U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q4 2023 Earnings Presentation
31 slides from U.s. Bancorp's earnings presentation, Jan 17, 2024
Slide 1: U.S. Bancorp 4Q23 Earnings Conference Call
January 17, 2024 U.S. Bancorp 4Q23 Earnings Conference Call U.S. Bank | Confidential 1
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: This presentation contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including st
Slide 3: 4Q23 Highlights
4Q23 Highlights Reported Adjusted 1 ▪ Strong financial performance $0.49 | $0.99 › Highly diversified and sustainable fee revenue Earnings per share streams; Prudent expense management ▪ Prudent balance sheet repositioning 9.9% + 20 bps vs. 3Q23 2 › Focus on high-margin / high-return business; CET1
Slide 4: 4Q23 Highlights
4Q23 Highlights Income Statement Credit Quality Adjusted Reported Adjusted 1 change vs. Change vs. $ in millions, except EPS 4Q23 4Q23 3Q231 4Q221 $ in millions 4Q23 3Q23 4Q22 2 Net interest income $4,142 $4,142 (3.0) % (4.2) % Nonperforming assets $1,494 14.0 % 47.0 % Noninterest income 2,620 2,738
Slide 5: Performance Ratios
Performance Ratios Return on Return on Return on Efficiency Ratio1 & Average Assets Average Common Equity Tangible Common Equity1 Net Interest Margin 2 1 23.4% 1 1 1 16.8% 21.0% 1 1.20% 19.6% 1 1 75.9% 1.04% 1 13.7% 1 0.99% 12.9% 18.4% 63.3% 64.4% 0.91% 11.9% 1 61.1% 1 58.4% 1 60.4% 11.5% 8.0% 10.5%
Slide 6: 4Q23 Earnings Summary – Notable Items
4Q23 Earnings Summary – Notable Items 4Q23 Notable Items: Notable Items Impact: • Balance sheet optimization › 4Q23 impacted by a rebalancing of our investment securities portfolio enhancing our earnings, capital and 4Q23 liquidity profile. Diluted • Merger & integration charges Net Income Earnings
Slide 7: 4Q23 Earnings Summary – Detail
4Q23 Earnings Summary – Detail Excluding Notable Items2 4Q23 % Change 4Q22 3Q23 Notable vs 3Q23 vs 4Q22 2 $ in millions, except EPS Reported Reported Reported Items Adjusted Adjusted Adjusted Net Interest Income $4,293 $4,236 $4,111 $— $ 4,111 (3.0) % (4.2) % Taxable-equivalent Adjustment 32 32 31 —
Slide 8: Balance Sheet Summary
Balance Sheet Summary The strength and stability of our balance sheet enables us to withstand economic pressures while continuing to meet the needs of our customers Total Average Deposits Consumer Deposit Growth (Avg.) $497 $512 $503 $217 $222 $224 2Q23 3Q23 4Q23 2Q23 3Q23 4Q23 Highlights Total Aver
Slide 9: Net Interest Income
Net Interest Income 4Q23 3Q23 4Q22 Loans $5,742 $5,700 $4,532 Loans held for sale 36 42 38 Investment securities 1,182 1,152 988 Other interest income 803 860 416 Total interest income $7,763 $7,754 $5,974 Deposits $2,751 $2,580 $1,081 Short-term borrowings 332 450 318 Long-term debt 569 488 282 Tot
Slide 10: Noninterest Income
Noninterest Income 4Q23 3Q23 4Q22 Payments $1,027 $1,037 $947 Service Charges 324 334 314 Mortgage 137 144 104 Trust & Inv Mgmt 621 627 571 Other 629 622 506 1 Noninterest Income, Adjusted $2,738 $2,764 $2,442 1 Notable Items (118) — (399) Noninterest Income, Reported $2,620 $2,764 $2,043 Reported -
Slide 11: Noninterest Expense
Noninterest Expense 4Q23 3Q23 4Q22 Compensation & Benefits $2,509 $2,615 $2,402 Technology & Communications 513 511 459 Occupancy & Equipment 316 313 290 Professional Services 158 127 173 Marketing/Business Development 196 176 144 All Other 512 504 485 1 Total Noninterest Expense, Adjusted $4,204 $4
Slide 12: Credit Quality
Credit Quality Credit quality normalizing to pre-pandemic levels Allowance for Credit Losses Net Charge-off and Nonperforming Assets by Loan Category, 4Q23 Change vs. Amount Loans and Leases Outstanding 4Q23 3Q23 4Q22 ($B) (%) Non-performing Assets Commercial $2.1 1.6% Balance ($M) $1,494 $184 $478
Slide 13: Accelerated Capital Accretion
Accelerated Capital Accretion CET1 capital ratio is 290 bps above our regulatory capital minimum 20 bps vs 3Q23 0.2% 0.2% 9.9% 9.7% (0.2)% 7% CET1 Ratio Regulatory Minimum 3Q23 Net Income Dividend on RWA / 4Q23 Binding Capital Common Stock Balance Sheet Constraint Optimization 4th Quarter Highlights
Slide 14: Well-Positioned for 2024 and Beyond
Well-Positioned for 2024 and Beyond Union Bank › Achieved $900M of run-rate cost synergies › Significant revenue opportunities Strong Risk Management › Through-the-cycle credit risk management › Robust asset / liability management Continued Investment › Digitalization / cloud migration › Payments ec
Slide 15: Appendix
Appendix U.S. Bancorp 15
Slide 16: Average Loans
Average Loans Average % of Average Change vs. $376.9 4Q 2023 Balance Total 3Q23 4Q22 $372.9 Commercial $131 35% (2.7) % (1.4) % $359.8 Commercial Real Estate 54 14% (0.8) 17.7 Residential Mortgages 115 31% 0.5 18.6 Credit Card 28 8% 3.2 10.2 Other Retail 45 12% (3.0) (23.6) Total Loans $373 (1.1) %
Slide 17: Average Deposits
Average Deposits Average Average Change vs. 4Q 2023 Balance 3Q23 4Q22 $512.3 $502.8 $481.8 Noninterest-bearing deposits $91 (7.1) % (23.8) % Money market savings 187 5.6 37.8 Interest checking 127 (3.9) 2.3 Savings accounts 45 (10.8) (34.2) Time deposits 53 (3.7) 52.9 Total interest-bearing deposits
Slide 18: Payment Services
Payment Services Payment Fees as a % of Total Net Revenue (4Q23) Highlights Total payment fee revenue grew 8% year-over-year due to continued strength in consumer and business spend activities ▪ Total Credit Card fee revenue (credit, debit and prepaid) 6.0% improved 14% YoY on strong holiday sales a
Slide 19: Credit Quality – Commercial
Credit Quality – Commercial Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 4Q22 3Q23 4Q23 Linked Quarter Growth(a) Average Loans $132,918 $134,720 $131,096 3.4% 2.1% 1.8% (2.4)% (2.7)% 30-89 Delinquencies 0.26 % 0.24 % 0.35 % $138,085 90+ Delinquencies 0.07 % 0.05 % 0.09 %
Slide 20: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 4Q22 3Q23 4Q23 Linked Quarter Growth(a) Average Loans $45,722 $54,253 $53,825 14.3% 21.6% (1.2)% (1.2)% (0.8)% 30-89 Delinquencies 0.16 % 0.07 % 0.10 % 90+ Delinquencies 0.01 % —% 0.01 %
Slide 21: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 4Q22 3Q23 4Q23 Linked Quarter Growth(a) Average Loans $97,092 $114,627 $115,196 15.6% 19.8% 1.1% (2.5)% 0.5% 30-89 Delinquencies 0.17 % 0.11 % 0.15 % 90+ Delinquencies 0.08 % 0.11 % 0.12 %
Slide 22: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 4Q22 3Q23 4Q23 Linked Quarter Growth(a) Average Loans $25,173 $26,883 $27,753 4.4% 1.6% 1.9% 3.2% 3.2% 30-89 Delinquencies 1.08 % 1.35 % 1.42 % 90+ Delinquencies 0.88 % 1.17 % 1.31 % $27,753 Nonper
Slide 23: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 4Q22 3Q23 4Q23 Linked Quarter Growth(a) Average Loans $58,906 $46,394 $44,986 (2.0)% (9.0)% (2.7)% (11.0)% (3.0)% 30-89 Delinquencies 0.56 % 0.56 % 0.63 % 90+ Delinquencies 0.12 % 0.13 % 0.15 % $5
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended (Dollars in Millions, Unaudited) December 31, 2023 September 30, 2023 December 31, 2022 Net interest income $ 4,111 $ 4,236 $ 4,293 Taxable-equivalent adjustment (1) 31 32 32 Net interest income, on a taxable-equivalent basis 4,142 4,268 4,325 Net inter
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended Year Ended (Dollars in Millions, Unaudited) December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 Net income applicable to U.S. Bancorp common shareholders $ 766 $ 1,412 $ 853 $ 5,051 Intangibles amortization (net-of-tax) 123 127 67 5
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended June 30, March 31, December 31, (Dollars in Millions, Unaudited) 2023 2023 2022 Net charge-offs $ 649 $ 373 $ 578 Less: Notable items (2) 309 91 368 Net charge-offs, excluding notable items 340 282 210 Annualized net charge-offs, excluding notable items
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended June 30, March 31, December 31, (Dollars in Millions, Unaudited) 2023 2023 2022 Credit card loan net charge-offs $ 175 Less: Notable items (2) 36 Net charge-offs, excluding notable items 139 Annualized net charge-offs, excluding notable items (g) 551 Cr
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended (Dollars and Shares in Millions Except Per Share Data, Unaudited) December 31, 2023 September 30, 2023 December 31, 2022 Common equity $ 48,498 $ 46,305 $ 43,958 Less: Goodwill (net of deferred tax liability) (3) (11,480) (11,470) (11,395) Less: Intangi
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Year Ended ($ in millions) December 31, 2023 Line of Business Financial Performance Net Revenue Wealth, Corporate, Commercial and Institutional Banking $ 10,272 Consumer and Business Banking 9,993 Payment Services 6,758 Treasury and Corporate Support 1,121 Total Company 2
Slide 30: Notes
Notes 1. Based on a 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, 2023 of $1.1 billion ($780 million net-of-tax, including a $70 million discrete
Slide 31: U.S. Bancorp
U.S. Bancorp 31