 U.S. Bancorp 4Q11 Earnings Conference Call U.S. Bancorp 4Q11 Earnings Conference Call January 18, 2012 Richard K. Davis Chairman, President and CEO Andy Cecere Vice Chairman and CFO |
 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 statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date made. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of U.S. Bancorp. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. Global and domestic economies could fail to recover from the recent economic downturn or could experience another severe contraction, which could adversely affect U.S. Bancorp’s revenues and the values of its assets and liabilities. Global financial markets could experience a recurrence of significant turbulence, which could reduce the availability of funding to certain financial institutions and lead to a tightening of credit, a reduction of business activity, and increased market volatility. Continued stress in the commercial real estate markets, as well as a delay or failure of recovery in the residential real estate markets, could cause additional credit losses and deterioration in asset values. In addition, U.S. Bancorp’s business and financial performance is likely to be negatively impacted by effects of recently enacted and future legislation and regulation. U.S. Bancorp’s results could also be adversely affected by continued deterioration in general business and economic conditions; changes in interest rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of securities held in its investment securities portfolio; legal and regulatory developments; increased competition from both banks and non-banks; changes in customer behavior and preferences; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, residual value risk, market risk, operational risk, interest rate risk and liquidity risk. For discussion of these and other risks that may cause actual results to differ from expectations, refer to U.S. Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2010, on file with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Corporate Risk Profile” contained in Exhibit 13, and all subsequent filings with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. Forward-looking statements speak only as of the date they are made, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events. This presentation includes non-GAAP financial measures to describe U.S. Bancorp’s performance. The reconciliations of those measures to GAAP measures are provided within or in the appendix of the presentation. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. |
 3 4Q11 Earnings Conference Call 4Q11 Highlights Net income of $1.4 billion; $0.69 per diluted common share Results included two notable items; net, items added $0.05 per diluted common share • $263 million merchant settlement gain • $130 million expense accrual related to mortgage servicing matters Record total net revenue of $5.1 billion, up 8.1% vs. 4Q10 (4.7% excluding notable items) • Net interest income growth of 7.0% vs. 4Q10 • Noninterest income growth of 9.4% vs. 4Q10 Average loan growth of 5.9% (5.5% excluding acquisitions) vs. 4Q10 and average loan growth of 2.4% vs. 3Q11 Strong average deposit growth of 17.3% (11.7% excluding acquisitions) vs. 4Q10 and average deposit growth of 3.7% vs. 3Q11 Net charge-offs declined 7.0% vs. 3Q11 and nonperforming assets (excluding covered assets) declined 15.2% vs. 3Q11 Capital generation continues to strengthen capital position • Tier 1 common equity ratio of 8.6% (8.2% under anticipated Basel III guidelines) • Tier 1 capital ratio of 10.8% • Repurchased 6 million shares of common stock during 4Q11 |
 4 4Q11 Earnings Conference Call 2011 Full Year Highlights Record net income of $4.9 billion; $2.46 per diluted common share Record total net revenue of $19.1 billion, up 5.3% vs. 2010 • Net interest income growth of 5.7% vs. 2010 • Noninterest income growth of 4.8% vs. 2010 Average loan growth of 4.4% (3.9% excluding acquisitions) vs. 2010 Strong average deposit growth of 15.4% (10.6% excluding acquisitions) vs. 2010 Net charge-offs declined 32.0% vs. 2010 and nonperforming assets (excluding covered assets) declined 23.2% vs. 2010 Capital generation continues to strengthen capital position • Tier 1 common equity ratio of 8.6% vs. 7.8% in 2010 • Repurchased 22 million shares of common stock during 2010 |
 5 4Q11 Earnings Conference Call Performance Ratios 16.8% 16.1% 15.9% 14.5% 13.7% 1.62% 1.57% 1.54% 1.38% 1.31% 0% 5% 10% 15% 20% 4Q10 1Q11 2Q11 3Q11 4Q11 0% 1% 2% 3% 4% 52.7% 51.5% 51.6% 51.1% 52.5% 3.60% 3.65% 3.67% 3.69% 3.83% 30% 40% 50% 60% 70% 4Q10 1Q11 2Q11 3Q11 4Q11 1% 2% 3% 4% 5% ROCE and ROA Efficiency Ratio and Net Interest Margin Return on Avg Common Equity Return on Avg Assets Efficiency Ratio Net Interest Margin Efficiency ratio computed as noninterest expense divided by the sum of net interest income on a taxable-equivalent basis and noninterest income excluding securities gains (losses) net |
 6 4Q11 Earnings Conference Call 4Q11 3Q11 2Q11 1Q11 4Q10 Shareholders' equity 34.0 $ 33.2 $ 32.5 $ 30.5 $ 29.5 $ Tier 1 capital 29.2 28.1 27.8 26.8 25.9 Total risk-based capital 36.1 35.4 35.1 34.2 33.0 Tier 1 common equity ratio 8.6% 8.5% 8.4% 8.2% 7.8% Tier 1 capital ratio 10.8% 10.8% 11.0% 10.8% 10.5% Total risk-based capital ratio 13.3% 13.5% 13.9% 13.8% 13.3% Leverage ratio 9.1% 9.0% 9.2% 9.0% 9.1% Tangible common equity ratio 6.6% 6.6% 6.5% 6.3% 6.0% percent of risk-weighted assets 8.1% 8.1% 8.0% 7.6% 7.2% Tier 1 common equity ratio 8.2% 8.2% 8.1% 7.7% 7.3% using anticipated Basel III definition Capital Position $ in billions |
 7 4Q11 Earnings Conference Call 150 170 190 210 230 4Q10 1Q11 2Q11 3Q11 4Q11 Loans Deposits Loan and Deposit Growth Average Balances Year-Over-Year Growth 4Q11 Acquisition Adjusted Loan Growth = 5.5% Deposit Growth = 11.7% 2.4% $197.6 4.0% $198.8 5.0% $202.2 5.9% $207.0 2.0% $195.5 11.9% $204.3 14.2% $209.4 17.9% $215.4 17.3% $223.3 5.2% $190.3 $ in billions |
 8 4Q11 Earnings Conference Call Taxable-equivalent basis Revenue Growth Year-Over-Year Growth 7.9% 4.6% 3.8% 4.5% 8.1% $ in millions 4,721 4,519 4,690 4,795 5,104 3,500 4,000 4,500 5,000 5,500 4Q10 1Q11 2Q11 3Q11 4Q11 USB Record Revenue 4Q11 |
 9 4Q11 Earnings Conference Call Credit Quality -15% -7% -6% 22% 34% 31% 33% 37% 23% 12% 5% 2% -7% -5% -6% -5% -800 -400 0 400 800 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 -40% -20% 0% 20% 40% -7% -10% -7% -14% -6% -11% -2% 2% 7% 12% 18% 25% 27% 26% 35% 30% -160 -80 0 80 160 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 -40% -20% 0% 20% 40% $ in millions, linked quarter change * Excluding Covered Assets (assets subject to loss sharing agreements with FDIC), 1Q11 change in NPAs excludes FCB acquisition ($287 million) Change in Net Charge-offs Change in Nonperforming Assets* NCO $ Change (Left Scale) NCO % Change (Right Scale) NPA $ Change (Left Scale) NPA % Change (Right Scale) 103 68 (21) 25 69 112 141 156 134 102 155 290 91 184 386 626 727 489 357 (261) (119) (171) (58) (212) (132) (159) (78) (217) (58) (226) (47) (462) |
 10 4Q11 Earnings Conference Call Credit Quality - Outlook The Company expects the level of Net Charge-offs to trend modestly lower and Nonperforming Assets to trend lower during 1Q12 -8% -9% -1% -11% -8% -6% 18% 23% 16% 36% 28% 0% 6% 0% -1% -16% -40.0% -20.0% 0.0% 20.0% 40.0% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Delinquencies* Changes in Criticized Assets* * Excluding Covered Assets (assets subject to loss sharing agreements with FDIC) 1Q11 change in criticized assets excludes FCB acquisition 0.73% 0.69% 1.06%1.04% 1.18% 1.62% 1.70% 1.45% 1.44% 1.48% 1.34% 1.11% 1.00% 1.04% 0.84% 0.72% 0.43% 0.43% 0.43% 0.41% 0.46% 0.56% 0.68% 0.72% 0.78% 0.88% 0.78% 0.72% 0.66% 0.61% 0.52% 0.44% 0.0% 0.5% 1.0% 1.5% 2.0% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 30 to 89 days 90+ days |
 11 4Q11 Earnings Conference Call FY FY 4Q11 3Q11 4Q10 vs 3Q11 vs 4Q10 2011 2010 % B/(W) Net Interest Income 2,673 $ 2,624 $ 2,499 $ 1.9 7.0 10,348 $ 9,788 $ 5.7 Noninterest Income 2,431 2,171 2,222 12.0 9.4 8,760 8,360 4.8 Total Revenue 5,104 4,795 4,721 6.4 8.1 19,108 18,148 5.3 Noninterest Expense 2,696 2,476 2,485 (8.9) (8.5) 9,911 9,383 (5.6) Operating Income 2,408 2,319 2,236 3.8 7.7 9,197 8,765 4.9 Net Charge-offs 622 669 937 7.0 33.6 2,843 4,181 32.0 Excess Provision (125) (150) (25) -- -- (500) 175 -- Income before Taxes 1,911 1,800 1,324 6.2 44.3 6,854 4,409 55.5 Applicable Income Taxes 583 548 368 (6.4) (58.4) 2,066 1,144 (80.6) Noncontrolling Interests 22 21 18 4.8 22.2 84 52 61.5 Net Income 1,350 1,273 974 6.0 38.6 4,872 3,317 46.9 Preferred Dividends/Other 36 36 23 - (56.5) 151 (15) -- NI to Common 1,314 $ 1,237 $ 951 $ 6.2 38.2 4,721 $ 3,332 $ 41.7 Diluted EPS 0.69 $ 0.64 $ 0.49 $ 7.8 40.8 2.46 $ 1.73 $ 42.2 Average Diluted Shares 1,911 1,922 1,922 0.6 0.6 1,923 1,921 (0.1) % B/(W) Earnings Summary $ in millions, except per-share data Taxable-equivalent basis |
 12 4Q11 Earnings Conference Call 4Q11 Results - Key Drivers vs. 4Q10 Net Revenue growth of 8.1% (4.7% excluding notable items) • Net interest income growth of 7.0%; net interest margin of 3.60% vs. 3.83% • Noninterest income growth of 9.4% (2.1% excluding notable items) Noninterest expense growth of 8.5% (3.3% excluding notable items) Provision for credit losses lower by $415 million • Net charge-offs lower by $315 million • Provision lower than NCOs by $125 million vs. provision lower than NCOs by $25 million in 4Q10 vs. 3Q11 Net Revenue growth of 6.4% (1.0% excluding notable items) • Net interest income growth of 1.9%; net interest margin of 3.60% vs. 3.65% • Noninterest income growth of 12.0% (-0.1% excluding notable items) Noninterest expense growth of 8.9% (3.6% excluding notable items) Provision for credit losses lower by $22 million • Net charge-offs lower by $47 million • Provision lower than NCOs by $125 million vs. provision lower than NCOs by $150 million in 3Q11 |
 13 4Q11 Earnings Conference Call FY FY 4Q11 3Q11 4Q10 2011 2010 Revenue Items Securities gains (losses), net (9) $ (9) $ (14) $ (31) $ (78) $ Merchant processing agreement settlement 263 - - 263 - Gain related to FCB acquisition - - - 46 - Nuveen transaction - - 103 - 103 Expense Items Mortgage servicing matters 130 - - 130 - ITS transaction debt extinguishment and expense - - - - 18 Incremental Provision (125) (150) (25) (500) 175 ITS transaction equity impact (net of tax)* - - - - 118 Notable Items $ in millions * Not a component of net income, but does impact net income applicable to U.S. Bancorp common shareholders and earnings per diluted common share |
 14 4Q11 Earnings Conference Call Net Interest Income 2,499 2,507 2,544 2,624 2,673 3.83% 3.69% 3.67% 3.65% 3.60% 1,000 1,500 2,000 2,500 3,000 4Q10 1Q11 2Q11 3Q11 4Q11 2.0% 3.0% 4.0% 5.0% 6.0% Net Interest Income Net Interest Margin Net Interest Income Key Points $ in millions Taxable-equivalent basis vs. 4Q10 Average earning assets grew by $35.3 billion, or 13.6% (13.1% excluding acquisitions) Net interest margin lower by 23 bp (3.60% vs. 3.83%) driven by: • Higher balances in lower yielding investment securities • Higher cash position at the Federal Reserve vs. 3Q11 Average earning assets grew by $8.8 billion, or 3.1% Net interest margin lower by 5 bp (3.60% vs. 3.65%) driven by: • Higher balances in lower yielding investment securities Year-Over-Year Growth 5.9% 4.3% 5.6% 5.9% 7.0% |
 15 4Q11 Earnings Conference Call Covered Commercial CRE Res Mtg Retail Credit Card Average Loans 15.8% 11.9% 8.0% 3.0% (4.5%) 3.5% 4.0% 3.9% 3.0% 1.6% 22.2% 22.0% 22.0% 20.3% 15.8% (0.8%) (2.7%) (2.7%) (1.5%) 0.0% (0.5%) 1.1% 1.9% 1.9% 3.1% 0 60 120 180 240 4Q10 1Q11 2Q11 3Q11 4Q11 Average Loans Key Points $ in billions Year-Over-Year Growth 2.0% 2.4% 4.0% 5.0% 5.9% $202.2 $207.0 $195.5 $197.6 $198.8 Retail Res Mtg Covered CRE Commercial vs. 4Q10 Average total loans grew by $11.5 billion, or 5.9% (5.5% excluding acquisitions) Average total loans, excluding covered loans, were higher by 8.5% Average commercial loans increased $7.6 billion, or 15.8% (15.6% excluding acquisitions) vs. 3Q11 Average total loans grew by $4.8 billion, or 2.4% Average total loans, excluding covered loans, were higher by 3.0% Average commercial loans grew by $2.9 billion, or 5.6% Credit Card |
 16 4Q11 Earnings Conference Call Average Deposits 0.3% 1.0% 5.1% 1.9% (7.4%) 14.2% 17.4% 11.8% 11.6% 2.9% 10.1% 11.0% 17.3% 17.2% 17.5% 48.2% 47.5% 22.1% 16.3% 4.8% 0 60 120 180 240 4Q10 1Q11 2Q11 3Q11 4Q11 Average Deposits Key Points $ in billions Year-Over-Year Growth 5.2% 11.9% 14.2% 17.9% 17.3% $215.4 $223.3 $190.3 $204.3 $209.4 Noninterest -bearing Checking & Savings Time Money Market vs. 4Q10 Average total deposits increased by $33.0 billion, or 17.3% (11.7% excluding acquisitions) Average low cost deposits (NIB, interest checking, money market and savings), increased by $32.9 billion, or 22.2% (16.1% excluding acquisitions) vs. 3Q11 Average total deposits increased by $7.9 billion, or 3.7% Average low cost deposits increased by $9.5 billion, or 5.5% Time Money Market Checking & Savings Noninterest-bearing |
 17 4Q11 Earnings Conference Call 32.8% 21.2% 8.4% (13.1%) (1.1%) 0 700 1400 2100 2800 4Q10 1Q11 2Q11 3Q11 4Q11 4Q10 1Q11 2Q11 3Q11 4Q11 Valuation losses (14) $ (5) $ (8) $ (9) $ (9) $ Other non-operating gains 103 46 - - 263 Total 89 $ 41 $ (8) $ (9) $ 254 $ Notable Noninterest Income Items All Other Mortgage Service Charges Trust and Inv Mgmt Payments Noninterest Income Noninterest Income Key Points $ in millions Year-Over-Year Growth 10.2% 4.9% 1.7% 2.9% 9.4% $2,146 $2,431 $2,171 $2,222 $2,012 Trust and Inv Mgmt Service Charges All Other Mortgage Payments Payments = credit and debit card revenue, corporate payment products revenue and merchant processing services; Service charges = deposit service charges, treasury management fees and ATM processing services vs. 4Q10 Noninterest income grew by $209 million, or 9.4%, driven by: • Deposit service charges (18.8% growth) • Merchant processing services (17.0% growth) • Commercial products revenue (5.8% growth) • Lower credit and debit card revenue (21.2% decline) due to the impact of legislative changes to debit interchange fees • Lower trust and investment mgmt fees (13.1% decline) primarily due to the sale of the long-term asset mgmt business (4Q10) and money market account fee waivers • Mortgage banking revenue increase of $53 million $43 million increase in origination and sales revenue Unfavorable net change in MSR valuation and related hedging (hedge $33 4Q11 vs. $41 4Q10) • Merchant settlement gain ($263 million) partially offset by Nuveen gain ($103 million 4Q10) vs. 3Q11 Noninterest income grew by $260 million, or 12.0%, driven by: • Mortgage banking revenue increase of $58 million $58 million increase in origination and sales revenue Favorable net change in MSR valuation and related hedging (hedge $33 4Q11 vs. $7 3Q11) • Merchant processing services (11.8% growth) • Lower credit and debit card revenue (20.1% decline) • Lower corporate payment products revenue (15.8% decline) and deposit service charges (6.6% decline), both primarily due to seasonality and lower transaction volumes • Merchant settlement gain ($263 million) |
 18 4Q11 Earnings Conference Call Noninterest Expense 10.3% 4.3% 13.9% 5.1% 7.6% 0 700 1400 2100 2800 4Q10 1Q11 2Q11 3Q11 4Q11 Noninterest Expense Key Points $ in millions Year-Over-Year Growth 11.5% 8.3% 2.0% 3.8% 8.5% $2,425 $2,476 $2,696 $2,485 $2,314 Occupancy and Equipment Prof Services, Marketing and PPS All Other Tech and Comm Compensation and Benefits vs. 4Q10 Noninterest expense was higher by $211 million, or 8.5%, driven by: • Increased compensation (5.8%) and employee benefits (18.1%) • Increase in net occupancy and equipment (5.1%) related to business expansion and technology initiatives • Increase in professional services (35.1%) due to mortgage servicing-related projects • Other expense higher primarily due to an accrual for mortgage servicing matters ($130 million), partially offset by lower costs related to insurance and litigation vs. 3Q11 Noninterest expense was higher by $220 million, or 8.9%, driven by: • Higher compensation (3.5%) principally due to additions to staff and higher incentives • Increase in professional services (31.0%) due to mortgage servicing-related projects and seasonally higher expenses and increase in marketing and business development expenses (9.8%) due to an increase in the contribution to the Company’s charitable foundation • Other expense higher principally due to an accrual for mortgage servicing matters All Other Tech and Communications Prof Svcs, Marketing and PPS Occupancy and Equipment Compensation and Benefits 4Q10 1Q11 2Q11 3Q11 4Q11 Mortgage servicing matters - $ - $ - $ - $ 130 $ Total - $ - $ - $ - $ 130 $ Notable Noninterest Expense Items |
 19 4Q11 Earnings Conference Call Mortgage Repurchase Mortgages Repurchased and Make-whole Payments Mortgage Representation and Warranties Reserve $ in millions 4Q11 3Q11 2Q11 1Q11 4Q10 Beginning Reserve $162 $173 $181 $180 $147 Net Realized Losses (31) (31) (43) (32) (27) Additions to Reserve 29 20 35 33 60 Ending Reserve $160 $162 $173 $181 $180 Mortgages repurchased and make-whole payments $61 $57 $72 $90 $69 Repurchase activity lower than peers due to: • Conservative credit and underwriting culture • Disciplined origination process - primarily conforming loans ( 95% sold to GSEs) Do not participate in private placement securitization market Outstanding repurchase and make-whole requests balance = $105 million Repurchase requests expected to remain relatively stable over next few quarters |
 20 4Q11 Earnings Conference Call Positioned to Win |
 21 4Q11 Earnings Conference Call Appendix |
 22 4Q11 Earnings Conference Call Credit Quality - Commercial Loans 41,700 42,683 44,135 46,484 49,437 1.11% 1.19% 0.75% 0.77% 0.41% 0 15,000 30,000 45,000 60,000 4Q10 1Q11 2Q11 3Q11 4Q11 0.0% 1.5% 3.0% 4.5% 6.0% Average Loans Net Charge-offs Ratio Average Loans and Net Charge-offs Ratios Key Statistics Comments Nonperforming loans continued to improve year-over-year and on a linked quarter basis while delinquencies have remained stable year-over-year Net charge-offs improved significantly from the prior quarter Loan balances and commitments showed strong growth; utilization rates remain historically low 4Q10 3Q11 4Q11 Average Loans 41,700 46,484 49,437 30-89 Delinquencies 0.57% 0.34% 0.48% 90+ Delinquencies 0.15% 0.09% 0.09% Nonperforming Loans 1.23% 0.71% 0.55% 20% 25% 30% 35% 40% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Revolving Line Utilization Trend $ in millions |
 23 4Q11 Earnings Conference Call Credit Quality - Commercial Leases 6,012 6,030 5,919 5,860 5,834 1.12% 0.94% 0.88% 0.61% 1.43% 0 2,000 4,000 6,000 8,000 4Q10 1Q11 2Q11 3Q11 4Q11 0.0% 1.5% 3.0% 4.5% 6.0% Average Loans Net Charge-offs Ratio Average Loans and Net Charge-offs Ratios Key Statistics Comments Net charge-offs increased this quarter primarily due to a single transaction, but overall credit quality continued to improve as nonperforming loans declined on a linked quarter and year-over- year basis 4Q10 3Q11 4Q11 Average Loans 6,012 5,860 5,834 30-89 Delinquencies 1.34% 0.93% 0.96% 90+ Delinquencies 0.02% 0.02% 0.00% Nonperforming Loans 1.27% 0.68% 0.54% $ in millions Equipment Finance $2,385 Small Ticket $3,449 |
 24 4Q11 Earnings Conference Call Credit Quality - Commercial Real Estate Average Loans and Net Charge-offs Ratios Key Statistics Comments Net charge-offs and nonperforming loans decreased on a linked quarter and on a year-over-year basis Delinquencies in all categories decreased on a linked quarter basis 4Q10 3Q11 4Q11 Average Loans 34,577 35,569 35,802 30-89 Delinquencies 1.20% 0.44% 0.38% 90+ Delinquencies 0.00% 0.08% 0.04% Nonperforming Loans 3.73% 3.43% 2.51% Performing TDRs* 15 459 537 $ in millions Multi-family $1,540 Other $981 Office $756 A&D Construction $958 Retail $814 Condo Construction $301 Residential Construction $1,049 Investor $18,120 Owner Occupied $11,283 CRE Mortgage CRE Construction Average Loans Net Charge-offs Ratio NCO Ratio - Comm Mtg NCO Ratio - Construction * TDR = troubled debt restructuring, 3Q11 increase principally due to the impact of new accounting guidance adopted in that quarter (FASB Accounting Standards Update No. 2011-02) 34,577 35,179 35,499 35,569 35,802 2.51% 1.44% 1.85% 1.39% 0.93% 0.50% 0.93% 0.90% 0.59% 1.33% 2.91% 3.43% 5.67% 4.61% 6.54% 4Q10 1Q11 2Q11 3Q11 4Q11 0.0% 2.5% 5.0% 7.5% 10.0% 0 10,000 20,000 30,000 40,000 |
 25 4Q11 Earnings Conference Call 2,002 1,938 1,939 1,890 1,804 0 1,000 2,000 3,000 4,000 4Q10 1Q11 2Q11 3Q11 4Q11 Credit Quality - Residential Mortgage 29,659 31,777 32,734 34,026 36,256 1.75% 1.65% 1.46% 1.42% 1.30% 0 10,000 20,000 30,000 40,000 4Q10 1Q11 2Q11 3Q11 4Q11 0.0% 1.5% 3.0% 4.5% 6.0% Average Loans Net Charge-offs Ratio Average Loans and Net Charge-offs Ratios Key Statistics Comments Strong growth in high quality originations (weighted average FICO 761, weighted average LTV 67%) as average loans increased 6.6% over 3Q11, driven by demand for refinancing Continued to help home owners by successfully modifying 3,618 loans (owned and serviced) in 4Q11, representing $619 million in balances Nonperforming loans and delinquencies continue to improve 4Q10 3Q11 4Q11 Average Loans 29,659 34,026 36,256 30-89 Delinquencies 1.48% 1.09% 1.09% 90+ Delinquencies 1.63% 1.03% 0.98% Nonperforming Loans 2.07% 1.85% 1.75% Residential Mortgage Performing TDRs $ in millions * Excludes GNMA loans, whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veteran Affairs ($1,265 million 4Q11) * |
 26 4Q11 Earnings Conference Call 4Q10 3Q11 4Q11 Average Loans 16,403 16,057 16,271 30-89 Delinquencies 1.60% 1.38% 1.37% 90+ Delinquencies 1.86% 1.28% 1.36% Nonperforming Loans 1.36% 1.53% 1.29% Credit Quality - Credit Card 16,403 16,124 15,884 16,057 16,271 6.65% 6.21% 5.45% 4.40% 4.71% 4.88% 4.54% 5.62% 6.45% 7.21% 0 5,000 10,000 15,000 20,000 4Q10 1Q11 2Q11 3Q11 4Q11 0.0% 4.0% 8.0% 12.0% 16.0% Average Loans and Net Charge-offs Ratios Key Statistics Comments 4Q11 net charge-offs are 30% lower than 4Q10 Overall delinquencies were relatively flat for the quarter and lower year-over-year Nonperforming loans have improved for two consecutive quarters and are at their lowest level since 3Q10 $ in millions * Excluding portfolio purchases where the acquired loans were recorded at fair value at the purchase date Average Loans Net Charge-offs Ratio Net Charge-offs Ratio Excluding Acquired Portfolios* Core Portfolio $15,678 Portfolios Acquired at Fair Value $593 |
 27 4Q11 Earnings Conference Call Credit Quality - Home Equity 19,119 18,801 18,634 18,510 18,281 1.67% 1.59% 1.64% 1.75% 1.72% 0 6,000 12,000 18,000 24,000 4Q10 1Q11 2Q11 3Q11 4Q11 0.0% 1.5% 3.0% 4.5% 6.0% Average Loans Net Charge-offs Ratio Average Loans and Net Charge-offs Ratios Key Statistics Comments Strong credit quality portfolio (weighted average FICO 747, weighted average CLTV 73%) originated primarily through the retail branch network to existing bank customers on their primary residence Early and late stage delinquencies improved year-over-year Net charge-offs modestly increased which is within seasonal expectations 4Q10 3Q11 4Q11 Average Loans 19,119 18,510 18,281 30-89 Delinquencies 0.93% 0.83% 0.90% 90+ Delinquencies 0.78% 0.67% 0.73% Nonperforming Loans 0.19% 0.19% 0.22% Consumer Finance: 13% Wtd Avg LTV: 82% NCO: 4.13% $ in millions Traditional: 87% Wtd Avg LTV: 71% NCO: 1.30% |
 28 4Q11 Earnings Conference Call Credit Quality - Retail Leasing Average Loans and Net Charge-offs Ratios Key Statistics Comments Average loans continued to increase as demand for new auto leases remained strong Retail leasing delinquencies have stabilized at very low levels Strong used auto values continue to contribute to historically low net charge-offs 4Q10 3Q11 4Q11 Average Loans 4,459 5,097 5,150 30-89 Delinquencies 0.37% 0.19% 0.19% 90+ Delinquencies 0.05% 0.02% 0.02% Nonperforming Loans --% --% --% $ in millions 90 100 110 120 130 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Manheim Used Vehicle Value Index* * Manheim Used Vehicle Value Index source: www.manheimconsulting.com, January 1995 = 100, quarter value = average monthly ending value 4,459 4,647 4,808 5,097 5,150 0.09% 0.09% 0.00% -0.08% 0.00% 4Q10 1Q11 2Q11 3Q11 4Q11 -1.0% 0.0% 1.0% 2.0% 3.0% Average Loans Net Charge-offs Ratio 0 2,000 4,000 6,000 |
 29 4Q11 Earnings Conference Call Credit Quality - Other Retail 24,983 24,691 24,498 24,773 24,901 1.45% 1.33% 1.16% 1.11% 1.19% 0 7,000 14,000 21,000 28,000 4Q10 1Q11 2Q11 3Q11 4Q11 0.0% 1.5% 3.0% 4.5% 6.0% Average Loans Net Charge-offs Ratio Average Loans and Net Charge-offs Ratios Key Statistics Comments Average balances modestly increased during the quarter Both early and late state delinquency performance remain stable Net charge-offs and nonperforming loans remain stable 4Q10 3Q11 4Q11 Average Loans 24,983 24,773 24,901 30-89 Delinquencies 0.85% 0.67% 0.68% 90+ Delinquencies 0.26% 0.20% 0.20% Nonperforming Loans 0.12% 0.12% 0.11% Installment $5,369 Auto Loans $11,485 Revolving Credit $3,331 Student Lending $4,716 $ in millions |
 30 4Q11 Earnings Conference Call $ in millions 4Q11 3Q11 2Q11 1Q11 4Q10 Total equity 34,971 $ 34,210 $ 33,341 $ 31,335 $ 30,322 $ Preferred stock (2,606) (2,606) (2,606) (1,930) (1,930) Noncontrolling interests (993) (980) (889) (828) (803) Goodwill (net of deferred tax liability) (8,239) (8,265) (8,300) (8,317) (8,337) Intangible assets (exclude mortgage servicing rights) (1,217) (1,209) (1,277) (1,342) (1,376) Tangible common equity (a) 21,916 21,150 20,269 18,918 17,876 Tier 1 Capital, determined in accordance with prescribed regulatory requirements using Basel I definition 29,173 28,081 27,795 26,821 25,947 Trust preferred securities (2,675) (2,675) (3,267) (3,949) (3,949) Preferred stock (2,606) (2,606) (2,606) (1,930) (1,930) Noncontrolling interests, less preferred stock not eligible for Tier I capital (687) (695) (695) (694) (692) Tier 1 common equity using Basel I definition (b) 23,205 22,105 21,227 20,248 19,376 Tier 1 capital, determined in accordance with prescribed regulatory requirements using anticipated Basel III definition 25,639 24,902 23,931 21,855 20,854 Preferred stock (2,606) (2,606) (2,606) (1,930) (1,930) Noncontrolling interests of real estate investment trusts (667) (667) (667) (667) (667) Tier 1 common equity using anticipated Basel III definition (c) 22,366 21,629 20,658 19,258 18,257 Total assets 340,122 330,141 320,874 311,462 307,786 Goodwill (net of deferred tax liability) (8,239) (8,265) (8,300) (8,317) (8,337) Intangible assets (exclude mortgage servicing rights) (1,217) (1,209) (1,277) (1,342) (1,376) Tangible assets (d) 330,666 320,667 311,297 301,803 298,073 Risk-weighted assets, determined in accordance with prescribed regulatory requirements using Basel I definition (e) 271,333 261,115 252,882 247,486 247,619 Risk-weighted assets using anticipated Basel III definitions (f) 274,351 264,103 256,205 250,931 251,704 Ratios Tangible common equity to tangible assets (a)/(d) 6.6% 6.6% 6.5% 6.3% 6.0% Tier 1 common equity to risk-weighted assets using Basel I definition (b)/(e) 8.6% 8.5% 8.4% 8.2% 7.8% Tier 1 common equity to risk-weighted assets using anticipated Basel III definition (c)/(f) 8.2% 8.2% 8.1% 7.7% 7.3% Tangible common equity to risk-weighted assets (a)/(e) 8.1% 8.1% 8.0% 7.6% 7.2% 4Q11 risk-weighted assets are preliminary data, subject to change prior to filings with applicable regulatory agencies Anticipated Basel III definitions reflect adjustments for changes to the related elements as proposed in December 2010 by regulatory agencies Non-Regulatory Capital Ratios |
 U.S. Bancorp 4Q11 Earnings Conference Call U.S. Bancorp 4Q11 Earnings Conference Call January 18, 2012 |