U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q2 2018 Earnings Presentation
27 slides from U.s. Bancorp's earnings presentation, Jul 18, 2018
Slide 1: U.S. Bancorp 2Q18 Earnings Conference Call
U.S. Bancorp 2Q18 Earnings Conference Call July 18, 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: 2Q18 Highlights
2Q18 Highlights Income Statement change vs. Credit Quality change vs. $ in millions, except EPS 2Q18 1Q18 2Q17 $ in millions 2Q18 1Q18 2Q17 Net interest income* $3,226 0.9 % 4.1 % Nonperforming assets $1,091 (9.4) % (19.1) % Noninterest income 2,414 6.3 2.8 NPA ratio 0.39% (4bps) (10bps) Reported ne
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** 1.54% 15.3% 19.3% 19.8% 1.50% 14.9% 55.9% 54.8% 1.35% 13.4% 17.2% 54.9% 3.08% 3.13% 3.13% 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 2Q17 1Q18 2Q1
Slide 5: Average Loans
Average Loans Average Change vs. (Three months ended 6/30/18) Balances 1Q18 2Q17 $279.4 Commercial $98.3 0.9 % 2.8 % $275.5 $278.6 Commercial Real Estate 39.9 (1.3) (6.3) Residential Mortgage 60.8 1.1 3.9 Credit Card 21.2 (0.3) 2.9 Retail 55.5 (2.8) 1.5 Covered 2.9 (5.0) (18.1) Total loans $278.6 (0
Slide 6: Average Deposits
Average Deposits Interest-bearing Deposits $331.2 $334.6 $334.8 Average Change vs. Change (Three months ended 6/30/18) Balances 1Q18 2Q17 Rates vs. 1Q18 Money market savings $103.3 -- % (3.2) % 0.98 % 0.17 % Interest checking 69.9 (0.6) 3.9 0.18 0.03 Savings accounts 45.1 1.5 3.5 0.11 0.04 Time depo
Slide 7: Credit Quality
Credit Quality Net Charge-offs Nonperforming Assets $340 $341 $332 $1,349 NCO Ratio $1,204 NPAs $1,091 -1 bp QoQ -9.4% QoQ 0.49% 0.49% 0.48% 0.49% -1 bp YoY 0.43% 0.39% -19.1% YoY 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 NCOs NCOs/Avg Loans NPAs NPAs/Period-end Loans plus OREO Provision for Credit Losses $10 $
Slide 8: Earnings Summary
Earnings Summary $ and shares in millions, except EPS Reported % Change 2Q18 1Q18 2Q17 vs. 1Q18 vs. 2Q17 Net Interest Income $3,197 $3,168 $3,049 0.9 4.9 Taxable-equivalent Adjustment 29 29 51 -- (43.1) Net Interest Income (taxable-equivalent basis) 3,226 3,197 3,100 0.9 4.1 Noninterest Income 2,414
Slide 9: Net Interest Income
Net Interest Income $3,197 $3,226 $3,100 Linked Quarter • Growth in net interest income was primarily driven by the impact of higher interest rates and an additional day in the second quarter. • The net interest margin was flat, reflecting the impact of higher interest rates offset by a deposit and
Slide 10: Noninterest Income
Noninterest Income $2,348 $2,414 Linked Quarter $2,272 $191 $212 $184 • Payment services revenue growth was driven by seasonally $401 higher credit and debit card revenue as well as higher $380 $398 merchant processing volumes. $428 • All other noninterest income growth reflects growth in $414 $411
Slide 11: Noninterest Expense
Noninterest Expense $3,055 $3,085 Linked Quarter $2,984 $223 $235 $242 • Noninterest expense growth was primarily driven by $255 $265 $262 seasonally higher professional services and marketing and $295 $260 $286 business development expense as well as higher $442 compensation expense. $454 $521 • Em
Slide 12: Capital Position
Capital Position $ in billions 2Q18 1Q18 4Q17 3Q17 2Q17 Total U.S. Bancorp shareholders' equity $49.6 $49.2 $49.0 $48.7 $48.3 Basel III Standardized Approach Common equity tier 1 capital ratio 9.1% 9.0% 9.3% 9.6% 9.5% Tier 1 capital ratio 10.5% 10.4% 10.8% 11.1% 11.1% Total risk-based capital ratio
Slide 13: Appendix
Appendix U.S. BANCORP | 13
Slide 14: Average Loans
Average Loans Average Loans ($bn) Key Points Year-over-Year Growth vs. 2Q17 • Average total loans increased by $3.1 billion, or 1.1% 3.4% 3.0% 2.6% 2.3% 1.1% • Average commercial loans increased by $2.7 billion, $275.5 $277.6 $279.8 $279.4 $278.6 or 2.8% 1.5% • Average residential mortgage loans inc
Slide 15: Average Deposits
Average Deposits Average Deposits ($bn) Key Points Year-over-Year Growth vs. 2Q17 7.7% 5.2% 3.0% 1.9% 1.1% • Average total deposits increased by $3.7 billion, or 1.1% $331.2 $335.2 $339.2 $334.6 $334.8 • Average low-cost deposits (NIB, interest (0.1%) (3.0%) (1.6%) (4.5%) checking, savings and money
Slide 16: Credit Quality – Commercial Loans
Credit Quality – Commercial Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q17 1Q18 2Q18 Average Loans $95,638 $97,465 $98,353 2.0% 1.0% 1.0% (0.1%) 0.9% 30-89 Delinquencies 0.27% 0.25% 0.23% 90+ Delinquencies 0.05% 0.06% 0.06% $95,638 $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 2Q17 1Q18 2Q18 Linked Quarter Growth Average Loans $42,549 $40,366 $39,857 (1.4%) (2.2%) (1.5%) (1.6%) (1.3%) 30-89 Delinquencies 0.08% 0.09% 0.11% 90+ Delinquencies 0.00% 0.01% 0.01% $42,549 $41
Slide 18: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q17 1Q18 2Q18 Average Loans $58,544 $60,174 $60,834 1.1% 0.8% 1.0% 0.9% 1.1% 30-89 Delinquencies 0.22% 0.24% 0.27% $59,030 $59,639 $60,174 $60,834 90+ Delinquencies 0.20% 0.2
Slide 19: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q17 1Q18 2Q18 Average Loans $20,631 $21,284 $21,220 (1.0%) 1.4% 1.4% 0.3% (0.3%) 30-89 Delinquencies 1.22% 1.32% 1.22% $20,631 $20,926 $21,218 $21,284 $21,220 90+ Delinquencies 1.10%
Slide 20: Credit Quality – Home Equity
Credit Quality – Home Equity Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q17 1Q18 2Q18 Average Loans $16,252 $16,195 $16,048 0.0% 0.3% 0.0% (0.6%) (0.9%) 30-89 Delinquencies 0.33% 0.41% 0.39% $16,252 $16,299 $16,299 $16,195 $16,048 90+ Delinquencies 0.25%
Slide 21: Credit Quality – Retail Leasing
Credit Quality – Retail Leasing Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q17 1Q18 2Q18 Average Loans $7,181 $7,982 $8,150 11.0% 8.1% 2.8% 0.0% 2.1% 30-89 Delinquencies 0.22% 0.34% 0.30% 90+ Delinquencies 0.01% 0.02% 0.02% $7,982 $7,982 $8,150 $7,762 Non
Slide 22: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q17 1Q18 2Q18 Average Loans $31,194 $32,874 $31,265 0.4% 2.6% 2.6% 0.1% (4.9%) 30-89 Delinquencies 0.65% 0.73% 0.75% $32,008 $32,856 $32,874 90+ Delinquencies 0.11% 0.15% 0.13% $31,1
Slide 23: Credit Quality – Auto Loans
Credit Quality – Auto Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 2Q17 1Q18 2Q18 Average Loans $17,533 $18,868 $18,599 0.0% 2.7% 4.1% 0.6% (1.4)% 30-89 Delinquencies 0.73% 0.85% 0.90% $18,754 $18,868 $18,599 90+ Delinquencies 0.06% 0.08% 0.08% $17,533
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures June 30, March 31, December 31, September 30, June 30, (Dollars in Millions, Unaudited) 2018 2018 2017 2017 2017 Total equity $50,257 $49,812 $49,666 $49,351 $48,949 Preferred stock (5,419) (5,419) (5,419) (5,419) (5,419) Noncontrolling interests (629) (625) (626) (628) (
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended June 30, March 31, June 30, (Dollars in Millions, Unaudited) 2018 2018 2017 Net income applicable to U.S. Bancorp common shareholders $1,678 $1,597 $1,430 Intangibles amortization (net-of-tax) 32 31 28 Net income applicable to U.S. Bancorp common shareh
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended June 30, March 31, June 30, (Dollars in Millions, Unaudited) 2018 2018 2017 Net interest income $3,197 $3,168 $3,049 Taxable-equivalent adjustment (1) 29 29 51 Net interest income, on a taxable-equivalent basis 3,226 3,197 3,100 Net interest income, on
Slide 27: U.S. Bancorp 2Q18 Earnings Conference Call
U.S. Bancorp 2Q18 Earnings Conference Call July 18, 2018 U.S. BANCORP