U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q3 2024 Earnings Presentation
31 slides from U.s. Bancorp's earnings presentation, Oct 16, 2024
Slide 1: U.S. Bancorp 3Q24 Earnings Conference Call
October 16, 2024 U.S. Bancorp 3Q24 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: 3Q24 Highlights
3Q24 Highlights ▪ Strong financial performance $1.03 › Top-line revenue growth supported by strong net interest Earnings per share income and margin expansion ▪ Positive operating leverage 17.9% › Achieved modest positive operating leverage excluding net Return on Tangible securities losses and prio
Slide 4: 3Q24 Results Summary
3Q24 Results Summary Income Statement Credit Quality Reported Change vs. Adjusted Change vs. 1 1 $ in millions, except EPS 3Q24 2Q24 3Q23 $ in millions 3Q24 2Q24 3Q23 2 Net interest income $4,166 2.8 % (2.4) % Nonperforming assets $1,848 (0.2) % 41.1 % Noninterest income 2,698 (4.2) (2.4) NPA ratio
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 13.7% 1.04% 1 1 64.4% 0.98% 1 12.6% 1 61.0% 60.2% 21.0% 1.03% 1 1 1 12.4% 12.4% 60.4% 60.7% 0.97% 11.9% 18.6% 0.91% 18.4% 18.4% 17.9% 2.81% 2.67%
Slide 6: Sustainable Earnings Power
Sustainable Earnings Power Diversified fee income businesses support our short- and long-term growth objectives Fee income represents 40% of 24% U.S. Bancorp total net revenue1 33% As a % of Total Net Revenue1,2 Fee revenue differentiators with national reach 43% Payment Services Payment Services fe
Slide 7: Balance Sheet Summary
Balance Sheet Summary Effective balance sheet management; Improved earning asset yields Total Average Deposits Total Average Loans $377 $373 $371 $375 $374 $512 $503 $503 $514 $509 6.25% 6.20% 6.19% 6.13% 6.02% 3Q23 4Q23 1Q24 2Q24 3Q24 3Q23 4Q23 1Q24 2Q24 3Q24 Average Balance Avg Yield % Highlights
Slide 8: Credit Quality
Credit Quality Stabilizing macro economic environment amid continued stress in CRE Office Allowance for Credit Losses Net Charge-offs and Nonperforming Assets by Loan Category, 3Q24 Change vs. Amount Reserve 3Q24 2Q24 3Q23 ($B) (%) Non-performing Assets Commercial $2.2 1.6% Balance $1,848 $(4) $538
Slide 9: 3Q24 Earnings Summary – Detail
3Q24 Earnings Summary – Detail Excluding Notable Items2 Reported % Change Notable Items2 % Change $ in millions, except EPS 3Q24 2Q24 3Q23 vs 2Q24 vs 3Q23 3Q24 2Q24 3Q23 vs 2Q24 vs 3Q23 Net Interest Income $4,135 $4,023 $4,236 2.8 % (2.4) % $— $— $— 2.8 % (2.4) % Taxable-equivalent Adjustment 31 29
Slide 10: Net Interest Income
Net Interest Income 3Q24 2Q24 3Q23 Loans $5,862 $5,761 $5,700 Loans held for sale 45 41 42 Investment securities 1,316 1,294 1,152 Other interest income 863 889 860 Total interest income $8,086 $7,985 $7,754 Deposits $3,004 $3,028 $2,580 Short-term borrowings 284 296 450 Long-term debt 663 638 488 T
Slide 11: Noninterest Income
Noninterest Income 3Q24 2Q24 3Q23 Payments $1,069 $1,077 $1,037 Trust and investment management 667 649 627 Service charges 302 322 334 Commercial products 397 374 354 Mortgage banking revenue 155 190 144 Investment product fees 84 82 70 Securities gains (losses), net (119) (36) — Other 143 157 198
Slide 12: Noninterest Expense
Noninterest Expense 3Q24 2Q24 3Q23 Compensation and benefits $2,637 $2,619 $2,615 Technology and communications 524 509 511 Occupancy and equipment 317 316 313 Professional services 130 116 127 Marketing and business development 165 158 176 All other 431 470 504 1 Total Noninterest Expense, Adjusted
Slide 13: Capital Management
Capital Management Capital build driven by earnings accretion CET1 Ratio 10.5% 10.3% 10.0% 9.9% 9.7% 7.6% CET1 Ratio Regulatory Minimum Binding Capital Constraint 3Q23 4Q23 1Q24 2Q24 3Q24 3rd Quarter Highlights • Strong CET1 capital accretion of 20 bps, net of distributions, reflective of our unique
Slide 14: Guidance – 4Q and FY 2024
Guidance – 4Q and FY 2024 4Q 2024 Guidance Relatively stable Net interest income1 vs. Q3 2024 of $4,166M FY 2024 Guidance Net interest income1 $16.1B to $16.4B Mid-single digit growth Total noninterest income, as adjusted2 vs. FY 2023 of ~$10.8B Total noninterest expense, as adjusted2 $16.8B3 1 Taxa
Slide 15: Appendix
Appendix U.S. Bancorp 15
Slide 16: Average Loans
Average Loans Average % of Average Change vs. $376.9 $374.7 $374.1 3Q 2024 Balance Total 2Q24 3Q23 Commercial $133 36% (0.9) % (1.2) % Commercial Real Estate 51 14% (1.6) (5.2) Residential Mortgages 118 31% 0.9 2.6 Credit Card 29 8% 2.3 7.9 Other Retail 43 11% (0.7) (7.5) Total Loans $374 (0.2) % (0
Slide 17: Average Deposits
Average Deposits Average Average Change vs. 3Q 2024 Balance 2Q24 3Q23 $512.3 $513.9 $508.8 Noninterest-bearing deposits $81 (3.0) % (17.0) % Money market savings 206 (0.9) 16.5 Interest checking 126 (0.1) (5.2) Savings accounts 37 (5.3) (26.6) Time deposits 59 2.2 7.5 Total interest-bearing deposits
Slide 18: Capital Position
Capital Position $ in billions 3Q24 2Q24 1Q24 4Q23 3Q23 Total U.S. Bancorp shareholders’ equity $58.9 $56.4 $55.6 $55.3 $53.1 Basel III Standardized Approach 1 Common equity tier 1 capital ratio 10.5 % 10.3 % 10.0 % 9.9 % 9.7 % Tier 1 capital ratio 12.2 % 11.9 % 11.6 % 11.5 % 11.2 % Total risk-based
Slide 19: Payment Services
Payment Services Payments Total Net Revenue by Business (3Q24) Highlights • Total card fee revenue (credit/debit/prepaid) improved 11% 3.4% YoY, driven by 4.5% credit card fee growth. 24% Global Merchant Acquiring • Merchant processing fee revenue improved 3.0% YoY Retail Payment Solutions primarily
Slide 20: Credit Quality – Commercial
Credit Quality – Commercial Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 3Q23 2Q24 3Q24 Linked Quarter Growth Average Loans $134,720 $134,339 $133,138 (2.4)% (2.7)% (0.3)% 2.7% (0.9)% 30-89 Delinquencies 0.24 % 0.21 % 0.25 % 90+ Delinquencies 0.05 % 0.06 % 0.07 % $134,72
Slide 21: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 3Q23 2Q24 3Q24 Linked Quarter Growth Average Loans $54,253 $52,289 $51,454 (1.2)% (0.8)% (1.5)% (1.4)% (1.6)% 30-89 Delinquencies 0.07 % 0.04 % 0.16 % 90+ Delinquencies —% 0.02 % 0.02 %
Slide 22: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 3Q23 2Q24 3Q24 Linked Quarter Growth Average Loans $114,627 $116,478 $117,559 (2.5)% 0.5% 0.4% 0.7% 0.9% 30-89 Delinquencies 0.11 % 0.12 % 0.14 % 90+ Delinquencies 0.11 % 0.15 % 0.15 % $11
Slide 23: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 3Q23 2Q24 3Q24 Linked Quarter Growth Average Loans $26,883 $28,349 $28,994 30-89 Delinquencies 1.35 % 1.34 % 1.47 % 3.2% 3.2% 0.7% 1.5% 2.3% 90+ Delinquencies 1.17 % 1.30 % 1.36 % $27,753 $27,942 $
Slide 24: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 3Q23 2Q24 3Q24 Linked Quarter Growth Average Loans $46,394 $43,230 $42,925 (11.0)% (3.0)% (2.9)% (1.0)% (0.7)% 30-89 Delinquencies 0.56 % 0.54 % 0.52 % 90+ Delinquencies 0.13 % 0.14 % 0.14 % $46,3
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended (Dollars in Millions, Unaudited) September 30, 2024 June 30, 2024 September 30, 2023 Net interest income $ 4,135 $ 4,023 $ 4,236 Taxable-equivalent adjustment (1) 31 29 32 Net interest income, on a taxable-equivalent basis 4,166 4,052 4,268 Net interest
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended (Dollars in Millions, Unaudited) September 30, 2024 June 30, 2024 September 30, 2023 Net income applicable to U.S. Bancorp common shareholders $ 1,601 $ 1,518 $ 1,412 Intangibles amortization (net-of-tax) 112 113 127 Net income applicable to U.S. Bancor
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures September 30, June 30, March 31, December 31, September 30, (Dollars and Shares in Millions Except Per Share Data, Unaudited) 2024 2024 2024 2023 2023 Total equity $ 59,321 $ 56,885 $ 56,033 $ 55,771 $ 53,578 Preferred stock (6,808) (6,808) (6,808) (6,808) (6,808) Noncont
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures Year Ended (Dollars in Millions, Unaudited) December 31, 2023 Total noninterest income $ 10,617 Less: Notable items (2) (140) Total noninterest income, as adjusted 10,757 U.S. Bancorp (2) – see last page in appendix for corresponding notes 28
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Nine Months Ended ($ in millions) September 30, 2024 Line of Business Financial Performance Net Revenue Wealth, Corporate, Commercial and Institutional Banking $ 9,098 Consumer and Business Banking 6,976 Payment Services 5,248 Treasury and Corporate Support (876) Total Co
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 June 30, 2024 included a $26 million ($19 million net-of-tax) charge for the increase in FDI
Slide 31: U.S. Bancorp
U.S. Bancorp 31