U.S. Bancorp (USB) 8-K U.s. Bancorp Reports Record Earnings for the Second Quarter of 2013

U.S. Bancorp

2Q13 Earnings

Conference Call

U.S. Bancorp

2Q13 Earnings

Conference Call

July 17, 2013

Richard K. Davis

Chairman, President and CEO

Andy Cecere

Vice Chairman and CFO

Exhibit 99.2

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

recently

enacted

and

future

legislation

and

regulation.

U.S.

Bancorp’s

results

could

also

be

adversely

affected

by

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,

2012,

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

2Q13 Earnings

Conference Call

2Q13 Highlights

Record net income of $1.5 billion; $0.76 per diluted common share

Average loan growth of 5.2% vs. 2Q12 and average loan growth of 1.2%        

vs. 1Q13

Strong average deposit growth of 7.0% vs. 2Q12 and 1.0% vs. 1Q13

Net charge-offs declined 9.5% vs. 1Q13

Nonperforming assets declined 5.4% vs. 1Q13 (5.3% excluding covered assets)

Capital generation continues to reinforce capital position

•

Tier 1 common equity ratio estimated at 8.6% using final rules for Basel III 

standardized approach released July 2013

•

Tier 1 common equity ratio of 9.2%; Tier 1 capital ratio of 11.1%

Returned 73% of earnings to shareholders in 2Q13

•

Annual dividend increased from $0.78 to $0.92, an 18% increase

•

Repurchased 18 million shares of common stock during 2Q13

4

2Q13 Earnings

Conference Call

Performance Ratios

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

5

2Q13 Earnings

Conference Call

$5,068

$5,179

$5,112

$4,874

$4,948

3,500

4,000

4,500

5,000

5,500

2Q12

3Q12

4Q12

1Q13

2Q13

Taxable-equivalent basis

Revenue Growth

Year-Over-Year Growth

8.1%

8.0%

0.2%

(1.1%)

(2.4%)

$ in millions

6

2Q13 Earnings

Conference Call

170.0

190.0

210.0

230.0

250.0

2Q12

3Q12

4Q12

1Q13

2Q13

Loans

Deposits

Loan and Deposit Growth

Average Balances

Year-Over-Year Growth

$ in billions

7.7%

$214.1

7.3%

$216.9

6.4%

$220.3

5.8%

$222.4

5.2%

$225.2

10.5%

$231.3

11.1%

$239.3

9.2%

$243.8

7.3%

$245.0

7.0%

$247.4

7

2Q13 Earnings

Conference Call

Credit Quality

* Excluding Covered Assets (assets subject to loss sharing agreements with FDIC)  ** Related to a regulatory clarification in the treatment of residential mortgage and other consumer

loans to borrowers who have exited bankruptcy but continue to make payments on their loans  *** Excluding $54 million of incremental charge-offs

$ in millions

Net Charge-offs (Left Scale)

NCOs to Avg Loans (Right Scale)

Nonperforming Assets (Left Scale)

NPAs to Loans plus ORE (Right Scale)

8

2Q13 Earnings

Conference Call

Earnings Summary

$ in millions, except per-share data

Taxable-equivalent basis

YTD

YTD

2Q13

1Q13

2Q12

vs 1Q13

vs 2Q12

2013

2012

% B/(W)

Net Interest Income

2,672

$    

2,709

$    

2,713

$    

(1.4)

(1.5)

5,381

$    

5,403

$    

(0.4)

Noninterest Income

2,276

2,165

2,355

5.1

(3.4)

4,441

4,594

(3.3)

Total Revenue

4,948

4,874

5,068

1.5

(2.4)

9,822

9,997

(1.8)

Noninterest Expense

2,557

2,470

2,601

(3.5)

1.7

5,027

5,161

2.6

Operating Income

2,391

2,404

2,467

(0.5)

(3.1)

4,795

4,836

(0.8)

Net Charge-offs

392

433

520

9.5

24.6

825

1,091

24.4

Excess Provision

(30)

(30)

(50)

--

--

(60)

(140)

--

Income before Taxes

2,029

2,001

1,997

1.4

1.6

4,030

3,885

3.7

Applicable Income Taxes

585

614

619

4.7

5.5

1,199

1,202

0.2

Noncontrolling Interests

40

41

37

(2.4)

8.1

81

70

15.7

Net Income

1,484

1,428

1,415

3.9

4.9

2,912

2,753

5.8

Preferred Dividends/Other

79

70

70

(12.9)

(12.9)

149

123

(21.1)

NI to Common

1,405

$    

1,358

$    

1,345

$    

3.5

4.5

2,763

$    

2,630

$    

5.1

Diluted EPS

0.76

$      

0.73

$      

0.71

$      

4.1

7.0

1.49

$      

1.38

$      

8.0

Average Diluted Shares

1,853

1,867

1,898

0.7

2.4

1,860

1,904

2.3

% B/(W)

9

2Q13 Earnings

Conference Call

2Q13 Results -

Key Drivers

vs. 2Q12

Net Revenue decline of 2.4%

•

Net interest income decline of 1.5%; net interest margin of 3.43% vs. 3.58% in 2Q12

•

Noninterest income decline of 3.4%

Noninterest expense decline of 1.7%

Provision for credit losses lower by $108 million

•

Net charge-offs lower by $128 million

•

Provision lower than NCOs by $30 million vs. $50 million in 2Q12

vs. 1Q13

Net Revenue growth of 1.5%

•

Net interest income decline of 1.4%; net interest margin of 3.43% vs. 3.48% in 1Q13

•

Noninterest income growth of 5.1%

Noninterest expense increase of 3.5%

Provision for credit losses lower by $41 million

•

Net charge-offs lower by $41 million

•

Provision lower than NCOs by $30 million vs. $30 million in 1Q13

10

2Q13 Earnings

Conference Call

Capital Position

$ in billions

RWA = risk-weighted assets

2Q13

1Q13

4Q12

3Q12

2Q12 

Shareholders' equity

39.7

$   

39.5

$   

39.0

$   

38.7

$   

37.8

$   

Tier 1 capital

32.2

31.8

31.2

30.8

30.0

Total risk-based capital

38.4

38.1

37.8

37.6

36.4

Tier 1 common equity ratio

9.2%

9.1%

9.0%

9.0%

8.8%

Tier 1 capital ratio

11.1%

11.0%

10.8%

10.9%

10.7%

Total risk-based capital ratio

13.3%

13.2%

13.1%

13.3%

13.0%

Leverage ratio

9.5%

9.3%

9.2%

9.2%

9.1%

Tangible common equity ratio

7.5%

7.4%

7.2%

7.2%

6.9%

Tangible common equity as a % of RWA

8.9%

8.8%

8.6%

8.8%

8.5%

Basel III

Tier 1 common equity ratio approximated

using proposed rules for the Basel III

standardized approach released June 2012

8.3%

8.2%

8.1%

8.2%

7.9%

Tier 1 common equity ratio estimated

using final rules for the Basel III

standardized approach released July 2013

8.6%

-

-

-

-

11

2Q13 Earnings

Conference Call

Capital Actions

Dividend increase announced June 18

•

Annual dividend increased from $0.78 to $0.92, an 18% increase

•

One

year

authorization

to

repurchase

up

to

$2.25

billion

of

outstanding

stock

effective

April

1,

2013

Returned 73% of earnings to shareholders during 2Q13

Reinvest and

Acquisitions

Dividends

Share

Repurchases

20 -

40%

Targets:

30 -

40%

30 -

40%

27%

2Q13

Actual:

43%

30%

Earnings Distribution

th

12

2Q13 Earnings

Conference Call

Mortgage Repurchase

Mortgages Repurchased and Make-whole Payments

Mortgage Representation and Warranties Reserve

$ in millions

2Q13

1Q13

4Q12

3Q12

2Q12

Beginning Reserve

$233

$240

$220

$216

$202

Net Realized Losses

(16)

(23)

(32)

(32)

(31)

Change in Reserve

(27)

16

52

36

45

Ending Reserve

$190

$233

$240

$220

$216

Mortgages

repurchased

and make-whole

payments

$41

$79

$57

$58

$58

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      

= $64 million

13

A Rich

A Rich Heritage

A Strong Future

A Strong Future

1863 -

2013

14

2Q13 Earnings

Conference Call

Appendix

15

2Q13 Earnings

Conference Call

Average Loans

Average Loans

Key Points

$ in billions

vs. 2Q12

Average total loans grew by $11.1 billion, or 5.2%

Average total loans, excluding covered loans,

were higher by 7.2%

Average total commercial loans increased $6.7

billion, or 11.2%; average residential mortgage

loans increased $7.7 billion, or 19.7%

vs. 1Q13

Average total loans grew by $2.8 billion, or 1.2%

Average total loans, excluding covered loans,

were higher by 1.6%

Average total commercial loans increased $1.5

billion, or 2.2%; average residential mortgage

loans increased $1.8 billion, or 3.9%

Covered

Commercial

CRE

Res Mtg

Retail

Credit Card

16

2Q13 Earnings

Conference Call

Average Deposits

Average Deposits

Key Points

$ in billions

vs. 2Q12

Average total deposits increased by $16.1

billion, or 7.0%

Average low cost deposits (NIB, interest

checking, money market and savings) 

increased by $18.1 billion, or 9.8%

vs. 1Q13

Average total deposits increased by $2.4

billion, or 1.0%

Average low cost deposits increased by $3.3

billion, or 1.6%

Time

Money Market

Checking and Savings

Noninterest-bearing

Noninterest

-bearing

Checking

& Savings

Money

Market

Time

2.2%

15.0%

8.8%

7.6%

(4.3%)

(1.2%)

6.5%

9.6%

15.6%

24.5%

8.1%

7.1%

4.7%

4.6%

6.4%

32.5%

16.2%

14.2%

4.4%

3.6%

0

70

140

210

280

2Q12

3Q12

4Q12

1Q13

2Q13

17

2Q13 Earnings

Conference Call

Net Interest Income

Net Interest Income

Key Points

$ in millions

Taxable-equivalent basis

vs. 2Q12

Average earning assets grew by $8.2 billion,

or 2.7%

Net interest margin lower by 15 bps (3.43%

vs. 3.58%) driven by:

•

Lower rates on investment securities and loans

•

Partially offset by lower rates on deposits and  

long-term debt

vs. 1Q13

Average earning assets declined by $2.1

billion, or 0.7%

Net interest margin lower by 5 bps (3.43% vs.

3.48%) driven by:

•

Lower rates on investment securities and loans

Year-Over-Year Growth

6.6%

6.1%

4.1%

0.7%

(1.5%)

$2,713

$2,783

$2,783

$2,709

$2,672

3.58%

3.59%

3.55%

3.48%

3.43%

0.0%

2.0%

4.0%

6.0%

8.0%

0

1,000

2,000

3,000

4,000

2Q12

3Q12

4Q12

1Q13

2Q13

Net Interest Income

Net Interest Margin

Noninterest Income

Noninterest Income

Key Points

$ in millions

Payments = credit and debit card revenue, corporate payment products revenue and merchant processing;

Service charges = deposit service charges, treasury management fees and ATM processing services

vs. 2Q12

Noninterest income declined by $79 million, or 3.4%,

driven by:

•

Mortgage banking revenue decline of $94 million

•

Lower corporate payments revenue (7.4% decline), mainly due to

lower government and transportation-related transactions

•

Higher trust and investment management fees (8.4% increase),

due to improved market conditions and business expansion, and

higher investment product fees (21.1% increase), due to higher

sales volume and fees

•

Higher merchant processing (3.9% increase) and higher credit

and debit card revenue (3.8% increase)

•

Lower other income, mainly due to lower equity investment and

retail lease revenue

vs. 1Q13

Noninterest income grew by $111 million, or 5.1%,

driven by:

•

Higher payments revenue (8.2% increase), primarily due to

seasonally higher transaction volumes

•

Higher trust and investment management fees (2.2% increase)

and higher investment product fees (12.2% increase)

•

Higher commercial products revenue (4.5% increase)

•

Higher deposit service charges (4.6% increase) and treasury

management fees (4.5% increase), mainly due to seasonally

higher transaction volumes

•

Higher other income, mainly due to higher equity investment and

other revenue, partially offset by lower retail lease revenue

Year-Over-Year Growth

9.7%

10.4%

(4.2%)

(3.3%)

(3.4%)

$2,329

$2,165

$2,276

$2,355

$2,396

Trust and

Inv Mgmt

Service

Charges

All Other

Mortgage

Payments

All Other

Mortgage

Service Charges

Trust and Inv Mgmt

Payments

2,800

2,100

1,400

700

0

2Q12

3Q12

4Q12

1Q13

2Q13

2Q13 Earnings

Conference Call

18

19

2Q13 Earnings

Conference Call

Noninterest Expense

Noninterest Expense

Key Points

$ in millions

vs. 2Q12

Noninterest expense was lower by $44 million, or

1.7%, driven by:

•

Lower other expense, mainly due to prior year Visa accrual,

lower FDIC insurance expense and costs related to OREO,

partially offset by higher costs related to investments in

affordable housing and other tax-advantaged projects

•

Lower professional services expense (33.1% decline), due to

reduction in mortgage servicing review-related costs

•

Higher compensation (2.0% increase), primarily the result of

growth in staffing and employee benefits (21.0% increase),

mainly due to higher pension costs

•

Higher marketing and business development expense (20.0%

increase), mainly due to payments-related initiatives

vs. 1Q13

Noninterest expense was higher by $87 million, or

3.5%, driven by:

•

Higher other expense, mainly due to higher insurance and

regulatory expense relative to the prior quarter, partially offset

by lower OREO expense

•

Higher marketing and business development expense (31.5%

increase) and higher professional services expense (16.7%

increase), driven by the timing of projects and initiatives

across a majority of the business lines

•

Lower benefits expense (10.6% decrease), due mainly to

seasonally lower payroll taxes

All Other

Tech and Communications

Prof Svcs, Marketing and PPS

Occupancy and Equipment

Compensation and Benefits

2Q12

3Q12

4Q12

1Q13

2Q13

Mortgage servicing matters

-

$        

-

$        

80

$      

-

$        

-

$        

Total

-

$        

-

$        

80

$      

-

$        

-

$        

Notable Noninterest Expense Items

Year-Over-Year Growth

7.3%

5.4%

(0.4%)

(3.5%)

(1.7%)

$2,601

$2,609

$2,686

$2,470

$2,557

Compensation

and Benefits

Occupancy

and Equipment

Prof Services,

Marketing

and PPS

Tech and Comm

All Other

20

2Q13 Earnings

Conference Call

Credit Quality

-

Commercial Loans

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Strong

new

lending

activity

resulted

in

2.6%

linked

quarter

loan

growth

and

13.1%

year-over-year

growth

even though utilization rates remained at historically low levels

Nonperforming loans and net charge-offs continued to improve year-over-year and were unchanged on a

linked quarter basis

Early stage delinquencies remained at moderate levels

2Q12

1Q13

2Q13

Average Loans

$54,362

$59,921

$61,507

30-89 Delinquencies

0.26%

0.20%

0.23%

90+ Delinquencies

0.07%

0.10%

0.10%

Nonperforming Loans

0.31%

0.14%

0.14%

$ in millions

$54,362

$56,655

$58,552

$59,921

$61,507

0.41%

0.41%

0.32%

0.22%

0.22%

0.0%

1.0%

2.0%

3.0%

4.0%

0

20,000

40,000

60,000

80,000

2Q12

3Q12

4Q12

1Q13

2Q13

Average Loans

Net Charge-offs Ratio

21

2Q13 Earnings

Conference Call

Credit Quality

-

Commercial Leases

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Net charge-offs improved materially year-over-year and rose modestly on a linked quarter basis

Nonperforming loans and early stage delinquencies improved year-over-year and on a linked

quarter basis

2Q12

1Q13

2Q13

Average Loans

$5,658

$5,378

$5,255

30-89 Delinquencies

0.83%

0.82%

0.74%

90+ Delinquencies

0.00%

0.00%

0.00%

Nonperforming Loans

0.40%

0.30%

0.27%

$ in millions

$5,658

$5,537

$5,377

$5,378

$5,255

1.07%

0.50%

0.37%

0.23%

0.31%

0.0%

1.0%

2.0%

3.0%

4.0%

0

2,000

4,000

6,000

8,000

2Q12

3Q12

4Q12

1Q13

2Q13

Average Loans

Net Charge-offs Ratio

Commercial Leases

22

Credit Quality

-

Commercial Real Estate

Key Statistics

Comments

Average loans increased 1.8% on a linked quarter basis

High levels of commercial real estate recoveries, reflecting continued improvement in market conditions

Early stage delinquencies remain stable year-over-year and on a linked quarter basis

Nonperforming loans continued to decline, down from the peak of 5.36% in 1Q10

2Q12

1Q13

2Q13

Average Loans

$36,549

$37,218

$37,884

30-89 Delinquencies

0.24%

0.22%

0.23%

90+ Delinquencies

0.03%

0.02%

0.03%

Nonperforming Loans

1.89%

1.36%

1.11%

Performing TDRs*

596

526

494

$ in millions

Investor

$20,270

Owner

Occupied

$11,101

Multi-family

$2,085

Retail

$494

Residential

Construction

$1,385

A&D

Construction

$547

Office

$510

Other

$1,492

* TDR = troubled debt restructuring

Average Loans and Net Charge-offs Ratios

2Q13 Earnings

Conference Call

45,000

30,000

15,000

0

$36,549

$36,630

$36,851

$37,218

$37,884

0.9%

0.6%

0.3%

0.0%

-0.3%

2Q12

3Q12

4Q12

1Q13

2Q13

Average Loans

Net Charge-offs Ratio

22

23

2Q13 Earnings

Conference Call

Credit Quality

-

Residential Mortgage

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Strong growth in high quality originations (weighted average FICO 763, weighted average LTV 65%) as average

loans increased 3.9% over 1Q13, driven by demand for refinancing

Over 74% of the balances have been originated since the beginning of 2009, the origination quality metrics and

performance to date have significantly outperformed prior vintages with similar seasoning

Net charge-offs continue to decline as housing values improve

2Q12

1Q13

2Q13

Average Loans

$39,166

$45,109

$46,873

30-89 Delinquencies

0.86%

0.71%

0.78%

90+ Delinquencies

0.80%

0.54%

0.53%

Nonperforming Loans

1.65%

1.46%

1.43%

$ in millions

*

Excluding

$22

million

related

to

a

regulatory

clarification

in

the

treatment

of

loans

to

borrowers

who

have

exited

bankruptcy

but

continue

to

make

payments

on

their

loans

$39,166

$40,969

$43,156

$45,109

$46,873

1.12%

1.17%

0.88%

0.83%

0.63%

0.96%*

0.0%

1.0%

2.0%

3.0%

4.0%

0

15,000

30,000

45,000

60,000

2Q12

3Q12

4Q12

1Q13

2Q13

Average Loans

Net Charge-offs Ratio

Adjusted NCO Ratio

$2,011

$2,076

$2,087

$2,035

$2,084

0

1,000

2,000

3,000

4,000

2Q12

3Q12

4Q12

1Q13

2Q13

Residential Mortgage Performing TDRs**

**

Excludes

GNMA

loans,

whose

repayments

are

insured

by

the

FHA

or

guaranteed

by

the

Department

of

VA

($1,851

million

2Q13)

24

2Q13 Earnings

Conference Call

2Q12

1Q13

2Q13

Average Loans

$16,696

$16,528

$16,416

30-89 Delinquencies

1.20%

1.24%

1.17%

90+ Delinquencies

1.17%

1.26%

1.10%

Nonperforming Loans

1.12%

0.78%

0.65%

Credit Quality -

Credit Card

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Increased loss rate driven by lower recoveries

Delinquencies remain at historically low levels

Nonperforming loans have decreased for eight consecutive quarters

$ in millions

$16,696

$16,551

$16,588

$16,528

$16,416

4.10%

4.01%

3.86%

3.93%

4.23%

0.0%

2.5%

5.0%

7.5%

10.0%

0

5,000

10,000

15,000

20,000

2Q12

3Q12

4Q12

1Q13

2Q13

Average Loans

Net Charge-offs Ratio

$189

$163

$146

$127

$109

1.12%

0.99%

0.85%

0.78%

0.65%

0.0%

0.6%

1.2%

1.8%

2.4%

0

60

120

180

240

2Q12

3Q12

4Q12

1Q13

2Q13

Credit Card Nonperforming Loans

25

2Q13 Earnings

Conference Call

Credit Quality -

Home Equity

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

High-quality originations (weighted average FICO 761, weighted average CLTV 71%) originated

primarily through the retail branch network to existing bank customers on their primary residence

Net charge-off ratio declined on a linked quarter basis

2Q12

1Q13

2Q13

Average Loans

$17,598

$16,434

$15,989

30-89 Delinquencies

0.71%

0.70%

0.74%

90+ Delinquencies

0.30%

0.27%

0.25%

Nonperforming Loans

0.91%

1.25%

1.23%

$ in millions

*

Excluding

$26

million

related

to

a

regulatory

clarification

in

the

treatment

of

loans

to

borrowerswho

have

exited

bankruptcy

but

continue

to

make

payments

on

their

loans

$17,598

$17,329

$16,950

$16,434

$15,989

1.44%

2.04%

1.76%

1.80%

1.45%

1.44%*

0.0%

1.5%

3.0%

4.5%

6.0%

0

6,000

12,000

18,000

24,000

2Q12

3Q12

4Q12

1Q13

2Q13

Average Loans

Net Charge-offs Ratio

Adjusted NCO Ratio

Credit Quality -

Retail Leasing

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Strong year-over-year growth (9.7%) driven by high-quality originations (weighted average FICO 769)

Delinquencies remain relatively stable at very low levels

Strong used auto values continued to contribute to historically low net charge-offs

2Q12

1Q13

2Q13

Average Loans

$5,151

$5,448

$5,653

30-89 Delinquencies

0.13%

0.12%

0.14%

90+ Delinquencies

0.00%

0.02%

0.00%

Nonperforming Loans

0.00%

0.02%

0.02%

$ in millions

*

Manheim

Used

Vehicle

Value

Index

source:

www.manheimconsulting.com,

January

1995

=

100,

quarter

value

=

average

monthly

ending

value

9,000

6,000

3,000

0

$5,151

$5,256

$5,384

$5,448

$5,653

2Q12

3Q12

4Q12

1Q13

2Q13

0.00%

0.00%

0.07%

0.07%

-0.07%

1.5%

1.0%

0.5%

0.0%

130

120

110

100

Manheim Used Vehicle Index*

90

2Q13 Earnings

Conference Call

Average Loans

Net Charge-offs Ratio

26

-0.5%

27

2Q13 Earnings

Conference Call

Credit Quality -

Other Retail

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Year-over-year

growth in Auto Loans continue to offset declines in Student Lending loan

balances (see slide 28 for auto loan detail)

Delinquencies and nonperforming loans remain stable and at very low levels

2Q12

1Q13

2Q13

Average Loans

$25,151

$25,364

$25,224

30-89 Delinquencies

0.51%

0.48%

0.46%

90+ Delinquencies

0.16%

0.16%

0.14%

Nonperforming Loans

0.09%

0.10%

0.11%

Installment

$5,564

$ in millions

* Excluding $5 million related to a regulatory clarification in the treatment of loans to borrowers who have exited bankruptcy but continue to make payments on their loans

$25,151

$25,406

$25,595

$25,364

$25,224

0.86%

1.06%

0.92%

0.83%

0.76%

0.98%*

0.0%

1.0%

2.0%

3.0%

4.0%

0

10,000

20,000

30,000

40,000

2Q12

3Q12

4Q12

1Q13

2Q13

Average Loans

Net Charge-offs Ratio

Adjusted NCO Ratio

Other Retail

28

2Q13 Earnings

Conference Call

Indirect and Direct Channel

Credit Quality -

Auto Loans

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Continued growth in Auto Loans driven by high-quality originations (Indirect channel weighted

average FICO 767, Direct channel weighted average FICO 750)

Low net charge-offs and delinquencies continue as used vehicle values remain strong

2Q12

1Q13

2Q13

Average Loans

$11,974

$12,519

$12,575

30-89 Delinquencies

0.40%

0.30%

0.30%

90+ Delinquencies

0.04%

0.03%

0.02%

Nonperforming Loans

0.00%

0.02%

0.02%

$ in millions

Auto Loans are included in Other Retail category

Direct: 9%

Wtd Avg FICO: 748

NCO: 0.00%

Indirect: 91%

Wtd Avg FICO: 770

NCO: 0.00%

$11,974

$12,211

$12,540

$12,519

$12,575

0.13%

0.20%

0.22%

0.16%

0.00%

0.0%

0.2%

0.4%

0.6%

0.8%

0

4,000

8,000

12,000

16,000

2Q12

3Q12

4Q12

1Q13

2Q13

Average Loans

Net Charge-offs Ratio

29

2Q13 Earnings

Conference Call

Non-GAAP Financial Measures

$ in millions

2Q13

1Q13

4Q12

3Q12

2Q12

Total equity

41,050

$   

40,847

$   

40,267

$   

39,825

$   

38,874

$   

Preferred stock

(4,756)

(4,769)

(4,769)

(4,769)

(4,769)

Noncontrolling interests

(1,367)

(1,316)

(1,269)

(1,164)

(1,082)

Goodwill (net of deferred tax liability)

(8,317)

(8,333)

(8,351)

(8,194)

(8,205)

Intangible assets (exclude mortgage servicing rights)

(910)

(963)

(1,006)

(980)

(1,118)

Tangible common equity (a)

25,700

25,466

24,872

24,718

23,700

Tier 1 capital, determined in accordance with prescribed

regulatory requirements using Basel I definition

32,219

31,774

31,203

30,766

30,044

Preferred stock

(4,756)

(4,769)

(4,769)

(4,769)

(4,769)

Noncontrolling interests, less preferred stock not eligible for Tier I capital

(685)

(684)

(685)

(685)

(685)

Tier 1 common equity using Basel I definition (b)

26,778

26,321

25,749

25,312

24,590

Tangible common equity (as calculated above)

25,700

25,466

24,872

24,718

23,700

Adjustments

1

(43)

81

126

157

153

Tier 1 common equity approximated using proposed rules for the

Basel III standardized approach released June 2012 (c)

25,657

25,547

24,998

24,875

23,853

Tangible common equity (as calculated above)

25,700

Adjustments

2

195

Tier 1 common equity estimated using final rules for the

Basel III standardized approach released July 2013 (d)

25,895

1

Includes

net

losses

on

cash

flow

hedges

included

in

accumulated

other

comprehensive

income,

unrealized

losses

on

securities

transferred

from

available-for-sale

to

held-to-maturity

included

in

accumulated

other

comprehensive

income

and

disallowed

mortgage

servicing

rights

2

Includes

net

losses

on

cash

flow

hedges

included

in

accumulated

other

comprehensive

income

and

unrealized

losses

on

securities

transferred

from

available-for-sale

to

held-to-maturity

included

in

accumulated

other

comprehensive

income

30

2Q13 Earnings

Conference Call

Non-GAAP Financial Measures

$ in millions

2Q13

1Q13

4Q12

3Q12

2Q12

Total assets

353,415

$ 

355,447

$ 

353,855

$ 

352,253

$ 

353,136

$ 

Goodwill (net of deferred tax liability)

(8,317)

(8,333)

(8,351)

(8,194)

(8,205)

Intangible assets (exclude mortgage servicing rights)

(910)

(963)

(1,006)

(980)

(1,118)

Tangible assets (e)

344,188

346,151

344,498

343,079

343,813

Risk-weighted assets, determined in accordance with prescribed

regulatory requirements using Basel I definition (f)

289,613

289,672

287,611

282,033

279,972

Adjustments

3

20,866

21,021

21,233

22,167

23,240

Risk-weighted assets approximated using proposed rules for the

Basel III standardized approach released June 2012 (g)

310,479

310,693

308,844

304,200

303,212

Risk-weighted assets, determined in accordance with prescribed

regulatory requirements using Basel I definition

289,613

Adjustments

4

12,476

Risk-weighted assets estimated using final rules for the

Basel III standardized approach released July 2013 (h)

302,089

Ratios

Tangible common equity to tangible assets (a)/(e)

7.5%

7.4%

7.2%

7.2%

6.9%

Tangible common equity to risk-weighted assets using Basel I definition (a)/(f)

8.9%

8.8%

8.6%

8.8%

8.5%

Tier 1 common equity to risk-weighted assets using Basel I definition (b)/(f)

9.2%

9.1%

9.0%

9.0%

8.8%

Tier 1 common equity to risk-weighted assets approximated using proposed

rules for the Basel III standardized approach released June 2012

(c)/(g)

8.3%

8.2%

8.1%

8.2%

7.9%

Tier 1 common equity to risk-weighted assets estimated using final rules

for the Basel III standardized approach released July 2013 (d)/(h)

8.6%

-

-

-

-

2Q13

risk-weighted

assets

are

preliminary

data,

subject

to

change

prior

to

filings

with

applicable

regulatory

agencies

3

Includes higher risk-weighting for residential mortgages, unfunded loan commitments, investment securities and mortgage servicing rights, and other adjustments

4

Includes higher risk-weighting for unfunded loan commitments, investment securities and mortgage servicing rights, and other adjustments

U.S. Bancorp

2Q13 Earnings

Conference Call

U.S. Bancorp

2Q13 Earnings

Conference Call

July 17, 2013