U.s. Bancorp · NYSE:USB
U.s. Bancorp — Q3 2023 Earnings Presentation
34 slides from U.s. Bancorp's earnings presentation, Oct 18, 2023
Slide 1: U.S. Bancorp 3Q23 Earnings Conference Call
U.S. Bancorp 3Q23 Earnings Conference Call October 18, 2023 Exhibit 99.2
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: 3Q23 Highlights
3Q23 Highlights Post-Acquisition Commitment Relief U.S. Bancorp will not be required to meet Category II requirements by December 31st, 2024 Accelerated CET1 accretion Driven by enhanced earnings generation and capital accretive initiatives Well maintained, strong balance sheet 3.0% linked quarter i
Slide 4: 3Q23 Highlights
3Q23 Highlights Income Statement Balance Sheet Credit Quality Capital 1 Non-GAAP; see appendix for calculations and description of notable items 2 Taxable-equivalent basis; see appendix for calculation 3 Common equity tier 1 capital to risk-weighted assets, reflecting Basel III standardized with 5 y
Slide 5: Performance Ratios
Performance Ratios Return on Average Assets Efficiency Ratio1 & Net Interest Margin2 Return on Average Common Equity Return on Tangible Common Equity1 1.07%1 1.04%1 14.6%1 13.7%1 22.3%1 21.0%1 63.7% 64.4% 1.24%1 16.2%1 21.4%1 57.5% 1 Non-GAAP; see appendix for calculations and description of notable
Slide 6: Sustainable Earnings Power
Sustainable Earnings Power As a % of Total Revenue1 Strong annualized fee income generated by our diversified business model supports our short- and long-term growth objectives Payment Services Three distinct business lines: Retail Payment Solutions, Global Merchant Acquiring and Corporate Payment S
Slide 7: Post Conversion Synergy Opportunities
~1.5x ~1.2x Post Conversion Synergy Opportunities Legacy capture rate of Consumer clients with a Credit Card compared to Union Bank Merger & Integration Costs: $1.1B Incurred to date ~$1.4B Total expected Opportunity across Union Bank’s loyal customer base to leverage our broad product set, distribu
Slide 8: Balance Sheet Summary
Balance Sheet Summary The strength and stability of our balance sheet enables us to withstand economic pressures while continuing to meet the needs of our customers Total Average Deposits ($B) Focused on efficient growth opportunities as we prudently allocate capital and focus on the strength of our
Slide 9: Investment Securities Portfolio
Investment Securities Portfolio Our balanced securities portfolio supports effective management of interest rate volatility AFS Portfolio Duration (Years) Duration continues to move lower Prudent management of our investment securities portfolio with emphasis on redeployment of runoff into short-ter
Slide 10: 3Q23 Earnings Summary - Detail
3Q23 Earnings Summary - Detail 1Taxable-equivalent basis 2 Non-GAAP; see appendix for calculations and description of notable items
Slide 11: Net Interest Income
Year-over-year performance impacted by rising rates and the acquisition of Union Bank Linked quarter decrease in net interest income and margin due to higher deposit pricing partially offset by the impact of higher rates on earning assets and balance sheet optimization Net Interest Income Net Intere
Slide 12: Noninterest Income
Year-over-year increase driven by higher payments service revenue, as well as trust and investment management fees, commercial products, mortgage banking, and other noninterest income. On a linked quarter basis, noninterest income increased due to higher other revenue. Noninterest Income $ in millio
Slide 13: Noninterest Expense
Noninterest Expense On a linked quarter basis, adjusted noninterest expense decrease driven by lower compensation expense offset by an increase in marketing and business development Merger and integration-related charges of $284M this quarter related to the Union Bank acquisition. Reported -0.9% Lin
Slide 14: Credit Quality
Change vs. 3Q23 Reported 2Q23 Adjusted1 2Q23 3Q22 Non-performing Assets Balance ($M) $1,310 $225 $225 $633 NPAs/Period-end Loans plus OREO 0.35% 6bps 6bps 15bps Net Charge-offs NCOs ($M) $420 ($229) $801 $258 NCOs/Avg Loans 0.44% (23bps) 9bps1 25bps Core Provision for Credit Losses Trending Reserve
Slide 15: Accelerated Capital Accretion
Accelerated Capital Accretion Ratios calculated in accordance with transitional regulatory requirements related to the current expected credit losses methodology CET1 capital ratio is 270 bps above our regulatory capital minimum 3rd Quarter Highlights Solid earnings accretion of ~20bps, net of capit
Slide 16: Fourth Quarter 2023 Outlook
1 All results and guidance are on an adjusted basis 2 Taxable-equivalent basis 3 Non-GAAP; see appendix for calculations and description of notable items Fourth Quarter 2023 Outlook1 Net interest income2 $13.4B $4.1B - $4.2B Total Revenue, adjusted3 $21.4B $6.8B - $6.9B Includes purchase accounting
Slide 17: Post-Acquisition Commitment Relief
Post-Acquisition Commitment Relief AOCI Treatment in CET1 Future RWA Optimization 100% inclusion No sooner than YE 2024 25% inclusion2 Beginning Q3 2025 Low-to-Moderate EPS Impact Low-to-Neutral EPS impact Full relief from Category II commitments 1 made in connection with Union Bank acquisition Now
Slide 18: Appendix
Appendix
Slide 19: Average Loans
Average Loans -3.1% linked quarter +11.9% year-over-year $ in billions On a year-over-year basis, average total loans grew due to growth in the legacy loan portfolio and from the Union Bank acquisition. On a linked quarter basis, average total loans decreased due to reduced commercial loans, commerc
Slide 20: Average Deposits
Average Deposits +3.0% linked quarter +12.2% year-over-year $ in billions On a year-over-year basis, average total deposits grew due to higher interest-bearing deposits, partially offset by decreasing noninterest-bearing deposits On a linked quarter basis, average total deposits grew due to higher i
Slide 21: Payment Services Fee Revenue Growth
Card fee revenue improved 5.4% YOY driven by sales growth and the Union Bank acquisition. Merchant processing fee revenue improved 5.2% YOY driven by sales growth. Corporate payments fee revenue increased 4.2% YOY driven by sales growth. Payment Services Fee Revenue Growth 1 Includes prepaid card 3Q
Slide 22: Payments Revenue Breakdown
Payments Revenue Breakdown Total payments revenue, which includes net interest income and fee revenue, accounted for 25% of 3Q23 net revenue Total payment fee revenue grew 5.1% year-over-year due to higher sales volumes across all businesses Seasonal Considerations A Shift to Tech-led3 Revenue Histo
Slide 23: Credit Quality – Commercial
Credit Quality – Commercial Key Statistics $ in millions3Q22 2Q23 3Q23 Average Loans$128,519 $138,085 $134,720 30-89 Delinquencies0.25% 0.25% 0.24% 90+ Delinquencies0.03% 0.04% 0.05% Nonperforming Loans0.09% 0.17% 0.19% Average Loans ($M) and Net Charge-offs Ratio 6.5% 3.4% 2.1% 1.8% (2.4%) Linked Q
Slide 24: Credit Quality – Commercial Real Estate
Credit Quality – Commercial Real Estate $ in millions 3Q22 2Q23 3Q23 Average Loans$40,010 $ 54,934$54,253 30-89 Delinquencies0.02% 0.13% 0.07% 90+ Delinquencies0.05% 0.00% 0.00% Nonperforming Loans0.41% 0.87% 1.33% Key Points Average Loans ($M) and Net Charge-offs Ratio Key Statistics Linked Quarter
Slide 25: Credit Quality – Residential Mortgage
1 Credit Quality – Residential Mortgage $ in millions 3Q222Q233Q23 Average Loans$84,018 $117,606$114,627 30-89 Delinquencies0.10%0.11% 0.11% 90+ Delinquencies0.10% 0.08% 0.11% Nonperforming Loans0.24%0.18%0.14% 4.7% 15.6% 19.8% 1.1% (2.5%) Key Points Average loans decreased by 2.5% on a linked quart
Slide 26: Credit Quality – Credit Card
Credit Quality – Credit Card $ in millions 3Q222Q233Q23 Average Loans$24,105 $26,046 $26,883 30-89 Delinquencies0.97% 1.15% 1.35% 90+ Delinquencies0.74%1.02% 1.17% Nonperforming Loans - %- %- % Key Points Average loans increased by 3.2% on a linked quarter basis Net charge-off rate of 3.25% and incr
Slide 27: Credit Quality – Other Retail
Credit Quality – Other Retail $ in millions 3Q222Q233Q23 Average Loans$60,126 $52,146$46,394 30-89 Delinquencies0.41%0.50% 0.56% 90+ Delinquencies0.11%0.12% 0.13% Nonperforming Loans0.22%0.27% 0.28% Key Points Average loans decreased by (11.0%) on a linked quarter basis primarily driven by 2Q23 bala
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures (1), (2) – see last page in appendix for corresponding notes
Slide 29: Non-GAAP Financial Measures
(2), (3) – see last page in appendix for corresponding notes Non-GAAP Financial Measures
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures (2) – see last page in appendix for corresponding notes
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures (1), (2), (3) – see last page in appendix for corresponding notes
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 33: Notes
Notes 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. Notable items for the three months ended September 30, 2023 included $284 million ($213 million net-of-tax) of merger and integration-relat
Slide 34: us bancorp.
us bancorp.