U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q2 2024 Earnings Presentation
34 slides from U.s. Bancorp's earnings presentation, Jul 17, 2024
Slide 1: U.S. Bancorp 2Q24 Earnings Conference Call
July 17, 2024 U.S. Bancorp 2Q24 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: 2Q24 Highlights
2Q24 Highlights Reported Adjusted 1 ▪ Solid financial performance $0.97 | $0.98 › Highly diversified and sustainable fee revenue streams; Over 40% of total net revenue Earnings per share Reported 1 Adjusted 1 ▪ Effective balance sheet management › Earning asset portfolio positioning and repricing; S
Slide 4: 2Q24 Results Summary
2Q24 Results Summary Income Statement Credit Quality Adjusted Reported Adjusted 1 change vs. Change vs. 1 1 $ in millions, except EPS 2Q24 2Q24 1Q24 2Q23 $ in millions 2Q24 1Q24 2Q23 2 Net interest income $4,052 $4,052 0.9 % (8.9) % Nonperforming assets $1,852 3.7 % 70.7 % Noninterest income 2,815 2
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 66.4% 1.07% 1 1 22.3% 1 63.7% 14.6% 61.0% 1 1 1 0.98% 62.5% 1 0.93% 1 1 59.2% 1 60.7% 12.6% 18.6% 0.97% 1 17.4% 1 11.6% 12.4% 18.4% 0.81% 0.81% 17.1
Slide 6: Sustainable Earnings Power
Sustainable Earnings Power Diversified fee income businesses support our short- and long-term growth objectives Fee income represents 41% 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 and stabilizing deposit trends Total Average Deposits Total Average Loans $497 $512 $503 $503 $514 $389 $377 $373 $371 $375 48.6% 51.0% 52.1% 45.8% 6.02% 6.13% 6.20% 6.19% 39.4% 5.79% (12.3% ) (14.3%) ( 7.1%) ( 6.4%) ( 1.6%) 2Q23 3Q23 4Q23 1Q2
Slide 8: Credit Quality
Credit Quality Trends reflect stabilization in the broader macroeconomic and credit environment amidst continued CRE stress Allowance for Credit Losses Net Charge-off and Nonperforming Assets by Loan Category, 2Q24 Change vs. Amount Reserve 2Q24 1Q24 2Q23 ($B) (%) Non-performing Assets Commercial $2
Slide 9: 2Q24 Earnings Summary – Detail
2Q24 Earnings Summary – Detail Excluding Notable Items2 Reported % Change Notable Items2 % Change $ in millions, except EPS 2Q24 1Q24 2Q23 vs 1Q24 vs 2Q23 2Q24 1Q24 2Q23 vs 1Q24 vs 2Q23 Net Interest Income $4,023 $3,985 $4,415 1.0 % (8.9) % $— $— $— 1.0 % (8.9) % Taxable-equivalent Adjustment 29 30
Slide 10: Net Interest Income
Net Interest Income 2Q24 1Q24 2Q23 Loans $5,761 $5,712 $5,605 Loans held for sale 41 37 38 Investment securities 1,294 1,175 1,077 Other interest income 889 840 806 Total interest income $7,985 $7,764 $7,526 Deposits $3,028 $2,884 $1,939 Short-term borrowings 296 270 740 Long-term debt 638 625 432 T
Slide 11: Noninterest Income
Noninterest Income 2Q24 1Q24 2Q23 Payments $1,077 $977 $1,048 Trust & Inv Mgmt 649 641 621 Service Charges 322 315 324 Commercial Products 374 388 358 Mortgage 190 166 161 Other 203 213 236 1 Noninterest Income, Adjusted $2,815 $2,700 $2,748 1 Notable Items — — (22) Noninterest Income, Reported $2,8
Slide 12: Noninterest Expense
Noninterest Expense 2Q24 1Q24 2Q23 Compensation & Benefits $2,619 $2,691 $2,646 Technology & Communications 509 507 522 Occupancy & Equipment 316 296 316 Professional Services 116 110 141 Marketing/Business Development 158 136 122 All Other 470 454 512 1 Total Noninterest Expense, Adjusted $4,188 $4
Slide 13: Capital Accretion
Capital Accretion 120 basis points of CET1 capital accretion since 2Q23 10.3% 10.0% 9.9% 9.7% 9.1% 7.6% CET1 Ratio Regulatory Minimum Binding Capital Constraint 2Q23 3Q23 4Q23 1Q24 2Q24 2nd Quarter Highlights • Strong CET1 capital accretion of ~30bps, net of distributions, reflective of our diversif
Slide 14: Guidance – 3Q and FY 2024
Guidance – 3Q and FY 2024 3Q 2024 Guidance Net interest income1 Relatively stable vs. Q2 2024 of $4,052M FY 2024 Guidance Net interest income1 $16.1B to $16.4B Total noninterest income, as adjusted2 Mid-single digit growth vs. FY 2023 of ~$10.8B Total noninterest expense, as adjusted2 $16.8B or less
Slide 15: Interconnectedness will drive our growth
Interconnectedness will drive our growth Core Key Priorities Differentiators Diversified business mix Deepen Total Fee Revenue > 40% relationships Enhance experiences Risk management discipline 1 Proven TTC underwriting capabilities Digital National enablement franchise Innovative Strategic Industry
Slide 16: Appendix
Appendix U.S. Bancorp 16
Slide 17: Average Loans
Average Loans $388.8 Average % of Average Change vs. $374.7 2Q 2024 Balance Total 1Q24 2Q23 $371.1 Commercial $134 36% 2.7 % (2.7) % Commercial Real Estate 52 14% (1.4) (4.8) Residential Mortgages 117 31% 0.7 (1.0) Credit Card 29 8% 1.5 8.8 Other Retail 43 11% (1.0) (17.1) Total Loans $375 1.0 % (3.
Slide 18: Average Deposits
Average Deposits Average Average Change vs. 2Q 2024 Balance 1Q24 2Q23 $497.3 $503.1 $513.9 Noninterest-bearing deposits $83 (1.6) % (26.7) % Money market savings 208 6.0 36.3 Interest checking 126 0.6 (1.8) Savings accounts 39 (6.7) (34.1) Time deposits 58 4.4 31.9 Total interest-bearing deposits $4
Slide 19: Capital Position
Capital Position $ in billions 2Q24 1Q24 4Q23 3Q23 2Q23 Total U.S. Bancorp shareholders’ equity $56.4 $55.6 $55.3 $53.1 $53.0 Basel III Standardized Approach 1 Common equity tier 1 capital ratio 10.3 % 10.0 % 9.9 % 9.7 % 9.1 % Tier 1 capital ratio 11.9 % 11.6 % 11.5 % 11.2 % 10.6 % Total risk-based
Slide 20: Payment Services
Payment Services Payment Fees as a % of Total Net Revenue (2Q24) Highlights • Total credit card fee revenue (credit/debit/prepaid) 6.6% improved 1.4% YoY, driven by 4.3% credit fee growth. 6.2% • Merchant processing fee revenue improved 4.1% YoY 84.3% 2.9% 1 primarily due to sales growth. • Corporat
Slide 21: Credit Quality – Commercial
Credit Quality – Commercial Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 2Q23 1Q24 2Q24 Linked Quarter Growth Average Loans $138,085 $130,767 $134,339 1.8% (2.4)% (2.7)% (0.3)% 2.7% 30-89 Delinquencies 0.25 % 0.23 % 0.21 % $138,085 90+ Delinquencies 0.04 % 0.08 % 0.06 %
Slide 22: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 2Q23 1Q24 2Q24 Linked Quarter Growth Average Loans $54,934 $53,037 $52,289 (1.2)% (1.2)% (0.8)% (1.5)% (1.4)% 30-89 Delinquencies 0.13 % 0.04 % 0.04 % 90+ Delinquencies —% —% 0.02 % $54,
Slide 23: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 2Q23 1Q24 2Q24 Linked Quarter Growth Average Loans $117,606 $115,639 $116,478 1.1% (2.5)% 0.5% 0.4% 0.7% 30-89 Delinquencies 0.11 % 0.12 % 0.12 % 90+ Delinquencies 0.08 % 0.12 % 0.15 % $11
Slide 24: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 2Q23 1Q24 2Q24 Linked Quarter Growth Average Loans $26,046 $27,942 $28,349 30-89 Delinquencies 1.15 % 1.40 % 1.34 % 1.9% 3.2% 3.2% 0.7% 1.5% 90+ Delinquencies 1.02 % 1.42 % 1.30 % $27,753 $27,942 $
Slide 25: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($M) and Net Charge-offs Ratio Key Statistics $ in millions 2Q23 1Q24 2Q24 Linked Quarter Growth Average Loans $52,146 $43,685 $43,230 (2.7)% (11.0)% (3.0)% (2.9)% (1.0)% 30-89 Delinquencies 0.50 % 0.55 % 0.54 % $52,146 90+ Delinquencies 0.12 % 0.15 % 0.14
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended (Dollars in Millions, Unaudited) June 30, 2024 March 31, 2024 June 30, 2023 Net interest income $ 4,023 $ 3,985 $ 4,415 Taxable-equivalent adjustment (1) 29 30 34 Net interest income, on a taxable-equivalent basis 4,052 4,015 4,449 Net interest income,
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended (Dollars in Millions, Unaudited) June 30, 2024 March 31, 2024 June 30, 2023 Net income applicable to U.S. Bancorp common shareholders $ 1,518 $ 1,209 $ 1,281 Intangibles amortization (net-of-tax) 113 115 126 Net income applicable to U.S. Bancorp common
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended (Dollars in Millions, Unaudited) June 30, 2023 Net charge-offs $ 649 Less: Notable items (2) 309 Net charge-offs, excluding notable items 340 Annualized net charge-offs, excluding notable items (a) 1,364 Average loan balances (b) 388,817 Net charge-off
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures June 30, March 31, December 31, September 30, June 30, (Dollars and Shares in Millions Except Per Share Data, Unaudited) 2024 2024 2023 2023 2023 Total equity $ 56,885 $ 56,033 $ 55,771 $ 53,578 $ 53,484 Preferred stock (6,808) (6,808) (6,808) (6,808) (6,808) Noncontrolli
Slide 30: 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 30
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures Six Months Ended ($ in millions) June 30, 2024 Line of Business Financial Performance Net Revenue Wealth, Corporate, Commercial and Institutional Banking $ 6,054 Consumer and Business Banking 4,637 Payment Services 3,448 Treasury and Corporate Support (557) Total Company
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures (2) U.S. Bancorp (2) – see last page in appendix for corresponding notes 32
Slide 33: 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 34: U.S. Bancorp
U.S. Bancorp 34