34 slides from U.s. Bancorp's earnings presentation, Jan 25, 2023
Slide 1: U.S. Bancorp 4Q22 Earnings Conference Call
us| bank. Januar y 25, 2023 U.S. Bancorp 4Q22 Earnings Conference Call
Slide 2: Forward-looking statements
The following information appears in accordance with the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-l
Slide 3: Successful Acquisition of Union Bank; key results
• Successful Acquisition of Union Bank Reported Adjusted1,2 – Closed transaction December 1st; Conversion expected over Memorial Day weekend Earnings per share $0.57 $1.20 • Positive operating leverage of 230bps1,2,3 Return on Average Assets 0.59% 1.20% • Strong financial performance Solid pre-provi
Slide 4: 4Q22 Highlights
4Q22 Highlights Adjusted Income Statement Reported | Adjusted’? change vs. Credit Quality Change vs. $in millions, except EPS 4Q22 4Q22 3Q22 4Q21 $ in millions 4Q22 3Q22 4Q21 Net interest income® $4,325 $4,325 12.1% 37.3 % Nonperforming assets $1,016 50.1 % 15.7 % Noninterest income 2,043 2,442 (4.1
Slide 5: Performance Ratios
Performance Ratios Return on Return on Return on Efficiency Ratio! & Average Assets Average Common Equity Tangible Common Equity Net Interest Margin? 23.4%5 62.3% 63.3% 16.8%5 21.4%5 16.2%5 1.24%3 vs 116% 1.20% 4Q21 3Q22 4Q22 4Q21 3Q22 4Q22 4Q21 3Q22 4Q22 4Q21 3Q22 4Q22 Adjusted for Adjusted for Adj
Slide 6: Combined company scale
Investment Assets1 Loans1 Deposits1 Securities1,2 ~1 Million ~190,000 ~50,000 ~700 296 High Net Worth / Consumer Business Commercial Affluent Branches Accounts Banking Clients Relationships Households U.S. Bank
Slide 7: Union Bank Acquisition Impacts
Union Bank Acquisition Impacts: Balance sheet optimization Sale of acquired loans not aligned with credit risk profile, repositioning of the investment portfolio and sale of certain equity investments Losses related to interest rate hedging positions to minimize impact of interest rate volatil
Slide 8: 4Q22 Earnings Summary - Detail
4Q22 Earnings Summary - Detail * Union Bank contributed $302 million of revenue and $0.03 earnings per share * Noninterest expense includes $42 million of intangibles amortization related to Union Bank Union Bank Legacy Adjusted* Combined Notable Combined $in millions, except EPS Adjusted’ + (1month
Slide 9: Period-end loans
$388 (As of 12/31/22) $343 $312 4Q21 3Q22 4Q22 U.S. Bank
Slide 10: End of Period Deposit Composition
End of Period Deposit Composition $525 4Q21 3Q22 4Q22 mmm Legacy ma Combined $ in billions Change vs. (As of 12/3/22) Ending Balance 3Q22 4Q21 Noninterest-bearing deposits $138 19.6 % 21% Money market savings $148 145 % 25.8 % Interest checking 134 14.7 16.8 Savings accounts 72 7A 91 Time deposits 3
Slide 11: Average loans
$174 $170 $163 4Q21 3Q22 4Q22 U.S. Bank
Slide 12: Net Revenue
Net Revenue Revenue, Adjusted 4Q22 Legacy Union Bank Combined $6,767* Net Interest Income $4,070 $255 $4,325 $6,326 Payments $940 $7 $947 Service Charges $305 $9 $314 Mortgage $101 $3 $104 Trust & Inv Mgmt $562 $9 $571 All Other $487 $19 $506 Noninterest Income, Adjusted* $2,395 $47 $2,442 Total Rev
Slide 13: Noninterest Expense
4Q22 Legacy Union Bank Combined $2,309 $93 $2,402 $447 $12 $459 $273 $17 $290 $292 $25 $317 $411 $74 $485 1 Total Noninterest Expense, Adjusted $3,732 $221 $3,953 2 Notable Items $68 $22 $90 Total Noninterest Expense, Reported $3,800 $243 $4,043 • • • U.S. Bank
Slide 14: Net charge-offs
Legacy NCO Balance Sheet Optimization Acquisition Impacts Combined NCO, Adjusted Combined NCO%, Reported Combined NCO%, Adjusted U.S. Bank
Slide 15: CET1 Waterfall (3Q22 - 4Q22)
CET1 Waterfall (3Q22 - 4Q22) 0.4% 0.3% 9 a —=k| 9.7% -0.2% 8.4% -1.8% 3Q22 Net income Dividend on RWA Acquisition 4Q22 Common Stock / Notable Impacts Acquisition and Notable impacts primarily include: mm An increase to goodwill & intangibles including impact of credit and interest rate marks maa Ini
Slide 16: Union Bank EPS accretion
(1) 2023E GAAP EPS accretion with synergies illustratively realized 75% and 100% in 2023; USB projections based on Wall Street consensus estimates (2) 2023E GAAP EPS accretion with synergies illustratively realized 35% and 100% in 2023; USB projections based on internal company forecast U.
Slide 17: Union Bank Acquisition Metrics - Update
Union Bank Acquisition Metrics - Update Acquisition Impact of Initial Provision PCD Allowance for Credit Losses Non-PCD Allowance for Credit Losses Total Allowance for Credit Losses Announcement Closing $920 million {| $662 million $307 million $173 million $920 million $1,227 million $646 million $
Slide 18: First Quarter / Full Year 2023 Outlook
First Quarter / Full Year 2023 Outlook+ 4Q22 1Q23 Guidance 2023 Guidance Average Earnings Assets $573b $605b - $610b $610b - $620b H “1 “1 Net interest margin? H 3.01% H +5-10bps H +5-10bps 1 1 vs. 4Q22 1 vs. 4Q22 Total Revenue, adjusted® H $6.8b H $7.1b - $7.3b H $29b - $31b Includes purchase accou
Slide 19: Appendix
U.S. Bank
Slide 20: Average loans
$359.8 4Q22 $336.8 $18.3 $302.8 $341.5 4Q21 3Q22 4Q22 • • • U.S. Bank
Slide 21: Average Deposits
Average Deposits 4Q21 WD us sank $449.8 $481.8 $456.8 3Q22 4Q22 Legacy Noninterest-bearing Legacy Interest-bearing Union Bank Noninterest-bearing Union Bank Interest-bearing Legacy (Total Deposits) Linked Quarter -0.8% Year-over-year 0.8% $ in billions Change vs. Change 4Q22 Average Balance 3Q22 4Q2
Slide 22: Payments revenue trends
Card Revenue1 20.0% 18.0% 15.0% 10.0% 5.5% 5.0% 0.8% 0.5% 0.6% 0.0% -1.8% -0.5% -5.0% -2.8% -2.0% -10.0% -15.0% -11.5% Linked Quarter Year-over-Year 4Q21 1Q22 2Q22 3Q22 4Q22 Merchant Processing Fee Revenue Corporate Payments Fee Revenue 20.0% 17.1% 17.4% 30.0% 25.4% 14.2% 25.0% 23.0% 24.6% 15.
Slide 23: Payments revenue growth
43% 8% • • 4Q22 vs. 4Q22 vs. 4Q21 4Q19 • • 2019 2020 2021 2022 1 Includes prepaid card 2 Linked quarter change based on trends from 2015 – 2019 U.S. Bank 3 Tech-led includes digital, omni-commerce and e-commerce as well as investments in integrated software providers; tech-led re
Slide 24: Credit Quality - Commercial
Credit Quality - Commercial Key Statistics rge-offs Ratio Linked Quarter Growth 2.6% 8.0% 6.9% 6.5 % 3.4% $120,657 $128,519 $132,918 , 112,822 $104,508 $112, 4Q21 1Q22 2Q22 3Q22 4Q22 Mag Union Bank ==o== NCO%, Reported Mmmm Legacy —e— Legacy NCO% $ in millions 4Q21 3Q22 4Q22 Average Loans $104,508 $
Slide 25: Credit Quality - Commercial Real Estate
Credit Quality - Commercial Real Estate Linked Quarter Growth $ in millions 4q2i 3Q22 4Q22 Average Loans $38,851 $40,010 $45,722 (0.2%) 0.6% 11% 12% 14.3% 30-89 Delinquencies 0.20% 0.02% 0.16% 90+ Delinquencies 0.03% 0.05% 0.01% $45,722 Nonperforming Loans 0.73% 0.41% 0.61% $38,851 $39,084 $39,517 $
Slide 26: Residential Mortgage Delinquencies
Residential Mortgage Delinquencies ($mm) $800 $600 $400 $200 $0 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 30-89 days past due 90+ days past due • • • U.S. Bank
Slide 27: Credit Card Delinquencies
Credit Card Delinquencies ($mm) $800 $600 $400 $200 $0 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 30-89 days past due 90+ days past due 4Q22 Average Loans include $74 million of Union Bank balances • • U.S. Bank
Slide 28: Average loans by category
4Q22 Average Loans include $638 million of Union Bank balances • • U.S. Bank
Slide 29: Non-GAAP reconciliation
U.S. Bank (1), (2) – see slide 33 for corresponding notes
Slide 30: Non-GAAP reconciliation
U.S. Bank (1), (2), (3) – see slide 33 for corresponding notes
Slide 31: Capital ratio reconciliation (preliminary data)
* Preliminary data. Subject to change prior to filings with applicable regulatory agencies. U.S. Bank (3), (4), (5) – see slide 33 for corresponding notes
Slide 32: Operating leverage reconciliation
Year Ended December 31, December 31, Percent 2022 2021 Change Net interest income $14,728 $12,494 Taxable-equivalent adjustment (1) 118 106 Net interest income, on a taxable-equivalent basis 14,846 12,600 Noninterest income 9,456 10,227 Total net revenue 24,302 22,827 6.5 % (a) Less: MUFG Union Bank
Slide 33: Notes
Notes (1) Based ona federal income tax rate of 21 percent for those assets and liabilities whose income or expense is not included for federal income tax purposes. (2) Notable items for the three months ended December 31, 2022 include the following: = $399 million ($297 million net-of-tax) of losses
Slide 34: U.S. Bank
U.S. Bank