U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q1 2023 Earnings Presentation
32 slides from U.s. Bancorp's earnings presentation, Apr 19, 2023
Slide 1: U.S. Bancorp 1Q23 Earnings Conference Call
April 19, 2023 U.S. Bancorp 1Q23 Earnings Conference Call U.S. Bank U.S. Bank 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: 1Q23 Highlights
1Q23 Highlights Earnings Per Share • Solid financial performance › Continuing to generate sustainable earnings through our highly Reported $1.04 diversified business mix and scale Adjusted $1.161,2 • Well‐managed, strong balance sheet › Able to withstand economic pressures to meet customer and share
Slide 4: 1Q23 Highlights
1Q23 Highlights Income Statement Adjusted Credit Quality 1,2 change vs. Change vs. Reported Adjusted 1,2 $ in millions, except EPS 1Q23 1Q23 4Q22 1Q22 $ in millions 1Q23 4Q22 1Q22 3 Net interest income $4,668 $4,668 7.9 % 45.9 % Nonperforming assets $1,181 16.2 % 45.6 % Noninterest income 2,507 2,50
Slide 5: Performance Ratios
Performance Ratios Return on Return on Return on Efficiency Ratio1 & Average Assets Average Common Equity Tangible Common Equity1 Net Interest Margin2 63.3% 63.2% 62.8% 16.8%3 15.7%3 24.3%3 23.4%3 58.4%3 59.8%3 1.20%3 1.09% 1.15%3 12.7% 14.1% 22.0% 16.6% 1.03% 3.10% 8.0% 3.01% 0.59% 11.5% 2.44% 1Q22
Slide 6: Union Bank Conversion – Update
Union Bank Conversion – Update We remain on track for the Union Bank conversion over Memorial Day weekend Year End 2022 New consumer mortgage, business lending and commercial lending customers offered branded products May 1, 2023 Union Bank mortgage accounts transition to U.S. Bank May 27-30, 2023 T
Slide 7: Strength and Stability of U.S. Bank
Strength and Stability of U.S. Bank The strength and stability of U.S. Bank is showcased by our highly diverse mix of businesses, strong risk management capabilities, and “through-the- cycle” earnings power Quality of Robust Liquidity Strong Capital Superior Credit Deposits Profile Base Quality Resi
Slide 8: Deposit Summary
Deposit Summary Our granular and diverse deposit base remains a stable source of funding 1Q23 trends were in line with expectations Deposit Balance Walk ($B) Quarter Highlights $525 3.2% $508 0.6% $505 Key drivers of deposit balance decline: • Seasonal outflow early in the quarter (~1.7%) • Union Ba
Slide 9: Deposit Summary – Detailed Composition
Deposit Summary – Detailed Composition Deposit composition is highly diversified with limited concentration and significant levels of operational deposits Deposits by Business Line1 Insured vs. Uninsured Deposits2 Total Deposit Base Uninsured Composition 16% Institutional Services 33% 20% Non-Operat
Slide 10: Robust Liquidity Profile
Robust Liquidity Profile Resilient liquidity profile allows for numerous alternative funding sources $315B Total Available Liquidity Exceeds Uninsured Deposits1 $167 126% Liquidity Coverage Ratio2 (LCR) $44 122% $46 $58 Strong Debt Ratings3 Total Available Liquidity Moody's S&P4 Fitch DBRS as of 3/3
Slide 11: Investment Securities Composition
Investment Securities Composition Our balanced investment securities portfolio gives us flexibility to manage interest rate volatility Investment Securities Portfolio Investment Securities Portfolio End of Period Balance ($B) Composition Duration continues to move lower $163 $170 2.4% $161 6.5% Agen
Slide 12: Capital Management
Capital Management Following our acquisition of Union Bank in 4Q22, we expect to accrete capital back quickly through earnings; Currently operating at our target capital policy level of 150 basis points above the regulatory minimum CET1 Ratio1,2 Impact of Union Capital Stack Total Risk Based Bank ac
Slide 13: Prudent Loan Growth
Prudent Loan Growth Disciplined loan growth focused on high margin / high return business that exceeds our cost of capital; Low concentration in CRE office space Total Loan Portfolio Mix Loans by Lending Segment Ending % of Ending Change vs. CRE Loans by Property Type 1Q23 Balance Total 4Q22 1Q22 Co
Slide 14: Credit Quality
Credit Quality Net Charge-off and Annual Net Charge-off Rates2 Nonperforming Assets Change vs. Adjusted1 Strong credit performance Reported Adjusted1 during severe recession 4Q22 1Q22 1Q23 1Q23 3.0% USB through Net Charge-offs 2.5% the cycle average 2.0% NCO Rate NCOs ($M) $373 $282 $72 $120 1.5% NC
Slide 15: 1Q23 Earnings Summary - Detail
1Q23 Earnings Summary - Detail Excluding Excluding Notable Notable Items1 Items1 Reported % Change Notable Items1 % Change % Change $ in millions, except EPS 1Q23 4Q22 1Q22 vs. 4Q22 vs. 1Q22 1Q23 4Q22 vs. 4Q22 vs. 1Q22 Net Interest Income $4,634 $4,293 $3,173 7.9 % 46.0 % $ ‐ $ ‐ 7.9 % 46.0 % Taxabl
Slide 16: Net Revenue
Net Revenue 1Q23 4Q22 1Q22 Net Interest Income $4,668 $4,325 $3,200 Payments $936 $947 $859 Service Charges $324 $314 $333 Mortgage $128 $104 $200 Trust & Inv Mgmt $590 $571 $500 All Other $529 $506 $504 1 Noninterest Income, Adjusted $2,507 $2,442 $2,396 1 Total Revenue, Adjusted $7,175 $6,767 $5,5
Slide 17: Noninterest Expense
Noninterest Expense 1Q23 4Q22 1Q22 Compensation & Benefits $2,646 $2,402 $2,249 Technology & Communications $503 $459 $421 Occupancy & Equipment $321 $290 $269 Professional Services, Marketing/Business Development $256 $317 $194 All Other $585 $485 $369 1 Total Noninterest Expense, Adjusted $4,311 $
Slide 18: Second Quarter / Full Year 2023 Outlook
Second Quarter / Full Year 2023 Outlook1 Updated Guidance 1Q23 2Q23 FY 2023 Average Earnings Assets $607.6b $600b - $605b $600b - $610b Net interest margin2 3.10% ~3.00% 3.00-3.05% Total Revenue $7.2b $7.1b - $7.3b $28.5b - $30.5b Includes purchase accounting $104m ~$85m ~$350m accretion Total Nonin
Slide 19: Appendix
Appendix U.S. Bank 19
Slide 20: Payment Services Fee Revenue Growth
Payment Services Fee Revenue Growth 1Q23 vs. prior year Card Revenue1 20.0% 18.0% Card revenue improved 6.5% YoY driven by sales 15.0% growth and partially offset by lower prepaid 10.0% activity. 6.5% 5.0% 0.6%0.8% 0.5% Merchant processing fee revenue increased 6.6% 0.0% YoY driven by sales grow
Slide 21: Payment Services
Payment Services Payments Revenue Breakdown Seasonal Considerations A Shift to Tech-led3 Revenue Payment Fees as a % of Historical Linked Quarter Seasonal Our multiyear investments in e- Net Revenue (1Q23) Trends for Payment Fees Revenue2 commerce and tech-led will continue to drive growth Segment 1
Slide 22: Credit Quality – Commercial
Credit Quality – Commercial Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth(a) $ in millions 1Q22 4Q22 1Q23 Average Loans $112,822 $132,918 $135,683 8.0% 6.9% 6.5% 3.4 % 2.1% 30-89 Delinquencies 0.20% 0.26% 0.33% $132,918 $135,683 90+ Delinquencies 0.06% 0.07% 0.05
Slide 23: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth(a) $ in millions 1Q22 4Q22 1Q23 Average Loans $39,084 $ 45,722 $55,595 0.6% 1.1% 1.2% 14.3% 21.6% 30-89 Delinquencies 0.22% 0.16% 0.13% $55,595 90+ Delinquencies 0.00% 0.01% 0.0
Slide 24: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth(a) $ in millions 1Q22 4Q22 1Q23 Average Loans $77,449 $97,092 $116,287 2.1% 3.6% 4.7% 15.6% 19.8% 30-89 Delinquencies 0.13% 0.17% 0.13% $116,287 90+ Delinquencies 0.18% 0.08% 0.08
Slide 25: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth(a) $ in millions 1Q22 4Q22 1Q23 (2.5%) 4.1% 6.0% 4.4% 1.6% Average Loans $21,842 $25,173 $25,569 30-89 Delinquencies 0.88% 1.08% 1.10% 90+ Delinquencies 0.74% 0.88% 1.00% $25,173 $25,569 $
Slide 26: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth(a) $ in millions 1Q22 4Q22 1Q23 1.0% (1.2%) (1.5%) (2.0%) (9.0%) Average Loans $61,769 $58,906 $53,316 30-89 Delinquencies 0.38% 0.56% 0.48% $61,769 $61,037 $60,126 $58,906 90+ Delinquenc
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures (Dollars in Millions, Unaudited) Three Months Ended March 31, December 31, March 31, 2023 2022 2022 Net interest income $4,634 $4,293 $3,173 Taxable‐equivalent adjustment (1) 34 32 27 Net interest income, on a taxable‐equivalent basis 4,668 4,325 3,200 Net interest income
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended March 31, December 31, March 31, (Dollars in Millions, Unaudited) 2023 2022 2022 Net income applicable to U.S. Bancorp common shareholders $1,592 $853 $1,466 Intangibles amortization (net‐of‐tax) 126 67 37 Net income applicable to U.S. Bancorp common sh
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended March 31, December 31, (Dollars in Millions, Unaudited) 2023 2022 Net charge‐offs $373 $578 Less: Notable items (2) 91 368 Net charge‐offs, excluding notable items 282 210 Annualized net charge‐offs, excluding notable items (a) 1,144 833 Average loan ba
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures March 31, (Dollars and Shares in Millions Except Per Share Data, Unaudited) 2023 Income before taxes $2,159 Taxable‐equivalent adjustment (1) 34 Less: Notable items (2) (244) Income before taxes (taxable‐equivalent basis), excluding notable items (a) 2,437 Income taxes $4
Slide 31: 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 March 31, 2023 included $183 million (net-of-tax) of merger and integration charges and $9
Slide 32: U.S. Bank
U.S. Bank 32