U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q3 2018 Earnings Presentation
27 slides from U.s. Bancorp's earnings presentation, Oct 17, 2018
Slide 1: U.S. Bancorp 3Q18 Earnings Conference Call
U.S. Bancorp 3Q18 Earnings Conference Call October 17, 2018 U.S. BANCORP
Slide 2: Forward-looking Statements and Additional Information
Forward-looking Statements and Additional Information The following information appears in accordance with the Private Securities Litigation Reform Act of 1995: Today’s presentation contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including
Slide 3: 3Q18 Highlights
3Q18 Highlights Income Statement change vs. Credit Quality change vs. $ in millions, except EPS 3Q18 2Q18 3Q17 $ in millions 3Q18 2Q18 3Q17 Net interest income* $3,281 1.7 % 1.7 % Nonperforming assets $1,004 (8.0) % (19.7) % Noninterest income 2,418 0.2 3.3 NPA ratio 0.36% (3bps) (9bps) Reported net
Slide 4: Performance Ratios
Performance Ratios Return on Return on Return on Efficiency Ratio* & Average Assets Average Common Equity Tangible Common Equity* Net Interest Margin** 1.58% 15.3% 15.5% 19.8% 19.9% 1.54% 1.38% 13.6% 17.3% 53.9% 54.8% 53.5% 3.14% 3.13% 3.15% 3Q17 2Q18 3Q18 3Q17 2Q18 3Q18 3Q17 2Q18 3Q18 3Q17 2Q18 3Q1
Slide 5: Average Loans
Average Loans Average Change vs. (Three months ended 9/30/18) Balances 2Q18 3Q17 $278.6 $281.1 Commercial $99.1 0.7 % 2.5 % $277.6 Commercial Real Estate 39.5 (0.8) (5.0) Residential Mortgages 62.0 2.0 5.1 Credit Card 21.8 2.6 4.1 Retail 55.9 0.8 (0.3) Covered 2.8 (4.9) (17.7) Total loans $281.1 0.9
Slide 6: Average Deposits
Average Deposits Interest-bearing Deposits $335.2 $334.8 $330.1 Average Change vs. Change (Three months ended 9/30/18) Balances 2Q18 3Q17 Rates vs. 2Q18 Money market savings $100.7 (2.6) % (4.2) % 1.13 % 0.15 % Interest checking 69.3 (0.8) 1.9 0.21 0.03 Savings accounts 44.8 (0.5) 2.7 0.14 0.03 Time
Slide 7: Credit Quality
Credit Quality Net Charge-offs Nonperforming Assets $330 $332 $328 NCO Ratio $1,251 NPAs $1,091 -2 bps QoQ $1,004 -8.0% QoQ 0.47% 0.48% 0.46% 0.45% -1 bp YoY 0.39% 0.36% -19.7% YoY 3Q17 2Q18 3Q18 3Q17 2Q18 3Q18 NCOs NCOs/Avg Loans NPAs NPAs/Period-end Loans plus OREO Provision for Credit Losses $30
Slide 8: Earnings Summary
Earnings Summary $ and shares in millions, except EPS Reported % Change 3Q18 2Q18 3Q17 vs. 2Q18 vs. 3Q17 Net Interest Income $3,251 $3,197 $3,176 1.7 2.4 Taxable-equivalent Adjustment 30 29 51 3.4 (41.2) Net Interest Income (taxable-equivalent basis) 3,281 3,226 3,227 1.7 1.7 Noninterest Income 2,41
Slide 9: Net Interest Income
Net Interest Income $3,227 $3,226 $3,281 Linked Quarter • Net interest income growth was primarily driven by the impact of higher interest rates, earning asset growth and an additional day in the quarter, partially offset by deposit and funding mix shift. • The increase in net interest margin was pr
Slide 10: Noninterest Income
Noninterest Income Linked Quarter $2,414 $2,418 $2,340 • Payment services revenue growth was driven by seasonally $191 $174 $213 higher sales volumes in corporate payment products and $401 $411 seasonally higher merchant processing fee revenue. $380 • Deposit service charges increased as a result of
Slide 11: Noninterest Expense
Noninterest Expense Linked Quarter • Noninterest expense decreased primarily due to a reduction in $2,998 $3,085 $3,044 compensation expense including lower incentives and a $227 $242 $247 seasonal decline in labor costs. $258 $262 $270 $286 • Other noninterest expense declined as a result of lower
Slide 12: Capital Position
Capital Position $ in billions 3Q18 2Q18 1Q18 4Q17 3Q17 Total U.S. Bancorp shareholders' equity $50.4 $49.6 $49.2 $49.0 $48.7 Basel III Standardized Approach Common equity tier 1 capital ratio 9.0% 9.1% 9.0% 9.3% 9.6% Tier 1 capital ratio 10.6% 10.5% 10.4% 10.8% 11.1% Total risk-based capital ratio
Slide 13: Appendix
Appendix U.S. BANCORP | 13
Slide 14: Average Loans
Average Loans Average Loans ($bn) Key Points Year-over-Year Growth vs. 3Q17 • Average total loans increased by $3.4 billion, or 1.2% 3.0% 2.6% 2.3% 1.1% 1.2% • Average residential mortgage loans increased by $277.6 $279.8 $279.4 $278.6 $281.1 $3.0 billion, or 5.1% (0.3%) • Average commercial loans i
Slide 15: Average Deposits
Average Deposits Average Deposits ($bn) Key Points Year-over-Year Growth vs. 3Q17 5.2% 3.0% 1.9% 1.1% (1.5%) • Average total deposits decreased by $5.0 billion, or 1.5% $335.2 $339.2 $334.6 $334.8 $330.1 • Average low-cost deposits (NIB, interest (0.1%) (3.0%) (1.6%) (4.5%) checking, savings and mon
Slide 16: Credit Quality – Commercial Loans
Credit Quality – Commercial Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q17 2Q18 3Q18 Average Loans $96,633 $98,353 $99,048 1.0% 1.0% (0.1%) 0.9% 0.7% 30-89 Delinquencies 0.22% 0.23% 0.23% $99,048 90+ Delinquencies 0.05% 0.06% 0.06% $96,633 $97,558 $
Slide 17: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate Average Loans ($mm) and Net Charge-offs Ratio Key Statistics $mm 3Q17 2Q18 3Q18 Linked Quarter Growth Average Loans $41,621 $39,857 $39,542 (2.2%) (1.5%) (1.6%) (1.3%) (0.8%) 30-89 Delinquencies 0.15% 0.11% 0.08% 90+ Delinquencies 0.01% 0.01% 0.01% $41,621 $41
Slide 18: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q17 2Q18 3Q18 Average Loans $59,030 $60,834 $62,042 0.8% 1.0% 0.9% 1.1% 2.0% 30-89 Delinquencies 0.26% 0.27% 0.27% $59,639 $60,174 $60,834 $62,042 90+ Delinquencies 0.18% 0.1
Slide 19: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q17 2Q18 3Q18 Average Loans $20,926 $21,220 $21,774 1.4% 1.4% 0.3% (0.3%) 2.6% 30-89 Delinquencies 1.42% 1.22% 1.42% $20,926 $21,218 $21,284 $21,220 $21,774 90+ Delinquencies 1.20% 1.
Slide 20: Credit Quality – Home Equity
Credit Quality – Home Equity Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q17 2Q18 3Q18 Average Loans $16,299 $16,048 $16,000 0.3% 0.0% (0.6%) (0.9%) (0.3%) 30-89 Delinquencies 0.38% 0.39% 0.45% $16,299 $16,299 $16,195 $16,048 $16,000 90+ Delinquencies 0.24
Slide 21: Credit Quality – Retail Leasing
Credit Quality – Retail Leasing Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q17 2Q18 3Q18 Average Loans $7,762 $8,150 $8,383 8.1% 2.8% 0.0% 2.1% 2.9% 30-89 Delinquencies 0.31% 0.30% 0.38% 90+ Delinquencies 0.03% 0.02% 0.02% $8,150 $8,383 $7,762 $7,982 $7,9
Slide 22: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q17 2Q18 3Q18 Average Loans $32,008 $31,265 $31,520 2.6% 2.6% 0.1% (4.9%) 0.8% 30-89 Delinquencies 0.75% 0.75% 0.83% $32,008 $32,856 $32,874 90+ Delinquencies 0.13% 0.13% 0.14% $31,2
Slide 23: Credit Quality – Auto Loans
Credit Quality – Auto Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q17 2Q18 3Q18 Average Loans $18,008 $18,599 $18,563 2.7% 4.1% 0.6% (1.4%) (0.2)% 30-89 Delinquencies 0.89% 0.90% 1.00% $18,754 $18,868 $18,599 $18,563 90+ Delinquencies 0.08% 0.08% 0.0
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures September 30, June 30, March 31, December 31, September 30, (Dollars in Millions, Unaudited) 2018 2018 2018 2017 2017 Total equity $51,007 $50,257 $49,812 $49,666 $49,351 Preferred stock (5,984) (5,419) (5,419) (5,419) (5,419) Noncontrolling interests (632) (629) (625) (6
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended September 30, June 30, September 30, (Dollars in Millions, Unaudited) 2018 2018 2017 Net income applicable to U.S. Bancorp common shareholders $1,732 $1,678 $1,485 Intangibles amortization (net-of-tax) 32 32 29 Net income applicable to U.S. Bancorp comm
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended September 30, June 30, September 30, (Dollars in Millions, Unaudited) 2018 2018 2017 Net interest income $3,251 $3,197 $3,176 Taxable-equivalent adjustment (1) 30 29 51 Net interest income, on a taxable-equivalent basis 3,281 3,226 3,227 Net interest in
Slide 27: U.S. Bancorp 3Q18 Earnings Conference Call
U.S. Bancorp 3Q18 Earnings Conference Call October 17, 2018 U.S. BANCORP