U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q4 2020 Earnings Presentation
33 slides from U.s. Bancorp's earnings presentation, Jan 20, 2021
Slide 1: U.S. Bancorp 4Q20 Earnings Conference Call
U.S. Bancorp 4Q20 Earnings Conference Call January 20, 2021 U . S. BAN C ORP
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: 4Q20 Highlights
4Q20 Highlights Income Statement change vs. Credit Quality change vs. $ in millions, except EPS 4Q20 3Q20 4Q19 $ in millions 4Q20 3Q20 4Q19 Net interest income* $3,201 (1.6) % (0.9) % Nonperforming assets $1,298 2.2 % 56.6 % Noninterest income 2,550 (6.0) 4.7 NPA ratio 0.44 % 3 bps 16 bps Reported n
Slide 4: Performance Ratios
Performance Ratios Return on Return on Return on Efficiency Ratio** & Average Assets Average Common Equity Tangible Common Equity** Net Interest Margin*** 1.44%* 14.1%* 60.3% 18.1%* 58.8% 56.6% 12.8% 16.6% 12.1% 15.6% 1.17% 55.4%* 1.10% 1.21% 11.8% 15.2% 2.92% 2.67% 2.57% 4Q19 3Q20 4Q20 4Q19 3Q20 4Q
Slide 5: Digital Engagement Trends
Digital Engagement Trends Transactions (% of Total) 77% 80% 70% 65% Digital Active Customers 60% (% of Total Active Customers)* 40% 35% 80% 77% 30% 73% 23% 71% 20% 0% 60% 57% Three months ended 52% 52% 51% 52% 11/30/18 11/30/19 11/30/20 47% Total Digital Branch, ATM, Phone and IVR 40% Loan Sales (%
Slide 6: Average Loans
Average Loans Change vs. (Three months ended 12/31/20) Avg. Balances 3Q20 4Q19 $311.0 $302.3 Commercial $106.4 (7.9) % 2.4 % $294.9 Commercial Real Estate 40.1 (2.0) 0.9 Residential Mortgages 76.8 1.3 9.9 Credit Card 21.9 (0.5) (9.0) Retail 57.1 0.5 (0.3) $294.9 $311.0 $302.3 Total loans $302.3 (2.8
Slide 7: Average Deposits
Average Deposits Interest-bearing Deposits Average Change vs. Change $422.4 (Three months ended 12/31/20) Balances 3Q20 4Q19 Rates vs. 3Q20 $405.5 Money market savings $127.4 2.6 % 9.2 % 0.17 % (0.05) % $356.5 Interest checking 91.4 8.2 20.9 0.03 (0.01) Savings accounts 55.7 4.2 18.7 0.03 (0.01) Tim
Slide 8: Credit Quality
Credit Quality Net Charge-offs Nonperforming Assets $515 $1,298 $1,270 $441 $385 NCO Ratio NPAs 0.66% 0.58% -8 bps QoQ $829 +2.2% QoQ 0.52% 0.44% +6 bps YoY 0.41% +56.6% YoY 0.28% 4Q19 3Q20 4Q20 4Q19 3Q20 4Q20 NCOs NCOs/Avg Loans NPAs NPAs/Period-end Loans plus OREO Provision for Credit Losses $1,30
Slide 9: Credit Risk Management – Consistent Underwriting
Credit Risk Management – Consistent Underwriting Disciplined Credit Underwriting, 4Q20 Allowance for Credit Losses by Loan Class, 4Q20 Loans and Leases Wtd Avg FICO/Bond Avg Amount Outstanding rating equivalent * LTV* ($B) (%) Residential mortgage 774 69% Commercial $2.4 2.4% Home equity 795 62% Com
Slide 10: Credit Risk Management – COVID-19 Impacted Industries
Credit Risk Management – COVID-19 Impacted Industries Commercial/Commercial Real Estate Exposures Payment Relief* by Impacted Industries*** As of 9/30/20 As of 12/31/20 As of 9/30/20 As of 12/31/20 Outstanding Segment Outstanding Segment Balances Loans Balances Loans Loans Commitments Loans Commitme
Slide 11: Earnings Summary
Earnings Summary Excluding Notable Items $ and shares in millions, except EPS Reported % Change Notable Items % Change 4Q20 3Q20 4Q19 vs. 3Q20 vs. 4Q19 4Q20 4Q19 vs. 4Q19 Net Interest Income $3,175 $3,227 $3,207 (1.6) (1.0) $- $- (1.0) Taxable-equivalent Adjustment 26 25 24 4.0 8.3 - - 8.3 Net Inter
Slide 12: Notable Items
Notable Items $ in millions, except per share 4Q20 4Q19 Visa derivative liability charge $- ($140) Total noninterest income - (140) Severance charges - 158 Other accruals and charges - 42 Total noninterest expense - 200 Income before taxes - (340) Tax expense (benefit) on notable items - (68) Net in
Slide 13: Net Interest Income
Net Interest Income $3,231 $3,252 $3,201 Linked Quarter • Net interest income decreased, primarily driven by a decline in average loan balances, higher premium amortization expense and lower yields on reinvestments in the investment portfolio, partially offset by the benefit of deposit and funding m
Slide 14: Noninterest Income
Noninterest Income $2,712 Linked Quarter $2,550 $2,436 • Payment services revenue decreased, driven by lower credit and debit card $553 revenue and lower merchant processing services revenue due to the timing of $244 $468 stimulus payments through prepaid card processing in the third quarter of 2020
Slide 15: Payment Services
Payment Services % of Merchant Acquiring Payment Fees as a % of Net Revenue Volume • Dip in 4Q20 Merchant Merchant Acquiring 2019 4Q20 2019 4Q20 services is driven by Travel & Hospitality * 22% 16% lockdowns and 7.0% 5.4% Airline 15% 4% restrictions in Europe 6.2% All Other 63% 80% 6.1% • Payments s
Slide 16: Noninterest Expense
Noninterest Expense Linked Quarter $3,401 $3,371 $3,364 • Compensation expense decreased, primarily due to lower business $291 $334 $362 incentives and employee benefits expense decreased, primarily due to $286 lower medical claims expense. $276 $269 $327 $244 $302 • Professional services expense in
Slide 17: Capital Position
Capital Position $ in billions 4Q20 3Q20 2Q20 1Q20 4Q19 Total U.S. Bancorp shareholders' equity $53.1 $52.6 $51.9 $51.5 $51.9 Basel III Standardized Approach* Common equity tier 1 capital ratio 9.7% 9.4% 9.0% 9.0% 9.1% Tier 1 capital ratio 11.3% 11.0% 10.6% 10.5% 10.7% Total risk-based capital ratio
Slide 18: Appendix
Appendix U . S. BAN C ORP | 18
Slide 19: Average Loans
Average Loans Average Loans ($bn) Key Points Year-over-Year Growth vs. 4Q19 • Average total loans increased by $7.4 billion, or 2.5% 3.9% 4.0% 10.0% 6.4% 2.5% • Average residential mortgage loans increased by $6.9 $318.1 $311.0 billion, or 9.9% $294.9 $297.7 $302.3 • Average commercial loans increas
Slide 20: Average Deposits
Average Deposits Average Deposits ($bn) Key Points Year-over-Year Growth vs. 4Q19 6.6% 8.2% 16.8% 15.9% 18.5% • Average total deposits increased by $405.5 $422.4 $66.0 billion, or 18.5% $403.3 $356.5 $362.8 • Average low-cost deposits (NIB, interest 30.1% 55.0% 46.6% checking, savings and money mark
Slide 21: Credit Quality – Commercial
Credit Quality – Commercial Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q19 3Q20 4Q20 Average Loans $103,911 $115,489 $106,421 0.2% 2.0% 20.8% (9.8%) (7.9%) 30-89 Delinquencies 0.30% 0.22% 0.31% $128,039 90+ Delinquencies 0.08% 0.06% 0.05% $115,489 Nonperf
Slide 22: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q19 3Q20 4Q20 Average Loans $39,722 $40,929 $40,098 1.9% 0.9% 2.5% (0.4%) (2.0%) 30-89 Delinquencies 0.09% 0.23% 0.47% 90+ Delinquencies 0.01% 0.00% 0.01% $39,722 $40,078 $
Slide 23: Credit Quality – Residential Mortgage
Credit Quality – Residential Mortgage Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q19 3Q20 4Q20 Average Loans $69,909 $75,786 $76,809 1.9% 1.4% 0.3% 6.6% 1.3% 30-89 Delinquencies 0.22% 0.31% 0.49% $75,786 $76,809 90+ Delinquencies 0.17% 0.15% 0.22% $69,909
Slide 24: Credit Quality – Credit Card
Credit Quality – Credit Card Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q19 3Q20 4Q20 Average Loans $24,107 $22,052 $21,937 1.8% (1.1%) (9.8%) 2.5% (0.5%) 30-89 Delinquencies 1.30% 0.94% 1.04% 90+ Delinquencies 1.23% 0.91% 0.88% $24,107 $23,836 $21,510 $2
Slide 25: Credit Quality – Home Equity
Credit Quality – Home Equity Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q19 3Q20 4Q20 Average Loans $15,221 $13,551 $12,816 (2.4%) (2.5%) (3.0%) (5.8%) (5.4%) 30-89 Delinquencies 0.51% 0.35% 0.55% 90+ Delinquencies 0.32% 0.37% 0.38% $15,221 $14,838 $14,38
Slide 26: Credit Quality – Retail Leasing
Credit Quality – Retail Leasing Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q19 3Q20 4Q20 0.5% (0.1%) (0.7%) 0.3% (1.6%) Average Loans $8,486 $8,438 $8,299 30-89 Delinquencies 0.53% 0.38% 0.43% $8,486 $8,474 $8,412 $8,438 $8,299 3.0% 90+ Delinquencies 0.05
Slide 27: Credit Quality – Other Retail
Credit Quality – Other Retail Average Loans ($mm) and Net Charge-offs Ratio Key Statistics Linked Quarter Growth $mm 4Q19 3Q20 4Q20 Average Loans $33,509 $34,773 $35,928 0.2% 0.1% 0.0% 3.6% 3.3% 30-89 Delinquencies 0.81% 0.51% 0.60% $35,928 90+ Delinquencies 0.13% 0.07% 0.10% $33,509 $33,552 $33,550
Slide 28: Credit Quality – Auto Loans
Credit Quality – Auto Loans Average Loans ($mm) and Net Charge-offs Ratio Key Statistics $mm 4Q19 3Q20 4Q20 Linked Quarter Growth Average Loans $19,434 $18,823 $19,390 0.0% (0.8%) (2.7%) 0.3% 3.0% 30-89 Delinquencies 1.06% 0.68% 0.83% 90+ Delinquencies 0.10% 0.05% 0.11% $19,434 $19,276 $18,758 $18,8
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures (Dollars in Millions, Unaudited) Three Months Ended December 31, September 30, December 31, 2020 2020 2019 Net interest income $3,175 $3,227 $3,207 Taxable-equivalent adjustment (4) 26 25 24 Net interest income, on a taxable-equivalent basis 3,201 3,252 3,231 Net interest
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended December 31, September 30, December 31, (Dollars in Millions, Unaudited) 2020 2020 2019 Net income applicable to U.S. Bancorp common shareholders $1,425 $1,494 $1,408 Intangibles amortization (net-of-tax) 37 35 35 Net income applicable to U.S. Bancorp c
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures December 31, September 30, June 30, March 31, December 31, (Dollars in Millions, Unaudited) 2020 2020 2020 2020 2019 Total equity $53,725 $53,195 $52,480 $52,162 $52,483 Preferred stock (5,983) (5,984) (5,984) (5,984) (5,984) Noncontrolling interests (630) (630) (630) (63
Slide 32: Notes
Notes (1) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements. (2) Includes the estimated increase in the allowance for credit losses related to the adoption of the current expected credit losses methodology net of deferred
Slide 33: U.S. Bancorp 4Q20 Earnings Conference Call
U.S. Bancorp 4Q20 Earnings Conference Call January 20, 2021 U . S. BAN C ORP