U.S. Bancorp (USB) 8-K U.s. Bancorp Reports $1.5 Billion of Net Income for the Third Quarter 2014

Richard K. Davis

Chairman, President and CEO

Andy Cecere

Vice Chairman and CFO

U.S. Bancorp

3Q14 Earnings

Conference Call

U.S. Bancorp

3Q14 Earnings

Conference Call

October 22, 2014

Exhibit 99.2

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.

A

reversal

or

slowing

of

the

current

moderate

economic

recovery

or

another

severe

contraction

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;

breaches

in

data

security;

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,

2013,

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

calculations

of

these

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

3Q14 Earnings

Conference Call

3Q14 Highlights

Net income of $1.5 billion; $0.78 per diluted common share

Positive operating leverage on a year-over-year basis

Average loan growth of 6.3% vs. 3Q13 (5.9% excluding Charter One

acquisition)

and 1.4% vs. 2Q14 (1.1% excluding Charter One acquisition)

Average deposit growth of 7.4% vs. 3Q13 (5.5% excluding Charter One

acquisition) and 3.3% vs. 2Q14 (1.7% excluding Charter One acquisition)

Net charge-offs declined 3.7% vs. 2Q14

Nonperforming assets decreased 6.2% vs. 3Q13 (excluding covered assets)

Capital generation continues to reinforce capital position

•

Common equity tier 1 capital ratio of 9.0% estimated for the Basel III fully implemented

standardized approach

•

Common equity tier 1 capital ratio of 9.7%; Tier 1 capital ratio

of 11.3%

Returned 78% of earnings to shareholders in 3Q14

•

Repurchased 16 million shares of common stock during the quarter

4

3Q14 Earnings

Conference Call

Performance Ratios

Return on Average Common Equity

and Return on Average Assets

Efficiency Ratio and

Net Interest Margin

Return on Avg Common Equity

Return on Avg Assets

Efficiency Ratio

Net Interest Margin

*

Excluding

$214

million

gain

on

Visa

Inc.

Class

B

common

stock

sale

and

$200

million

FHA

DOJ

settlement

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

4

5

3Q14 Earnings

Conference Call

* Gain on Visa Inc. Class B common stock sale

Taxable-equivalent basis

Revenue Growth

Year-Over-Year Change

(5.6%)

(4.4%)

(1.2%)

4.9%

2.0%

$ in millions

5

3Q14 Earnings

Conference Call

3Q14 Earnings

Conference Call

Loan and Deposit Growth

Year-Over-Year Growth

Average Balances

$ in billions

3Q14 Acquisition Adjusted

Loan Growth = 5.9%

Deposit Growth = 5.5%

190.0

210.0

230.0

250.0

270.0

3Q13

4Q13

1Q14

2Q14

3Q14

6.8%

$240.5

6.3%

$243.9

5.7%

$229.4

5.7%

$232.8

6.0%

$235.9

6.0%

$262.4

7.4%

$271.0

5.5%

$252.4

5.4%

$256.9

5.1%

$257.5

Loans

Deposits

6

7

3Q14 Earnings

Conference Call

Credit Quality

* Excluding Covered Assets (assets subject to loss sharing agreements with FDIC)

Net Charge-offs

Nonperforming Assets*

$ in millions

Net Charge-offs (Left Scale)

NCOs to Avg Loans (Right Scale)

Nonperforming Assets (Left Scale)

NPAs to Loans plus ORE (Right Scale)

7

3Q14 Earnings

Conference Call

8

3Q14 Earnings

Conference Call

Earnings Summary

$ in millions, except per-share data

Taxable-equivalent basis

YTD

YTD

3Q14

2Q14

3Q13

vs 2Q14

vs 3Q13

2014

2013

% B/(W)

Net Interest Income

2,748

$    

2,744

$    

2,714

$    

0.1

1.3

8,198

$    

8,095

$    

1.3

Noninterest Income

2,242

2,444

2,177

(8.3)

3.0

6,794

6,618

2.7

Total Revenue

4,990

5,188

4,891

(3.8)

2.0

14,992

14,713

1.9

Noninterest Expense

2,614

2,753

2,565

5.0

(1.9)

7,911

7,592

(4.2)

Operating Income

2,376

2,435

2,326

(2.4)

2.1

7,081

7,121

(0.6)

Net Charge-offs

336

349

328

3.7

(2.4)

1,026

1,153

11.0

Excess Provision

(25)

(25)

(30)

-

(16.7)

(85)

(90)

(5.6)

Income before Taxes

2,065

2,111

2,028

(2.2)

1.8

6,140

6,058

1.4

Applicable Income Taxes

579

602

598

3.8

3.2

1,733

1,797

3.6

Noncontrolling Interests

(15)

(14)

38

(7.1)

nm

(44)

119

nm

Net Income

1,471

1,495

1,468

(1.6)

0.2

4,363

4,380

(0.4)

Preferred Dividends/Other

66

68

68

2.9

2.9

200

217

7.8

NI to Common

1,405

$    

1,427

$    

1,400

$    

(1.5)

0.4

4,163

$    

4,163

$    

-

Diluted EPS

0.78

$      

0.78

$      

0.76

$      

-

2.6

2.29

$      

2.25

$      

1.8

Average Diluted Shares

1,807

1,821

1,843

0.8

2.0

1,819

1,854

1.9

% B/(W)

9

3Q14 Earnings

Conference Call

3Q14 Results -

Key Drivers

vs. 3Q13

Net Revenue increase of 2.0%

•

Net interest income increase of 1.3%; net interest margin of 3.16% vs. 3.43% in 3Q13

•

Noninterest income increase of 3.0%

Noninterest expense increase of 1.9%

Provision for credit losses higher by $13 million

•

Net charge-offs higher by $8 million, or 2.4%

•

Provision lower than NCOs by $25 million vs. $30 million in 3Q13

vs. 2Q14

Net Revenue decrease of 3.8% (0.3% increase excluding notable items)

•

Net interest income increase of 0.1%; net interest margin of 3.16%

vs. 3.27% in 2Q14

•

Noninterest income decrease of 8.3% (0.5% increase excluding

notable items)

Noninterest expense decrease of 5.0% (2.4% increase

excluding notable items)

Provision for credit losses lower by $13 million

•

Net charge-offs decreased by $13 million, or 3.7%

•

Provision lower than NCOs by $25 million vs. $25 million in 2Q14

10

3Q14 Earnings

Conference Call

Capital Position

$ in billions; RWA = risk-weighted assets

(a) 2014 amounts and ratios calculated under the Basel III transitional standardized approach; all prior periods under Basel I

3Q14

2Q14

1Q14

4Q13

3Q13

Total U.S. Bancorp shareholders' equity

43.1

$    

42.7

$    

42.1

$    

41.1

$    

40.1

$    

Standardized Approach

Basel III transitional standardized approach/Basel I (a)

Common equity tier 1 capital

30.2

29.8

29.5

27.9

27.3

Tier 1 capital

35.4

34.9

34.6

33.4

32.7

Total risk-based capital

42.5

41.0

40.7

39.3

38.9

Common equity tier 1 capital ratio

9.7%

9.6%

9.7%

9.4%

9.3%

Tier 1 capital ratio

11.3%

11.3%

11.4%

11.2%

11.2%

Total risk-based capital ratio

13.6%

13.2%

13.5%

13.2%

13.3%

Leverage ratio

9.4%

9.6%

9.7%

9.6%

9.6%

Common equity tier 1 capital to RWA estimated for the

Basel III fully implemented standardized approach

9.0%

8.9%

9.0%

8.8%

8.6%

Advanced Approaches

Common equity tier 1 capital to RWA for the Basel III

transitional advanced approaches

12.4%

12.3%

Common equity tier 1 capital to RWA estimated for the 

Basel III fully implemented advanced approaches

11.8%

11.7%

Tangible common equity ratio

7.6%

7.5%

7.8%

7.7%

7.4%

Tangible common equity as a % of RWA

9.3%

9.2%

9.3%

9.1%

8.9%

11

3Q14 Earnings

Conference Call

12

3Q14 Earnings

Conference Call

Appendix

13

3Q14 Earnings

Conference Call

Average Loans

Key Points

$ in billions

vs. 3Q13

Average total loans grew by $14.5 billion, or 6.3%

(5.9% excluding Charter One acquisition)

Average total loans, excluding covered loans,

were higher by 7.7%

Average total commercial loans increased $9.3

billion, or 13.6%; average commercial real estate

loans increased $2.3 billion, or 6.1%

vs. 2Q14

Average total loans grew by $3.4 billion, or 1.4%

(1.1% excluding Charter One acquisition)

Average total loans, excluding covered loans,

were higher by 1.7%

Average total commercial loans increased $2.3

billion, or 3.1%; average commercial real estate

loans increased $0.3 billion, or 0.8%

Year-Over-Year Growth

5.7%

5.7%

6.0%

6.8%

6.3%

Covered

Commercial

CRE

Res Mtg

Retail

Credit Card

$229.4

$232.8

$235.9

$240.5

$243.9

Average Loans

13

3Q14 Earnings

Conference Call

14

3Q14 Earnings

Conference Call

Average Deposits

Average Deposits

Key Points

$ in billions

vs. 3Q13

Average total deposits increased by $18.6

billion, or 7.4% (5.5% excluding Charter One

acquisition)

Average low-cost deposits (NIB, interest

checking, money market and savings) 

increased by $24.9 billion, or 12.2%

vs. 2Q14

Average total deposits increased by $8.7

billion, or 3.3% (1.7% excluding Charter One

acquisition)

Average low-cost deposits increased by $9.2

billion, or 4.2%

Year-Over-Year Growth

5.5%

5.4%

5.1%

6.0%

7.4%

Time

Money Market

Checking and Savings

Noninterest-bearing

$252.4

$256.9

$257.5

$262.4

$271.0

14

3Q14 Earnings

Conference Call

15

3Q14 Earnings

Conference Call

Net Interest Income

Net Interest Income

Key Points

$ in millions

Taxable-equivalent basis

vs. 3Q13

Average earning assets grew by $31.4 billion,

or 10.0%

Net interest margin lower by 27 bps (3.16%

vs. 3.43%) driven by:

•

Lower reinvestment rates on investment securities,

as well as growth in the investment portfolio at

lower average rates, lower loan fees, and lower

rates on new loans

•

Partially offset by lower funding costs

vs. 2Q14

Average earning assets grew by $10.4 billion,

or 3.1%

Net interest margin lower by 11 bps (3.16%

vs. 3.27%) driven by:

•

Growth in lower rate investment securities and

lower loan fees

Year-Over-Year Change

(2.5%)

(1.8%)

(0.1%)

2.7%

1.3%

15

3Q14 Earnings

Conference Call

16

3Q14 Earnings

Conference Call

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. 3Q13

Noninterest income increased by $65 million, or

3.0%, driven by:

•

Higher credit and debit card revenues (2.9% increase) due to

higher transaction volumes; higher merchant processing

revenue (4.3% increase) due to an increase in product fees and

higher volumes, partially offset by lower rates

•

Higher trust and investment management revenue (12.5%

increase) due to account growth, improved market conditions

and business expansion

•

Higher deposit service charges (2.8% increase) due to account

growth, the Charter One acquisition and pricing changes

•

Higher other income due primarily to gains on sales of other

equity investments and an increase in retail leasing revenue

•

Mortgage banking revenue decline of $68 million

vs. 2Q14

Noninterest income decreased by $202 million, or

8.3%, driven by:

•

Lower other income primarily due to the second quarter

Visa sale

•

Higher corporate payments (7.1% increase) due to seasonally

higher transaction volumes

•

Higher deposit service charges (8.2% increase) due to higher

transaction volumes

•

Lower commercial products revenue (5.4% decrease) due to

lower wholesale transaction activity

•

Mortgage banking revenue decline of $18 million

Year-Over-Year Change

(9.1%)

(7.4%)

(2.6%)

7.4%

3.0%

$2,177

$2,156

$2,108

$2,444

$2,242

All Other

Mortgage

Service Charges

Trust and Inv Mgmt

Payments

3Q13

4Q13

1Q14

2Q14

3Q14

Visa Gain

-

$        

-

$        

-

$        

214

$    

-

$        

Total

-

$        

-

$        

-

$        

214

$    

-

$        

Notable Noninterest Income Items

16

3Q14 Earnings

Conference Call

17

3Q14 Earnings

Conference Call

Noninterest Expense

Noninterest Expense

Key Points

$ in millions

vs. 3Q13

Noninterest expense was higher by $49 million, or

1.9%, driven by:

•

Higher compensation expense (4.0% increase) reflecting the

impact of merit increases, acquisitions, and higher staffing for

risk and compliance activities

•

Higher net occupancy and equipment expense (3.8% increase)

due to business initiatives and maintenance costs

•

Higher professional services expense (8.5% increase) due

mainly to mortgage servicing-related project costs

•

Higher other expense primarily due to Charter One merger

integration and mortgage servicing-related expenses, partially

offset by lower costs for investments in tax-advantaged projects

related to a change in 1Q14 in accounting for affordable housing

investments

•

Lower employee benefit expense (decrease of 10.1%) driven by

lower pension costs

vs. 2Q14

Noninterest expense was lower by $139 million, or

5.0%, driven by:

•

Lower other expense due to the 2Q FHA DOJ settlement,

partially offset by mortgage servicing-related expenses, the

Charter One merger integration costs, and seasonally higher

costs related to investments in tax-advantaged projects

•

Lower marketing and business development (18.8% decrease)

due to 2Q charitable contributions and the timing of various

marketing programs

•

Higher professional services expense (5.2% increase) primarily

due to higher mortgage servicing-related project costs

Year-Over-Year Change

(1.7%)

(0.1%)

3.0%

7.7%

1.9%

$2,565

$2,682

$2,544

$2,753

$2,614

All Other

Tech and Communications

Prof Svcs, Marketing and PPS

Occupancy and Equipment

Compensation and Benefits

3Q13

4Q13

1Q14

2Q14

3Q14

FHA DOJ settlement

-

$        

-

$        

-

$        

200

$    

-

$        

Total

-

$        

-

$        

-

$        

200

$    

-

$        

Notable Noninterest Expense Items

17

3Q14 Earnings

Conference Call

18

3Q14 Earnings

Conference Call

Credit Quality

-

Commercial Loans

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Continued new client growth led to 3.2% linked quarter loan growth and 14.8% year-over-year

growth; utilization rates improved modestly

Net charge-offs below historic norms and were largely unchanged

Nonperforming loans and delinquencies continued at historically low levels

3Q13

2Q14

3Q14

Average Loans

$62,856

$69,920

$72,190

30-89 Delinquencies

0.28%

0.23%

0.23%

90+ Delinquencies

0.08%

0.06%

0.05%

Nonperforming Loans

0.16%

0.24%

0.22%

$ in millions

18

3Q14 Earnings

Conference Call

Credit Quality

-

Commercial Leases

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Commercial lease balances increased slightly

Net charge-offs increased in the quarter but remain at low historic levels

Nonperforming loans and delinquencies continued at modest levels

3Q13

2Q14

3Q14

Average Loans

$5,208

$5,100

$5,155

30-89 Delinquencies

0.76%

0.75%

0.83%

90+ Delinquencies

0.00%

0.00%

0.00%

Nonperforming Loans

0.23%

0.31%

0.23%

$ in millions

19

3Q14 Earnings

Conference Call

Credit Quality

-

Commercial Real Estate

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Average loans increased 0.8% on a linked quarter basis and 6.1% year-over-year

Credit quality is stable at low levels; net charge-offs ratio of 0.04%

Delinquencies continued a downward trend

3Q13

2Q14

3Q14

Average Loans

$38,501

$40,497

$40,839

30-89 Delinquencies

0.16%

0.14%

0.12%

90+ Delinquencies

0.02%

0.06%

0.03%

Nonperforming Loans

0.92%

0.55%

0.59%

Performing TDRs*

$365

$330

$284

$ in millions

Investor

$20,552

Owner

Occupied

$11,413

Multi-family

$2,927

Retail

$670

Residential

Construction

$1,810

A&D

Construction

$631

Office

$897

Other

$1,939

* TDR = troubled debt  restructuring

20

3Q14 Earnings

Conference Call

Credit Quality

-

Residential Mortgage

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Modest growth in high-quality originations (weighted average FICO 757, weighted average LTV

71%), as average loans increased 0.3% over 2Q14

81% 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

3Q13

2Q14

3Q14

Average Loans

$49,139

$51,815

$51,994

30-89 Delinquencies

0.70%

0.48%

0.46%

90+ Delinquencies

0.53%

0.49%

0.41%

Nonperforming Loans

1.46%

1.57%

1.62%

$ in millions

** Excludes GNMA loans, whose repayments are insured by the FHA or guaranteed by the Department of VA ($2,478 million 3Q14)

21

3Q14 Earnings

Conference Call

22

3Q14 Earnings

Conference Call

3Q13

2Q14

3Q14

Average Loans

$16,931

$17,384

$17,753

30-89 Delinquencies

1.25%

1.13%

1.23%

90+ Delinquencies

1.11%

1.06%

1.10%

Nonperforming Loans

0.55%

0.29%

0.22%

Credit Quality -

Credit Card

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Average loans increased 2.1% on a linked quarter basis; up 4.9% year-over-year

Delinquencies and losses have stabilized near historically low levels with some seasonal impacts

on delinquencies

Nonperforming loans continued to decline

$ in millions

22

3Q14 Earnings

Conference Call

23

3Q14 Earnings

Conference Call

Credit Quality -

Home Equity

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

High-quality

originations

(weighted

average

FICO

on

commitments

was

767,

weighted

average

CLTV

71%)

originated

primarily

through

the

retail

branch

network

to

existing

bank

customers

on

their

primary

residence

Net

charge-offs

ratio

declined

on

a

year-over-year

basis

3Q13

2Q14

3Q14

Average Loans

$15,648

$15,327

$15,704

30-89 Delinquencies

0.65%

0.50%

0.51%

90+ Delinquencies

0.25%

0.26%

0.26%

Nonperforming Loans

1.15%

1.11%

1.05%

Subprime: 2%

Wtd Avg LTV**: 90%

NCO: 6.22%

$ in millions

Prime: 95%

Wtd Avg LTV**: 72%

NCO: 0.50%

** LTV at origination

Other: 3%

Wtd Avg LTV**: 72%

NCO: 0.79%

23

3Q14 Earnings

Conference Call

24

3Q14 Earnings

Conference Call

Credit Quality -

Retail Leasing

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Year-over-year

growth

(5.8%)

driven

by

high-quality

originations

(weighted

average

FICO

780)

Delinquencies

remained

relatively

stable

at

very

low

levels

Strong

used

auto

values

continued

to

contribute

to

historically

low

net

charge-offs

3Q13

2Q14

3Q14

Average Loans

$5,664

$6,014

$5,991

30-89 Delinquencies

0.15%

0.16%

0.14%

90+ Delinquencies

0.02%

0.00%

0.02%

Nonperforming Loans

0.02%

0.02%

0.02%

$ in millions

*

Manheim

Used

Vehicle

Value

Index

source:

www.manheimconsulting.com,

January

1995

=

100,

quarter

value

=

average

monthly

ending

value

24

3Q14 Earnings

Conference Call

25

3Q14 Earnings

Conference Call

Credit Quality -

Other Retail

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Auto

loan

growth

continued

to

offset

declines

in

student

lending

loan

balances

Net

charge-offs

and

delinquencies

remained

low

on

a

linked

quarter

and

year-over-year

basis

3Q13

2Q14

3Q14

Average Loans

$25,682

$26,587

$27,003

30-89 Delinquencies

0.48%

0.47%

0.49%

90+ Delinquencies

0.14%

0.11%

0.13%

Nonperforming Loans

0.10%

0.06%

0.06%

Installment

$6,072

Auto Loans

$14,404

Revolving

Credit

$3,231

Student

Lending

$3,296

$ in millions

25

3Q14 Earnings

Conference Call

26

3Q14 Earnings

Conference Call

Credit Quality -

Auto Loans

Average Loans and Net Charge-offs Ratios

Key Statistics

Comments

Continued growth in auto loans driven by high-quality originations in the Indirect Channel

(weighted average FICO 762)

Net charge-offs increased due to seasonality as well as growth initiatives beginning to mature

3Q13

2Q14

3Q14

Average Loans

$12,946

$14,108

$14,404

30-89 Delinquencies

0.30%

0.38%

0.41%

90+ Delinquencies

0.03%

0.03%

0.05%

Nonperforming Loans

0.02%

0.01%

0.03%

$ in millions

Auto Loans are included in Other Retail category

Direct: 6%

Wtd Avg FICO: 748

NCO: .06%

Indirect: 94%

Wtd Avg FICO: 763

NCO: 0.26%

26

3Q14 Earnings

Conference Call

27

3Q14 Earnings

Conference Call

Mortgage Repurchase

Mortgages Repurchased and Make-whole Payments

Mortgage Representation and Warranties Reserve

$ in millions

3Q14

2Q14

1Q14

4Q13

3Q13

Beginning Reserve

$69

$75

$83

$176

$190

Net Realized Losses

(1)

(2)

(10)

(63)

(13)

Change in Reserve

(6)

(4)

2

(30)

(1)

Ending Reserve

$62

$69

$75

$83

$176

Mortgages

repurchased

and make-whole

payments

$19

$30

$36

$32

$42

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      

= $29 million

28

3Q14 Earnings

Conference Call

Non-GAAP Financial Measures

$ in millions

3Q14

2Q14

1Q14

4Q13

3Q13

Total equity

43,829

$   

43,386

$   

42,743

$   

41,807

$   

41,552

$   

Preferred stock

(4,756)

(4,756)

(4,756)

(4,756)

(4,756)

Noncontrolling interests

(688)

(686)

(689)

(694)

(1,420)

Goodwill (net of deferred tax liability) (1)

(8,503)

(8,548)

(8,352)

(8,343)

(8,319)

Intangible assets, other than mortgage servicing rights

(877)

(925)

(804)

(849)

(878)

Tangible common equity (a)

29,005

28,471

28,142

27,165

26,179

Tangible common equity (as calculated above)

29,005

28,471

28,142

27,165

26,179

Adjustments (2)

187

224

239

224

258

Common equity tier 1 capital estimated for the Basel III fully

implemented standardized and advanced approaches (b)

29,192

28,695

28,381

27,389

26,437

Tier 1 capital, determined in accordance with prescribed

regulatory requirements using Basel I definition

33,386

32,707

Preferred stock

(4,756)

(4,756)

Noncontrolling interests, less preferred stock not eligible for Tier 1 capital

(688)

(686)

Tier 1 common equity using Basel I definition (c)

27,942

27,265

(1) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements beginning March 31, 2014.

(2) Includes net losses on cash flow hedges included in accumulated other comprehensive income and other adjustments.

(3)

Beginning March 31, 2014, calculated under the Basel III transitional standardized approach; all other periods calculated under Basel I.

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

(5)

Primarily reflects higher risk-weighting for mortgage servicing rights.

29

3Q14 Earnings

Conference Call

Non-GAAP Financial Measures

$ in millions

3Q14

2Q14

1Q14

4Q13

3Q13

Total assets

391,284

$ 

389,065

$ 

371,289

$ 

364,021

$ 

360,681

$ 

Goodwill (net of deferred tax liability) (1)

(8,503)

(8,548)

(8,352)

(8,343)

(8,319)

Intangible assets, other than mortgage servicing rights

(877)

(925)

(804)

(849)

(878)

Tangible assets (d)

381,904

379,592

362,133

354,829

351,484

Risk-weighted assets, determined in accordance with prescribed

regulatory requirements (3)(e)

311,914

*

309,929

302,841

297,919

293,155

Adjustments (4)

12,837

*

12,753

13,238

13,712

13,473

Risk-weighted assets estimated for the Basel III fully implemented

standardized approach (f)

324,751

*

322,682

316,079

311,631

306,628

Risk-weighted assets, determined in accordance with prescribed

transitional advanced approaches regulatory requirements

243,905

*

241,929

Adjustments (5)

3,443

*

3,383

Risk-weighted assets estimated for the Basel III fully implemented

247,348

*

245,312

advanced approaches (g)

Ratios

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

7.6

%

7.5

%

7.8

%

7.7

%

7.4

%

Tangible common equity to risk-weighted assets (a)/(e)

9.3

9.2

9.3

9.1

8.9

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

--

--

--

9.4

9.3

Common equity tier 1 capital to risk-weighted assets estimated for the

Basel III fully implemented standardized approach (b)/(f)

9.0

8.9

9.0

8.8

8.6

Common equity tier 1 capital to risk-weighted assets estimated for the

Basel III fully implemented advanced approaches (b)/(g)

11.8

11.7

* Preliminary data.  Subject to change prior to filings with applicable regulatory agencies. 

(1) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements beginning March 31, 2014.

(2) Includes net losses on cash flow hedges included in accumulated other comprehensive income and other adjustments.

(3)

Beginning March 31, 2014, calculated under the Basel III transitional standardized approach; all other periods calculated under Basel I.

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

(5)

Primarily reflects higher risk-weighting for mortgage servicing rights.

U.S. Bancorp

3Q14 Earnings

Conference Call

U.S. Bancorp

3Q14 Earnings

Conference Call

October 22, 2014