U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q3 2020 Earnings Presentation
33 slides from U.s. Bancorp's earnings presentation, Oct 14, 2020
Slide 1: U.S. Bancorp 3Q20 Earnings Conference Call
U.S. Bancorp 3Q20 Earnings Conference Call October 14, 2020 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: This presentation contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including st
Slide 3: 3Q20 Highlights
3Q20 Highlights Income Statement change vs. Credit Quality change vs. $ in millions, except EPS 3Q20 2Q20 3Q19 $ in millions 3Q20 2Q20 3Q19 Net interest income* $3,252 0.9 % (1.6) % Nonperforming assets $1,270 8.3 % 29.7 % Noninterest income 2,712 3.7 3.7 NPA ratio 0.41 % 3 bps 8 bps Reported net in
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** 1.57% 15.3% 19.4% 57.6% 56.6% 12.8% 16.6% 53.3% 1.17% 5.3% 7.1% 3.02% 0.51% 2.62% 2.67% 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20
Slide 5: Digital Engagement Trends
Digital Engagement Trends Transactions (% of Total) 80% 76% 64% 67% Digital Active Customers 60% (% of Total Active Customers)* 40% 36% 33% 80% 76% 24% 72% 70% 20% 0% 60% 56% Three months ended 52% 51% 51% 51% 8/31/18 8/31/19 8/31/20 45% Total Digital Branch, ATM, Phone and IVR 40% Loan Sales (% of
Slide 6: Average Loans
Average Loans Change vs. (Three months ended 9/30/20) Avg. Balances 2Q20 3Q19 $318.1 $311.0 Commercial $115.5 (9.8) % 11.4 % $292.4 Commercial Real Estate 40.9 (0.4) 5.0 Residential Mortgages 75.8 6.6 10.5 Credit Card 22.0 2.5 (6.9) Retail 56.8 0.7 (1.3) $318.1 $311.0 Total loans $311.0 (2.2) % 6.4
Slide 7: Average Deposits
Average Deposits Interest-bearing Deposits Average Change vs. Change $403.3 $405.5 (Three months ended 9/30/20) Balances 2Q20 3Q19 Rates vs. 2Q20 $349.9 Money market savings $124.1 (4.3) % 8.4 % 0.22 % (0.08) % Interest checking 84.5 0.8 17.3 0.04 (0.01) Savings accounts 53.5 4.4 15.4 0.04 (0.05) Ti
Slide 8: Credit Quality
Credit Quality Net Charge-offs Nonperforming Assets $515 $1,270 $437 $1,173 NCO Ratio $979 NPAs $352 0.66% +11 bps QoQ +8.3% QoQ 0.48% 0.55% +18 bps YoY 0.33% 0.38% 0.41% +29.7% YoY 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20 NCOs NCOs/Avg Loans NPAs NPAs/Period-end Loans plus OREO Provision for Credit Losses $1,
Slide 9: Credit Risk Management – Consistent Underwriting
Credit Risk Management – Consistent Underwriting Disciplined Credit Underwriting, 3Q20 Allowance for Credit Losses by Loan Class, 3Q20 Loans and Leases Wtd Avg FICO/Bond Avg Amount Outstanding rating equivalent* LTV* ($B) (%) Residential mortgage 772 69% Commercial $2.5 2.2% Home equity 797 62% Comm
Slide 10: Credit Risk Management – COVID-19 Impacted Industries
Credit Risk Management – COVID-19 Impacted Industries Payment Relief* Commercial Exposures by Impacted Industries*** As of 6/30/20 As of 9/30/20 As of 6/30/20 As of 9/30/20 Outstanding Segment Outstanding Segment Balances Loans Balances Loans Loans Commitments Loans Commitments Segments ($B) (%) ($B
Slide 11: Earnings Summary
Earnings Summary $ and shares in millions, except EPS Reported % Change 3Q20 2Q20 3Q19 vs. 2Q20 vs. 3Q19 Net Interest Income $3,227 $3,200 $3,281 0.8 (1.6) Taxable-equivalent Adjustment 25 24 25 4.2 - Net Interest Income (taxable-equivalent basis) 3,252 3,224 3,306 0.9 (1.6) Noninterest Income 2,712
Slide 12: Net Interest Income
Net Interest Income $3,306 $3,224 $3,252 Linked Quarter • Net interest income increased, primarily driven by deposit and funding mix, one additional day in the third quarter and higher loan fees, partially offset by higher premium amortization within the investment portfolio and a decrease in loan v
Slide 13: Noninterest Income
Noninterest Income $2,712 Linked Quarter $2,614 $2,614 • Payment services revenue increased, driven by higher credit and debit card $272 $553 revenue, higher corporate payment products revenue and higher merchant $648 processing services revenue, primarily driven by higher sales volume due to the $4
Slide 14: Payment Services
Payment Services % of Merchant Acquiring Payment Fees as a % of Net Revenue Volume 2019 3Q20 Merchant Acquiring 2019 3Q20 • Payments sales volumes Travel & Hospitality* 22% 19% have rebounded since 7.0% 5.8% Airline 15% 3% bottoming in April 2020 All Other 63% 78% 6.1% 6.5% • Travel & hospitality, 8
Slide 15: Noninterest Expense
Noninterest Expense Linked Quarter $3,318 $3,371 • Employee benefits expense increased, primarily due to higher medical $3,144 claim expense. $309 $334 $277 $276 $271 • Technology and communications expense increased, primarily due to $279 $245 $244 the acquisition of the State Farm credit card port
Slide 16: Capital Position
Capital Position $ in billions 3Q20 2Q20 1Q20 4Q19 3Q19 Total U.S. Bancorp shareholders' equity $52.6 $51.9 $51.5 $51.9 $53.5 Basel III Standardized Approach Common equity tier 1 capital ratio 9.4% 9.0% 9.0% 9.1% 9.6% Tier 1 capital ratio 11.0% 10.6% 10.5% 10.7% 11.2% Total risk-based capital ratio
Slide 17: Our culture is rooted in 'doing the right thing'
Our culture is rooted in ‘doing the right thing’ We put our employees, customers and communities at the center of everything we do Supporting financial inclusion Investing in our communities Creating an inclusive workplace • We serve the underbanked market through • Through our Community Possible pr
Slide 18: Appendix
Appendix U.S. BANCORP | 18
Slide 19: Average Loans
Average Loans Average Loans ($bn) Key Points Year-over-Year Growth vs. 3Q19 • Average total loans increased by $18.6 billion, or 6.4% 4.0% 3.9% 4.0% 10.0% 6.4% • Average commercial loans increased by $11.8 billion, $318.1 $311.0 or 11.4% $292.4 $294.9 $297.7 • Average residential mortgage loans incr
Slide 20: Average Deposits
Average Deposits Average Deposits ($bn) Key Points Year-over-Year Growth vs. 3Q19 6.0% 6.6% 8.2% 16.8% 15.9% • Average total deposits increased by $405.5 $55.6 billion, or 15.9% $403.3 $356.5 $362.8 • Average low-cost deposits (NIB, interest $349.9 30.1% 46.6% checking, savings and money market) (3.
Slide 21: Credit Quality – Commercial
Credit Quality – Commercial Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q19 2Q20 3Q20 Average Loans $103,660 $128,039 $115,489 0.4% 0.2% 2.0% 20.8% (9.8%) 30-89 Delinquencies 0.43% 0.33% 0.22% $128,039 90+ Delinquencies 0.10% 0.07% 0.06% $115,489 Nonperfor
Slide 22: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q19 2Q20 3Q20 Average Loans $38,990 $41,088 $40,929 (1.0%) 1.9% 0.9% 2.5% (0.4%) 30-89 Delinquencies 0.13% 0.25% 0.23% 90+ Delinquencies 0.01% 0.00% 0.00% $38,990 $39,722 $
Slide 23: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q19 2Q20 3Q20 Average Loans $68,608 $71,122 $75,786 2.7% 1.9% 1.4% 0.3% 6.6% 30-89 Delinquencies 0.24% 0.34% 0.31% $75,786 90+ Delinquencies 0.17% 0.16% 0.15% $68,608 $69,909
Slide 24: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q19 2Q20 3Q20 Average Loans $23,681 $21,510 $22,052 3.7% 1.8% (1.1%) (9.8%) 2.5% 30-89 Delinquencies 1.33% 1.08% 0.94% $23,681 $24,107 $23,836 $22,052 90+ Delinquencies 1.16% 1.22% 0.
Slide 25: Credit Quality – Home Equity
Credit Quality – Home Equity Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q19 2Q20 3Q20 Average Loans $15,601 $14,386 $13,551 (1.5%) (2.4%) (2.5%) (3.0%) (5.8%) 30-89 Delinquencies 0.55% 0.46% 0.35% 90+ Delinquencies 0.34% 0.37% 0.37% $15,601 $15,221 $14,83
Slide 26: Credit Quality – Retail Leasing
Credit Quality – Retail Leasing Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q19 2Q20 3Q20 (1.2%) 0.5% (0.1%) (0.7%) 0.3% Average Loans $8,442 $8,412 $8,438 30-89 Delinquencies 0.48% 0.51% 0.38% $8,442 $8,486 $8,474 $8,412 $8,438 3.0% 90+ Delinquencies 0.05
Slide 27: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 3Q19 2Q20 3Q20 Average Loans $33,454 $33,550 $34,773 2.7% 0.2 % 0.1% 0.0% 3.6% 30-89 Delinquencies 0.78% 0.43% 0.51% $33,454 $33,509 $33,552 $33,550 $34,773 90+ Delinquencies 0.14% 0.
Slide 28: Credit Quality – Auto Loans
Credit Quality – Auto Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics $mm 3Q19 2Q20 3Q20 Linked Quarter Growth Average Loans $19,426 $18,758 $18,823 2.1% 0.0% (0.8%) (2.7%) 0.3% 30-89 Delinquencies 1.04% 0.56% 0.68% 90+ Delinquencies 0.11% 0.07% 0.05% $19,426 $19,434 $19,276 $18,7
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures (Dollars in Millions, Unaudited) Three Months Ended September 30, June 30, September 30, 2020 2020 2019 Net interest income $3,227 $3,200 $3,281 Taxable-equivalent adjustment (4) 25 24 25 Net interest income, on a taxable-equivalent basis 3,252 3,224 3,306 Net interest in
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended September 30, June 30, September 30, (Dollars in Millions, Unaudited) 2020 2020 2019 Net income applicable to U.S. Bancorp common shareholders $1,494 $614 $1,821 Intangibles amortization (net-of-tax) 35 34 33 Net income applicable to U.S. Bancorp common
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures September 30, June 30, March 31, December 31, September 30, (Dollars in Millions, Unaudited) 2020 2020 2020 2019 2019 Total equity $53,195 $52,480 $52,162 $52,483 $54,147 Preferred stock (5,984) (5,984) (5,984) (5,984) (5,984) Noncontrolling interests (630) (630) (630) (6
Slide 32: Notes
Notes (1) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements. (2) Includes the estimated increase in the allowance for credit losses related to the adoption of the current expected credit losses methodology net of deferred
Slide 33: U.S. Bancorp 3Q20 Earnings Conference Call
U.S. Bancorp 3Q20 Earnings Conference Call October 14, 2020 U.S. BANCORP