U.s. Bancorp · NYSE:USB
U.s. Bancorp — U.S. Bancorp Intellisight Investor Conference 2017
28 slides from U.s. Bancorp's conference presentation, Aug 22, 2017
Slide 1: U.S. Bancorp Intellisight Investor Presentation
U.S. Bancorp Intellisight Investor Presentation John Stern EVP, Treasurer August 22, 2017 U.S. BANCORP
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: Today’s presentation contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including
Slide 3: Agenda
Agenda U.S. Bank Overview Risk Management The Regulatory Environment Top Issues in the Banking Industry U.S. BANCORP | 3
Slide 4: U.S. Bancorp 2Q17 Dimensions
U.S. Bancorp 2Q17 Dimensions NYSE Traded USB Branches 3,088 Assets $464B Founded 1863 ATMs 4,826 Deposits $347B Market Value $88B Customers 18.7M Loans $277B As of 6/30/17, except market value as of 7/21/17 U.S. BANCORP | 4
Slide 5: Industry Position
Industry Position Assets Deposits Market Value U.S. U.S. U.S. Rank Company $ in billions Rank Company $ in billions Rank Company $ in billions 1 J.P. Morgan $2,563 1 J.P. Morgan $1,439 1 J.P. Morgan $323 2 Bank of America 2,255 2 Wells Fargo 1,306 2 Wells Fargo 269 3 Wells Fargo 1,931 3 Bank of Amer
Slide 6: Our Business Mix and Product Delivery
Our Business Mix and Product Delivery • Branch Banking, Small Business Banking, Consumer Lending, Mortgage Consumer & Small Banking and Omnichannel Delivery Business Banking • Provides a full suite of banking products and services to consumer and small business customers • Corporate Banking, Commerc
Slide 7: Revenue Diversification
Revenue Diversification Revenue Mix Diversification Advantages by Business Line Balanced mix of fee revenue and balance sheet businesses High return/capital efficient businesses: Payment Services • Payments 30% • Wealth Management Wealth Mgmt and Consistent, predictable, repeatable Securities
Slide 8: Agenda
Agenda U.S. Bank Overview Risk Management The Regulatory Environment Top Issues in the Banking Industry U.S. BANCORP | 8
Slide 9: Critical Bank Treasury Responsibilities
Critical Bank Treasury Responsibilities Asset / Optimize Issue Debt Liability Investment to Support Optimization Management Portfolio Loan Growth Board Rating Business Line Committee Agency Communication Partner Communication “Relationship Manager” Interest Rate Liquidity Capital Risk Risk Managemen
Slide 10: Industry Enhancements in Capital Management
Industry Enhancements in Capital Management Banking Sector Enhancements: • Comprehensive quantitative analysis of capital targets • Consideration of stress results into risk/limit structure • Capital largely defined as Common Equity Tier 1 • Three Lines of Defense central to appropriate challenge of
Slide 11: Industry Changes in Capital Management
Industry Changes in Capital Management Payout ratios declined significantly post-crisis, and have yet to return to pre-crisis levels Peer Median Payout Ratio 200% 410% 180% 390% 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2
Slide 12: Industry Changes in Capital Management
Industry Changes in Capital Management Quality and quantity within the capital stack has improved Peer Median Capital Composition Q1 2007 Q1 2017 1.0% 7.0% 8.0% 15.9% 8.1% 0.0% 76.0% 84.0% Sub Debt Trust Preferred Sub Debt Trust Preferred Preferred Equity Common Equity Preferred Equity Common Equity
Slide 13: U.S. Bank Capital Management
U.S. Bank Capital Management USB’s earnings distribution model has endured throughout the years 9.3%* Earnings Distribution Target: 8.5% Reinvest & Share Dividends 1.5% Internal Acquisitions Repurchases Buffer Capital 20 - 40% 30 - 40% 30 - 40% 2.5% Conservation Buffer Hypothetical Earnings Distribu
Slide 14: Industry Enhancements in Liquidity Management
Industry Enhancements in Liquidity Management Banking Sector Focus: • Robust liquidity stress scenarios • Quality and quantity of high-quality liquid assets dramatically increase • Additional data required to monitor liquidity profile in real time • Three Lines of Defense central to appropriate chal
Slide 15: Industry Changes in Liquidity Management
Industry Changes in Liquidity Management Since 2007, total on-balance sheet liquidity as a percentage of total assets has increased from 22% to 36%, largely driven by new regulatory requirements Peer Median On-Balance Sheet Liquidity as a % of Total Assets 40% 35% 30% 25% 20% 15% 2000Q1 2000Q3 2001Q
Slide 16: Industry Changes in Liquidity Management
Industry Changes in Liquidity Management Quality and quantity of liquidity has improved Peer Median Liquidity Composition Q1 2007 Q1 2017 1% 4% 18% 13% 83% 81% Fed Funds Sold & Rev. Repo Cash & Due From Securities Fed Funds Sold & Rev. Repo Cash & Due From Securities Total Liquidity Sources: $1.0T T
Slide 17: U.S. Bank's Integrated Liquidity Program
U.S. Bank’s Integrated Liquidity Program • Liquidity profile changes as the Company experiences more severe levels of liquidity stress • Stress scenarios are integrated with contingency funding plan, recovery plan and resolution plan – Early Warning Indicators provide cascading escalation – Triggers
Slide 18: Interest Rate Risk
Interest Rate Risk Current areas of focus: Deposit behavior post- Federal Reserve Balance Sheet prolonged low rate environment: • Deposit pricing (i.e. betas) • Balance outflow and rotation • Potential impact of Fed’s reduced balance sheet and rising interest rates Enhancements of behavioral modelin
Slide 19: Current Asset Sensitivity and Liquidity Position
Current Asset Sensitivity and Liquidity Position Net Interest Income Sensitivity Well-Balanced Liquidity Position Continued and steady asset sensitivity Reliable source of core deposits Diversified sources of liquidity • Excess cash and liquid assets 3.00% 2.69% • Wholesale funding sources • O
Slide 20: Agenda
Agenda U.S. Bank Overview Risk Management The Regulatory Environment Top Issues in the Banking Industry U.S. BANCORP | 20
Slide 21: Current Regulatory Environment
Current Regulatory Environment Current areas of focus: • Current environment is complex • Multiple new rules over the past decade have created new constraints • Structural changes within the Fed and OCC continue to drive headlines • More recently, open and productive dialogue is taking place U.S. BA
Slide 22: U.S. Bancorp's Position and Optimal Size
U.S. Bancorp’s Position and Optimal Size Assets Relative cost of compliance G-SIBs Sub-optimal efficiency and scale TLAC/Bail-in debt requirements Less capacity to invest Higher capital standards Enhanced supplementary leverage ratio Potential trapped capital Higher litigation risk
Slide 23: Agenda
Agenda U.S. Bank Overview Risk Management The Regulatory Environment Top Issues in the Banking Industry U.S. BANCORP | 23
Slide 24: Top Issues in the Banking Industry
Top Issues in the Banking Industry The future of branches Cybersecurity • Omnichannel, digital, mobile Amazon effect Government policies • Expectations, competition, • Lending, taxes, regulation demographics Payments Innovation • P2P, B2C, C2B, B2B • The role of Fintech U.S. BANCORP | 24
Slide 25: Appendix
Appendix ws U.S. BANCORP | 25
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures June 30, (Dollars in Millions, Unaudited) 2017 Total equity $48,949 Preferred stock (5,419) Noncontrolling interests (629) Goodwill (net of deferred tax liability) (1) (8,181) Intangible assets, other than mortgage servicing rights (634) Tangible common equity 34,086 Tang
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures ($ in millions) Net Revenue Line of Business Financial Performance 2Q17 YTD Wholesale Banking and Commercial Real Estate $ 1,669 Consumer and Small Business Banking 3,685 Wealth Management and Securities Services 1,177 Payment Services 2,855 Treasury and Corporate Support
Slide 28: U.S. Bancorp Intellisight Investor Presentation
U.S. Bancorp Intellisight Investor Presentation August 22, 2017 U.S. BANCORP
U.S. Bancorp — U.S. Bancorp Intellisight Investor Conference 2017 on 6ix