33 slides from U.s. Bancorp's earnings presentation, Jan 19, 2011
Slide 1: U.S. Bancorp 4Q10 Earnings Conference Call
U.S. Bancorp 4Q10 Earnings Conference Call January 19, 2011 Richard K. Davis Chairman, President and CEO Andy Cecere Vice Chairman and CFO
Slide 2: Forward-looking Statements and Additional Information
2 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
Slide 3: 4Q10 Highlights
4Q10 Highlights Net income of $974 million; $0.49 per diluted common share Record total net revenue of $4.7 billion, up 7.9% vs. 4Q09 Net interest income growth of 5.9% vs. 4Q09 Noninterest income growth of 10.2% vs. 4Q09 Average loan growth of 2.0% (0.9% excluding acquisitions) vs. 4Q09 and average
Slide 4: Performance Ratios
Performance Ratios 4Q09 1Q10 2Q10 3Q10 4Q10 Return on Avg Common Equity 0.096 0.105 0.134 0.128 0.137 Return on Avg Common Equity 0.096 0.105 0.118 0.128 0.137 Return on Avg Assets 0.0086 0.0096 0.0109 0.0126 0.0131 4Q09 1Q10 2Q10 3Q10 4Q10 Efficiency Ratio 0.491 0.49 0.524 0.519 0.525 Net Interest
Slide 5: Capital Position
Capital Position $ in billions
Slide 6: Loan and Deposit Growth
4Q09 1Q10 2Q10 3Q10 4Q10 Loans 191.6 192.9 191.2 192.5 195.5 Deposits 180.9 182.5 183.3 182.7 190.3 Loan and Deposit Growth Average Balances Year-Over-Year Growth 4Q10 Acquisition Adjusted Loan Growth = 0.9% Deposit Growth = 5.1% 8.2% $191.6 3.9% $192.9 4.0% $191.2 5.8% $192.5 2.0% $195.5 25.2% $180
Slide 7: Revenue Growth
Taxable-equivalent basis Revenue Growth Year-Over-Year Growth 20.8% 11.3% 8.7% 7.9% 7.9% $ in millions 4Q09 1Q10 2Q10 3Q10 4Q10 Reported 4376 4321 4519 4587 4721 USB Record Revenue 4Q10
Slide 8: Credit Quality
3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 NPA $ Change 76 49 155 290 357 489 727 626 386 184 91 -261 -171 -212 NPA % Change 0.13 0.08 0.22 0.34 0.31 0.33 0.37 0.23 0.12 0.05 0.02 -0.07 -0.05 -0.06 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 NCO $
Slide 9: Credit Quality - Outlook
Credit Quality - Outlook The Company expects the level of Net Charge-offs and Nonperforming Assets, excluding covered assets, to trend lower during 1Q11 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 30 to 89 % 0.010601156 0.0103876 0.011833483 0.016222915 0.017008547 0.014526577 0.0144
Slide 10: Credit Quality - Reserves
Credit Quality - Reserves 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Allowance 2260 2435 2648 2898 3639 4105 4571 4986 5264 5439 5536 5540 5531 Provision/NCO's 1 1.66 1.51 1.5 2 1.67 1.5 1.4 1.25 1.15 1.02 1 0.97 Allowance for Credit Losses Allowance for Credit Losses Provision
Slide 11: Earnings Summary
Earnings Summary $ in millions, except per-share data Taxable-equivalent basis
Slide 12: 4Q10 Results - Key Drivers
4Q10 Results - Key Drivers vs. 4Q09 Net Revenue growth of 7.9% (2.2% excluding significant items) Net interest income growth of 5.9%; net interest margin of 3.83% vs. 3.83% Noninterest income growth of 10.2% (decline of 1.9% excluding significant items) Significant items: net change of $247 million
Slide 13: Significant Items
Significant Items $ in millions * Not a component of net income, but does impact net income applicable to U.S. Bancorp common shareholders and earnings per diluted common share
Slide 14: Net Interest Income
Net Interest Income 4Q09 1Q10 2Q10 3Q10 4Q10 Net Interest Income 2360 2403 2409 2477 2499 Net Interest Margin 0.0383 0.039 0.039 0.0391 0.0383 Net Interest Income Key Points $ in millions Taxable-equivalent basis vs. 4Q09 Average earning assets grew by $14.5 billion, or 5.9% (5.3% excluding acquisit
Slide 15: Average Loans
Average Loans 4Q09 1Q10 2Q10 3Q10 4Q10 Covered 18.504 21.415 20.454 19.308 18.572 Commercial 49.979 47.282 46.34 46.784 47.712 CRE 34.044 34.151 34.164 34.19 34.577 Res Mtg 25.621 26.408 26.821 27.89 29.659 Retail 63.5 63.622 63.382 64.369 64.964 Average Loans Key Points $ in billions Year-Over-Year
Slide 16: Average Deposits
Average Deposits 4Q09 1Q10 2Q10 3Q10 4Q10 Time 45.774 45.606 43.607 43.607 42.388 Money Market 38.485 40.902 40.256 38.005 39.585 Checking & Savings 55.64 58.023 59.538 61.316 65.39 Noninterest-bearing 40.99 38 39.917 39.732 42.95 Average Deposits Key Points $ in billions Year-Over-Year Growth 25.2%
Slide 17: Noninterest Income
Noninterest Income 4Q09 1Q10 2Q10 3Q10 4Q10 All Other 299 287 384 346 518 Mortgage 218 200 243 310 250 Service Charges 471 449 452 404 383 Trust & Inv Mgmt 277 264 267 267 282 Payment Services 751 718 764 783 789 Noninterest Income Key Points $ in millions Year-Over-Year Growth 37.8% 7.3% 2.7% 0.8%
Slide 18: Noninterest Expense
Noninterest Expense 4Q09 1Q10 2Q10 3Q10 4Q10 All Other 611 491 613 566 610 Tech & Communications 186 185 186 186 187 Prof Svcs, Marketing and PPS 256 192 234 260 281 Occupancy & Equip 214 227 226 229 237 Compensation & Benefits 961 1041 1118 1144 1170 Noninterest Expense Key Points $ in millions Yea
Slide 19: Mortgage Repurchase
Mortgage Repurchase Mortgages Repurchased and Make-whole Payments Mortgage Representation and Warranties Reserve $ in millions 4Q10 3Q10 2Q10 1Q10 4Q09 Beginning Reserve $147 $101 $73 $72 $52 Net Realized Losses (27) (24) (20) (22) (6) Additions to Reserve 60 70 48 23 26 Ending Reserve $180 $147 $10
Slide 20: Role of the Trustee in MBS
Role of the Trustee in MBS Trustee role and responsibilities The Trustee: Performs administrative functions for the transaction such as maintaining bank accounts and holder records, receiving payments from servicers, and distributing funds and reports to investors as directed The Trustee does not: I
Slide 21: Positioned to Win
Positioned to Win USB is well-positioned to produce industry-leading performance with... a strong foundation, including excellent credit and risk management, a diversified business mix and prudent capital management a proven track record initiatives to build relevant, profitable scale in each of our
Slide 22: Appendix
4Q10 Earnings Conference Call LI Appendix (Sbancorp.
Slide 23: Credit Quality - Commercial Loans
Credit Quality - Commercial Loans 4Q09 1Q10 2Q10 3Q10 4Q10 Average Loans 43490 40837 40095 40726 41700 Net Charge-offs Ratio 0.0228 0.0241 0.0223 0.0149 0.0111 Average Loans and Net Charge-offs Ratios Key Statistics Comments Overall delinquencies continue to decline significantly Nonperforming loans
Slide 24: Credit Quality - Commercial Leases
EF ST Balance 2469 3663 Credit Quality - Commercial Leases 4Q09 1Q10 2Q10 3Q10 4Q10 Average Loans 6489 6445 6245 6058 6012 Net Charge-offs Ratio 0.0202 0.0214 0.0141 0.0118 0.0112 Average Loans and Net Charge-offs Ratios Key Statistics Comments Net charge-offs declined slightly while early stage del
Slide 25: Credit Quality - Commercial Real Estate
Multi-Family Retail Res Construction Condo Construction A&D Commercial Office Other balance 1894 1086 1203 487 930 877 1350 Inv Owner balance 15545 11205 Credit Quality - Commercial Real Estate 4Q09 1Q10 2Q10 3Q10 4Q10 Avg Loans 34044 34151 34164 34190 34577 NCO Ratio 0.0203 0.0228 0.0267 0.024 0.02
Slide 26: Credit Quality - Residential Mortgage
4Q09 1Q10 2Q10 3Q10 4Q10 Restructured 1354 1560 1672 1747 1804 Credit Quality - Residential Mortgage 4Q09 1Q10 2Q10 3Q10 4Q10 Average Loans 25621 26408 26821 27890 29659 Net Charge-offs Ratio 0.0237 0.0223 0.0206 0.0188 0.0175 Average Loans and Net Charge-offs Ratios Key Statistics Comments Strong g
Slide 27: Credit Quality - Home Equity
Credit Quality - Home Equity 4Q09 1Q10 2Q10 3Q10 4Q10 Average Loans 19444 19402 19332 19289 19119 Net Charge-offs Ratio 0.0196 0.0188 0.0164 0.0162 0.0172 Average Loans and Net Charge-offs Ratios Key Statistics Comments Strong credit quality portfolio (weighted average FICO 746, weighted average CLT
Slide 28: Credit Quality - Credit Card
Traditional Consumer Finance Balance 15126 1277 4Q09 3Q10 4Q10 Average Loans 16,399 16,510 16,403 30-89 Delinquencies 2.38% 1.85% 1.60% 90+ Delinquencies 2.59% 2.09% 1.86% Nonperforming Loans 0.84% 1.21% 1.36% Credit Quality - Credit Card 4Q09 1Q10 2Q10 3Q10 4Q10 Average Loans 16399 16368 16329 1651
Slide 29: Credit Quality - Retail Leasing
Credit Quality - Retail Leasing 4Q09 1Q10 2Q10 3Q10 4Q10 Average Loans 4620 4509 4364 4289 4459 Net Charge-offs Ratio 0.0043 0.0045 0.0037 0.0019 0.0009 Average Loans and Net Charge-offs Ratios Key Statistics Comments Average loans increased during the quarter as demand for new auto leases increased
Slide 30: Credit Quality - Other Retail
Auto Install Student Revolving Balance 10823 5537 5104 3519 Credit Quality - Other Retail 4Q09 1Q10 2Q10 3Q10 4Q10 Average Loans 23037 23343 23357 24281 24983 Net Charge-offs Ratio 0.0191 0.0193 0.017 0.0165 0.0145 Average Loans and Net Charge-offs Ratios Key Statistics Comments Average balances inc
Slide 31: Foreclosures
4Q09 1Q10 2Q10 3Q10 4Q10 Foreclosure Starts - Insured/Serviced 7160 7632 7738 7778 7835 Foreclosure Starts - Portfolio 2413 2231 1659 1717 1757 Average per Day 154 162 147 148 152 Foreclosures Number of Foreclosure Starts Judicial Non Mix 63 37 Judicial 63% Non Judicial 37% Primary goal is to keep b
Slide 32: Non-Regulatory Capital Ratios
Non-Regulatory Capital Ratios $ in millions
Slide 33: U.S. Bancorp 4Q10 Earnings Conference Call
U.S. Bancorp 4Q10 Earnings Conference Call January 19, 2011