U.s. Bancorp · NYSE:USB
U.s. Bancorp — Bank of America Merrill Lynch 2010 Banking & Financial Services Conference
38 slides from U.s. Bancorp's conference presentation, Nov 16, 2010
Slide 1: Bank of America Merrill Lynch 2010 Banking & Financial Services Conference
Richard K. Davis Chairman, President and CEO November 16, 2010 Bank of America Merrill Lynch 2010 Banking & Financial Services Conference
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: Overview and Financial Performance
U.S. Bancorp Overview and Financial Performance Growth Initiatives Corporate Trust Financial Institutions Current Environment
Slide 4: U.S. Bancorp Businesses
U.S. Bancorp Businesses International Payments Regional Consumer & Business Banking & Wealth Management National Wholesale Banking & Trust Services 3Q10 Dimensions Asset Size $291 billion Deposits $187 billion Loans $195 billion Customers 17.2 million NYSE Traded USB Market Capitalization* $47 billi
Slide 5: Performance Metrics
Performance Metrics Source: company reports Peer Banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI, USB and WFC Peer USB USB Median Rank Return on Common Equity 12.3% 4.0% 1 Return on Assets 1.11% 0.50% 2 Efficiency Ratio 51.1% 62.3% 1 Net Interest Margin 3.90% 3.49% 4 3Q10 YTD
Slide 6: Performance vs Peers
Performance vs Peers Source: SNL, 1Q08 through 3Q10 annualized Peer banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI, USB and WFC Since 1/1/08 USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 ROA 0.0103 0.0096 0.0086 0.0075 0.0056 0.0015 USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 P
Slide 7: Diversification
Diversification 3Q10 YTD, taxable-equivalent basis Excluding securities gains (losses) net Consumer Wholesale PCTAM Payments Treas & Corp Support Revenue 44 20 9 27 0 Revenue Mix By Business Line Revenue Mix By Category Net Interest Income Payments Fiduciary Service Charges Mortgage Trading, Brokera
Slide 8: Record Revenue 3Q10
Taxable-equivalent basis Revenue Growth Year-Over-Year Growth 25.8% 20.8% 11.3% 8.7% 7.9% $ in millions 3Q09 4Q09 1Q10 2Q10 3Q10 Reported 4250 4376 4321 4519 4587 USB Record Revenue 3Q10
Slide 9: Loan and Deposit Growth
3Q09 4Q09 1Q10 2Q10 3Q10 Loans 182 191.6 192.9 191.2 192.5 Deposits 166.4 180.9 182.5 183.3 182.7 Loan and Deposit Growth Average Balances Year-Over-Year Growth 3Q10 Acquisition Adjusted Loan Growth = (0.4%) Deposit Growth = 2.7% 8.2% $191.6 3.9% $192.9 4.0% $191.2 5.8% $192.5 9.3% $182.0 25.2% $180
Slide 10: Loan Growth
Loan Growth Average loans; loan growth 3Q10 vs. 3Q09 adjusted for acquisitions Acquisition adjustments: USB - FBOP acquisition, BBT - Colonial acquisition, BAC & JPM - credit card securitizations USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Loan Growth 0.007 0.003 0.001 -0.005
Slide 11: Capital Position
Capital Position 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 TARP 0 0 0 0 24.4 25.3 0 0 0 0 0 0 Tier 1 Capital Ratio 0.083 0.086 0.085 0.085 0.106 0.109 0.094 0.095 0.096 0.099 0.101 0.103 Tier 1 Common Ratio 0.056 0.057 0.056 0.057 0.051 0.054 0.067 0.068 0.068 0.071 0.074 0.076 Tie
Slide 12: Credit Quality
3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 NPA $ Change 76 49 155 290 357 489 727 626 386 184 91 -261 -171 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 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 NCO $ Change 8 26 68 103 1
Slide 13: Credit Quality
Credit Quality Peer Banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI, USB and WFC NPA Ratio equals nonperforming assets as a % of the sum of gross loans and foreclosed assets USB NPA ratio excludes Covered Assets (subject to loss sharing agreements with FDIC) 3Q09 4Q09 1Q10 2Q10 3Q10 Charge-off Ratio 0
Slide 14: Credit Quality - Outlook
Credit Quality - Outlook Reached inflection point on credit losses and NPAs; driven by declines in delinquencies and criticized assets The Company expects the level of Net Charge-offs and Nonperforming Assets, excluding covered assets, to trend lower during 4Q10 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q
Slide 15: Growth Initiatives
U.S. Bancorp Overview and Financial Performance Growth Initiatives Corporate Trust Financial Institutions Current Environment
Slide 16: Building on our Strengths...
Building on our Strengths... Expense Driven Conservative Credit Culture Efficient Operating Model Strong Capital Generation Fortress Balance Sheet Diversification of Risk Low Revenue Volatility Strong Defense (2001 - 2006)
Slide 17: Continuing to Invest...
Continuing to Invest... Flight-to-Quality Expense Driven Conservative Credit Culture Efficient Operating Model Strong Capital Generation Fortress Balance Sheet Diversification of Risk Low Revenue Volatility Conservative Credit Culture Efficient Operating Model Strong Capital Generation Fortress Bala
Slide 18: Positioned to Win
Positioned to Win Flight-to-Quality Expense Driven Organic Market Share Gain Conservative Credit Culture Efficient Operating Model Strong Capital Generation Fortress Balance Sheet Diversification of Risk Low Revenue Volatility Conservative Credit Culture Efficient Operating Model Strong Capital Gene
Slide 19: Corporate Trust
U.S. Bancorp Overview and Financial Performance Growth Initiatives Corporate Trust Financial Institutions Current Environment
Slide 20: Corporate Trust Revenue
Corporate Trust 1 2 4 5 Revenue 54.06 37.14 5 4 Trustee Paying Agent Escrow Agent Document Custody 2011 revenue forecast Revenue by Business Segment Successful Growth Through Acquisition Municipal, Corporate & Escrow 54% Structured 37% Document Custody Services 5% Default 4% Bank of America (Global
Slide 21: Corporate Trust - Transaction Summary
Corporate Trust - Transaction Summary Acquisition of Bank of America's U.S and European CDO, CMBS, RMBS and ABS Securitization Trust Administration Business Solidifies U.S. Bank as a top tier provider of corporate trust services Adds revenues of more than $100 million and deposits of more than $10 b
Slide 22: Corporate Trust - Strategic Rationale
Corporate Trust - Strategic Rationale Opportunity to increase U.S. structured finance trust business pro-forma market share ranking to #1 Strong complement to existing U.S. Bank Corporate Trust business Cost take-outs result from leveraging existing platforms and scale As capital markets strengthen,
Slide 23: Corporate Trust - Role of the Trustee
Servicer role and responsibilities Collect payments on the loans and maintain loan level detail for the investors Enforce the terms of each mortgage loan, including declaring default and foreclosing on the property, and can modify terms within limitations specified by the transaction documents Trust
Slide 24: Financial Institutions
U.S. Bancorp Overview and Financial Performance Growth Initiatives Corporate Trust Financial Institutions Current Environment
Slide 25: Financial Institutions
Financial Institutions Key partner to 3,300+ U.S. financial institutions Including banks, thrifts and credit unions Assets from $1 million to $1+ trillion Value proposition is resonating with partners and clients: Maximize profits Mitigate risk Achieve full business potential Deeper product penetrat
Slide 26: Financial Institutions Solutions
Financial Institutions Payment Solutions ATM Processing and ATM Servicing MoneyPass Network Debit and Prepaid Card Solutions Credit Card Services and Acquisitions Merchant Servicing and Acquisitions Wealth Management and Securities Services Solutions Institutional Trust & Custody Corporate Trust Ser
Slide 27: Current Environment
U.S. Bancorp Overview and Financial Performance Growth Initiatives Corporate Trust Financial Institutions Current Environment
Slide 28: Foreclosures
3Q09 4Q09 1Q10 2Q10 3Q10 Foreclosure Starts - Insured/Serviced 6615 7160 7632 7738 7778 Foreclosure Starts - Portfolio 2673 2413 2231 1659 1717 Average per Day 143 154 162 147 148 Foreclosures Number of Foreclosure Starts Investor Owner Mix 15185 10823 Judicial 62% Non Judicial 38% Primary goal is t
Slide 29: Mortgage Repurchase
Mortgage Repurchase Mortgages Repurchased and Make-whole Payments Mortgage Representation and Warranties Reserve $ in millions 3Q10 2Q10 1Q10 4Q09 3Q09 Beginning Reserve $101 $73 $72 $52 $40 Net Realized Losses (24) (20) (22) (6) (3) Additions to Reserve 70 48 23 26 15 Ending Reserve $147 $101 $73 $
Slide 30: Regulatory Environment
Regulatory Environment Existing regulatory oversight actions YTD 4Q10 Annual Actual Estimate Run Rate Overdraft Legislation ^ $140 ^ $110 - $120 ^ $440 - $480 Pricing and Policy Changes Card Act ^ $100 ^ $60 - $80 ^ $250 Net Interest Margin and Fee Income $ in millions, estimated reduction to revenu
Slide 31: Basel III - Capital
Basel III - Capital Capital Impact of limits for mortgage servicing rights, deferred tax assets and investments in financial institutions = $0 Impact of pension liability, purchased credit card relationship intangibles and all other = 38 bp Impact of non-core capital elements (-135 bp) net of replac
Slide 32: Basel III - Liquidity
Basel III - Liquidity Liquidity Liquidity Coverage Ratio (LCR) may require replacing off-balance sheet liquidity with on-balance sheet liquidity Expect transition to on-balance sheet liquidity to result in moderate increase in average investment portfolio in 2011 vs. 2010 No impact to risk-weighted
Slide 33: U.S. Bancorp Capital Management
U.S. Bancorp Capital Management USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 ROA 0.22 0.18 0.16 0.13 0.1 0.03 0 0 0 0 Strong capital generation and less shareholder dilution over the current cycle Historically enjoyed high payout ratio Goal to resume normal capital management -
Slide 34: 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 35: Bank of America Merrill Lynch 2010 Banking & Financial Services Conference
Richard K. Davis Chairman, President and CEO November 16, 2010 Bank of America Merrill Lynch 2010 Banking & Financial Services Conference
Slide 36: Appendix
Appendix (Sbancorp.
Slide 37: Non-Regulatory Capital Ratios
Non-Regulatory Capital Ratios $ in millions
Slide 38: Richard K. Davis Chairman, President and CEO November 16, 10 Bank of America Merrill
Richard K. Davis Chairman, President and CEO November 16, 2010 Bank of America Merrill Lynch 2010 Banking & Financial Services Conference
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