Richard K. Davis Kathy Rogers U.S. Bancorp 1Q15 Earnings Conference Call U.S. Bancorp 1Q15 Earnings Conference Call April 15, 2015 Exhibit 99.2 Chairman, President and CEO Vice Chairman and CFO |
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 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. Stress in the commercial real estate markets, as well as a downturn in the residential real estate markets, could cause 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; litigation; 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, compliance risk, strategic risk, interest rate risk, liquidity risk and reputational 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, 2014, 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. |
1Q15 Earnings Conference Call 1Q15 Highlights Net income of $1.4 billion; $0.76 per diluted common share Average loan growth of 5.1% vs. 1Q14 and 0.6% vs. 4Q14 (0.8% excluding the reclassification of certain municipal loans to securities) Average deposit growth of 8.1% vs. 1Q14 (6.4% excluding Charter One acquisition) and 1.1% vs. 4Q14 Net charge-offs declined 18.2% vs. 1Q14 and 9.4% vs 4Q14 Nonperforming assets declined 15.2% vs. 1Q14 and 6.2% vs 4Q14 Capital generation continues to reinforce capital position • Common equity tier 1 capital ratio of 9.2% estimated for the Basel III fully implemented standardized approach Returned 70% of earnings to shareholders in 1Q15 • Repurchased 12 million shares of common stock during the quarter 3 |
1Q15 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 ** Excluding $124 million gain related to an equity interest in Nuveen and $88 million expense for charitable contributions and legal accruals 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 14.6% 15.1% 14.5% 14.4% 14.1% 1.56% 1.60% 1.51% 1.50% 1.44% 1.0% 1.5% 2.0% 2.5% 3.0% 8% 11% 14% 17% 20% 1Q14 2Q14 3Q14 4Q14 1Q15 52.9% 53.1% 52.4% 54.3% 53.8%** 51.3%* 3.35% 3.27% 3.16% 3.14% 3.08% 1.6% 2.2% 2.8% 3.4% 4.0% 48% 52% 56% 60% 64% 1Q14 2Q14 3Q14 4Q14 1Q15 54.3% 4 |
1Q15 Earnings Conference Call * Gain on Visa Inc. Class B common stock sale ** Gain related to an equity interest in Nuveen Taxable-equivalent basis Revenue Growth Year-Over-Year Change (1.2%) 4.9% 2.0% 5.7% 1.9% $ in millions $4,906 $4,814 $4,990 $5,188 $214* $124** 3,500 4,000 4,500 5,000 5,500 1Q14 2Q14 3Q14 4Q14 1Q15 $5,169 5 |
1Q15 Earnings Conference Call Loan and Deposit Growth Year-Over-Year Growth Average Balances $ in billions 5.9% $246.4 5.1% $248.0 6.0% $235.9 6.8% $240.5 6.3% $243.9 7.2% $275.5 8.1% $278.5 5.1% $257.5 6.0% $262.4 7.4% $271.0 210.0 230.0 250.0 270.0 290.0 1Q14 2Q14 3Q14 4Q14 1Q15 Loans Deposits 6 |
1Q15 Earnings Conference Call Credit Quality 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) $341 $349 $336 $308 $279 0.59% 0.58% 0.55% 0.50% 0.46% 0.00% 0.75% 1.50% 2.25% 3.00% 0 130 260 390 520 1Q14 2Q14 3Q14 4Q14 1Q15 $1,999 $1,943 $1,923 $1,808 $1,696 0.84% 0.80% 0.78% 0.73% 0.69% 0.00% 0.75% 1.50% 2.25% 3.00% 0 700 1,400 2,100 2,800 1Q14 2Q14 3Q14 4Q14 1Q15 7 |
1Q15 Earnings Conference Call Earnings Summary $ and shares in millions, except per-share data Taxable-equivalent basis 1Q15 4Q14 1Q14 vs 4Q14 vs 1Q14 Net Interest Income 2,752 $ 2,799 $ 2,706 $ (1.7) 1.7 Noninterest Income 2,154 2,370 2,108 (9.1) 2.2 Net Revenue 4,906 5,169 4,814 (5.1) 1.9 Noninterest Expense 2,665 2,804 2,544 5.0 (4.8) Operating Income 2,241 2,365 2,270 (5.2) (1.3) Net Charge-offs 279 308 341 9.4 18.2 Excess Provision (15) (20) (35) (25.0) (57.1) Income before Taxes 1,977 2,077 1,964 (4.8) 0.7 Applicable Income Taxes 533 576 552 7.5 3.4 Noncontrolling Interests (13) (13) (15) - 13.3 Net Income 1,431 1,488 1,397 (3.8) 2.4 Preferred Dividends/Other 66 68 66 2.9 - NI to Common 1,365 $ 1,420 $ 1,331 $ (3.9) 2.6 Diluted EPS 0.76 $ 0.79 $ 0.73 $ (3.8) 4.1 Average Diluted Shares 1,789 1,796 1,828 0.4 2.1 % B/(W) 8 |
1Q15 Earnings Conference Call 1Q15 Results - Key Drivers vs. 1Q14 Net Revenue increase of 1.9% • Net interest income increase of 1.7%; net interest margin of 3.08% vs. 3.35% in 1Q14 • Noninterest income increase of 2.2% Noninterest expense increase of 4.8% Provision for credit losses declined by $42 million • Net charge-offs lower by $62 million, or 18.2% • Provision lower than NCOs by $15 million vs. $35 million in 1Q14 vs. 4Q14 Net Revenue decrease of 5.1% (2.8% decrease excluding notable item in 4Q14) • Net interest income decrease of 1.7%; net interest margin of 3.08% vs. 3.14% in 4Q14 • Noninterest income decrease of 9.1% (4.1% decrease excluding notable item in 4Q14) Noninterest expense decrease of 5.0% (1.9% decrease excluding notable items in 4Q14) Provision for credit losses lower by $24 million • Net charge-offs decreased by $29 million, or 9.4% • Provision lower than NCOs by $15 million vs. $20 million in 4Q14 9 |
10 1Q15 Earnings Conference Call Capital Position $ in billions RWA = risk-weighted assets 1Q15 4Q14 3Q14 2Q14 1Q14 Total U.S. Bancorp shareholders' equity 44.3 $ 43.5 $ 43.1 $ 42.7 $ 42.1 $ Standardized Approach Basel III transitional standardized approach Common equity tier 1 capital 31.3 30.9 30.2 29.8 29.5 Tier 1 capital 36.4 36.0 35.4 34.9 34.6 Total risk-based capital 43.6 43.2 42.5 41.0 40.7 Common equity tier 1 capital ratio 9.6% 9.7% 9.7% 9.6% 9.7% Tier 1 capital ratio 11.1% 11.3% 11.3% 11.3% 11.4% Total risk-based capital ratio 13.3% 13.6% 13.6% 13.2% 13.5% Leverage ratio 9.3% 9.3% 9.4% 9.6% 9.7% Common equity tier 1 capital to RWA estimated for the Basel III fully implemented standardized approach 9.2% 9.0% 9.0% 8.9% 9.0% Advanced Approaches Common equity tier 1 capital to RWA for the Basel III transitional advanced approaches 12.3% 12.4% 12.4% 12.3% Common equity tier 1 capital to RWA estimated for the Basel III fully implemented advanced approaches 11.8% 11.8% 11.8% 11.7% Tangible common equity ratio 7.6% 7.5% 7.6% 7.5% 7.8% Tangible common equity as a % of RWA 9.3% 9.3% 9.3% 9.2% 9.3% 10 |
11 1Q15 Earnings Conference Call Capital Actions Reinvest and Acquisitions Dividends Share Repurchases 20 - 40% Targets: 30 - 40% 30 - 40% 30% 1Q15 Actual: 38% 32% Earnings Distribution Share repurchase authorization and expected dividend increase announced March 11 • Expect to increase annual dividend from $0.98 to $1.02, a 4.1% increase, effective 2Q15 • Five-quarter authorization to repurchase up to $3.022 billion of outstanding common stock effective April 1, 2015 Returned 70% of earnings to shareholders during 1Q15 th |
12 1Q15 Earnings Conference Call |
1Q15 Earnings Conference Call Appendix 13 |
1Q15 Earnings Conference Call Average Loans Key Points $ in billions vs. 1Q14 Average total loans grew by $12.1 billion, or 5.1% (4.8% excluding Charter One acquisition) Average total commercial loans increased $10.7 billion, or 15.1%; average commercial real estate loans increased $2.6 billion, or 6.5% vs. 4Q14 Average total loans grew by $1.6 billion, or 0.6% (0.8% increase excluding reclassification of certain municipal loans to securities at the end of 4Q14) Average total commercial loans increased $1.9 billion, or 2.4%; average commercial real estate loans increased $1.7 billion, or 4.2% Year-Over-Year Growth 6.0% 6.8% 6.3% 5.9% 5.1% Covered Commercial CRE Res Mtg Retail Credit Card Average Loans 8.5% 12.4% 13.6% 15.5% 15.1% 7.6% 6.9% 6.1% 4.2% 6.5% 14.4% 10.5% 5.8% 2.2% (0.3%) 5.3% 5.9% 4.9% 3.6% 2.4% 0 70 140 280 1Q14 2Q14 3Q14 4Q14 1Q15 0.9% 2.3% 3.6% 3.6% 3.5% 210 14 $235.9 $240.5 $243.9 $246.4 $248.0 |
1Q15 Earnings Conference Call Average Deposits Average Deposits Key Points $ in billions vs. 1Q14 Average total deposits increased by $21.0 billion, or 8.1% (6.4% excluding Charter One acquisition) Average low-cost deposits (NIB, interest checking, money market and savings) increased by $24.5 billion, or 11.4% vs. 4Q14 Average total deposits increased by $3.0 billion, or 1.1% Average low-cost deposits increased by $4.1 billion, or 1.7% Year-Over-Year Growth 5.1% 6.0% 7.4% 7.2% 8.1% Time Money Market Checking and Savings Noninterest-bearing $257.5 $262.4 $271.0 $275.5 $278.5 (6.1%) (5.9%) (13.1%) (4.9%) (8.2%) 11.6% 10.8% 18.3% 19.7% 24.7% 5.9% 8.3% 10.9% 8.3% 7.3% 6.7% 7.4% 8.6% 3.3% 5.2.% 0 80 160 240 320 1Q14 2Q14 3Q14 4Q14 1Q15 15 |
1Q15 Earnings Conference Call Net Interest Income Net Interest Income Key Points $ in millions Taxable-equivalent basis vs. 1Q14 Average earning assets grew by $34.6 billion, or 10.6% Net interest margin lower by 27 bps (3.08% vs. 3.35%) driven by: • growth in the investment portfolio at lower average rates, as well as lower reinvestment rates on investment securities, lower loan fees due to the CAA product wind down, lower rates on new loans and a change in loan portfolio mix • Partially offset by lower funding costs vs. 4Q14 Average earning assets grew by $5.9 billion, or 1.7% Net interest margin lower by 6 bps (3.08% vs. 3.14%) driven by: • Growth in lower rate investment securities and lower reinvestment rates, lower interest recoveries, lower rates on new loans and a change in loan portfolio mix, along with the impact of higher cash balances at the Federal Reserve as a result of continued deposit growth Year-Over-Year Change (0.1%) 2.7% 1.3% 2.4% 1.7% $2,706 $2,744 $2,748 $2,799 $2,752 3.35% 3.27% 3.16% 3.14% 3.08% 0.0% 2.0% 4.0% 6.0% 8.0% 0 1,000 2,000 3,000 4,000 1Q14 2Q14 3Q14 4Q14 1Q15 Net Interest Income Net Interest Margin 16 |
1Q15 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. 1Q14 Noninterest income increased by $46 million, or 2.2%, driven by: • Higher trust and investment management fees (5.9% increase) due to account growth and improved market conditions • Higher other income due primarily to equity investment gains • Mortgage revenue increase of $4 million • Partially offset by lower commercial products revenue (2.4% decrease) due to lower wholesale transaction activity and lower commercial leasing revenue, partially offset by increased bond underwriting fees vs. 4Q14 Noninterest income decreased by $216 million, or 9.1%, driven by: • Lower credit and debit card revenue (11.4% decrease) primarily due to seasonally lower sales volume and fewer days • Lower merchant processing revenue (6.5% decrease) due to seasonally lower product fees and fewer days • Lower deposit service charges (10.6% decrease) due to fewer days and seasonally lower volumes • Lower commercial products revenue (8.7% decrease) due to lower wholesale transaction activity partially offset by increased bond underwriting fees • Lower other income due primarily to 4Q Nuveen gain • Partially offset by mortgage revenue increase of $5 million Year-Over-Year Change (2.6%) 7.4% 3.0% 9.9% 2.2% $2,108 $2,444 $2,242 $2,370 All Other Mortgage Service Charges Trust and Inv Mgmt Payments 1Q14 2Q14 3Q14 4Q14 1Q15 Nuveen Gain - $ - $ - $ 124 $ - $ Visa Gain - 214 - - - Total - $ 214 $ - $ 124 $ - $ Notable Noninterest Income Items 0 700 1,400 2,100 2,800 1Q14 2Q14 3Q14 4Q14 1Q15 $2,154 3.2% 1.7% 2.2% 5.9% 0.3% 17 |
1Q15 Earnings Conference Call Noninterest Expense Noninterest Expense Key Points $ in millions vs. 1Q14 Noninterest expense was higher by $121 million, or 4.8%, driven by: • Higher compensation expense (5.7% increase) reflecting the impact of merit increases, acquisitions, and higher staffing for risk and compliance activities, and higher employee benefits expense (9.7% increase) due to higher pension costs • Higher other expense (12.4% increase) primarily due to higher mortgage servicing-related expenses vs. 4Q14 Noninterest expense was lower by $139 million, or 5.0%, driven by: • Lower marketing and business development expense (45.7% decrease) due to the fourth quarter 2014 charitable contributions and lower advertising costs • Lower professional services expense (41.7% decrease) due to seasonally lower costs • Lower other expense due to seasonally lower costs related to investments in tax-advantaged projects and the impact of the fourth quarter 2014 legal accruals, partially offset by increased mortgage servicing-related expenses • Partially offset by higher employee benefit expense (29.4% increase) due to increased pension costs and seasonally higher payroll taxes and higher compensation expense (2.4% increase) reflecting the seasonal impact of stock based compensation grants and commissions related to mortgage production Year-Over-Year Change 3.0% 7.7% 1.9% 4.5% 4.8% $2,544 $2,753 $2,614 $2,804 $2,665 All Other Tech and Communications Prof Svcs, Marketing and PPS Occupancy and Equipment Compensation and Benefits 1Q14 2Q14 3Q14 4Q14 1Q15 Charitable contributions - $ - $ - $ 35 $ - $ Accruals for legal matters - - - 53 - FHA DOJ settlement - 200 - - - Total - $ 200 $ - $ 88 $ - $ Notable Noninterest Expense Items 9.6% 1.4% (0.8%) 6.6% 0 800 1,600 2,400 3,200 1Q14 2Q14 3Q14 4Q14 1Q15 (5.8%) 18 |
19 1Q15 Earnings Conference Call Credit Quality - Commercial Loans Average Loans and Net Charge-offs Ratios Key Statistics Key Points Continued new client growth led to 2.5% linked quarter loan growth and 16.1% year-over-year growth; utilization rates improved modestly Net charge-offs declined on a linked quarter basis and the NCO ratio was flat year-over-year Nonperforming loans and delinquencies continued at historically low levels 1Q14 4Q14 1Q15 Average Loans $65,645 $74,333 $76,183 30-89 Delinquencies 0.25% 0.27% 0.19% 90+ Delinquencies 0.07% 0.05% 0.06% Nonperforming Loans 0.25% 0.13% 0.10% $ in millions $65,645 $69,920 $72,190 $74,333 $76,183 0.21% 0.30% 0.29% 0.26% 0.21 0.0% 0.5% 1.0% 1.5% 2.0% 0 25,000 50,000 75,000 100,000 1Q14 2Q14 3Q14 4Q14 1Q15 Average Loans Net Charge -offs Ratio 20% 24% 28% 32% 36% Revolving Line Utilization Trend |
20 1Q15 Earnings Conference Call Credit Quality - Commercial Leases Average Loans and Net Charge-offs Ratios Key Statistics Key Points Commercial lease balances increased slightly on a linked quarter basis Net charge-offs increased as recoveries returned to normal levels Nonperforming loans and delinquencies continued at modest levels 1Q14 4Q14 1Q15 Average Loans $5,189 $5,292 $5,325 30-89 Delinquencies 0.74% 0.78% 0.84% 90+ Delinquencies 0.00% 0.00% 0.00% Nonperforming Loans 0.27% 0.24% 0.24% $ in millions Small Ticket $3,095 Equipment Finance $2,230 Commercial Leases $5,189 $5,100 $5,155 $5,292 $5,325 0.16% 0.24% 0.46% -0.15% 0.23% -0.7% 0.0% 0.7% 1.4% 2.1% 0 3,000 6,000 9,000 1Q14 2Q14 3Q14 4Q14 1Q15 Average Loans Net Charge -offs Ratio |
1Q15 Earnings Conference Call Credit Quality - Commercial Real Estate Average Loans and Net Charge-offs Ratios Key Statistics Key Points Credit quality is stable at low levels; non-performing loans improved quarter-over-quarter Net recovery ratio of 0.17%, continuing a trend of recoveries in the portfolio 1Q14 4Q14 1Q15 Average Loans $40,050 $40,966 $42,671 30-89 Delinquencies 0.14% 0.26% 0.24% 90+ Delinquencies 0.06% 0.05% 0.07% Nonperforming Loans 0.67% 0.61% 0.51% Performing TDRs* $359 $365 $259 $ in millions Investor $21,551 Owner Occupied $11,568 Multi-family $2,931 Retail $745 Residential Construction $2,061 A&D Construction $714 Office $1,024 Other $2,077 * TDR = troubled debt restructuring $40,050 $40,497 $40,839 $40,966 $42,671 -0.03% -0.04% 0.04% -0.10% -0.17% -0.5% 0.0% 0.5% 1.0% 1.5% 0 20,000 40,000 60,000 1Q14 2Q14 3Q14 4Q14 1Q15 Average Loans Net Charge -offs Ratio CRE Mortgage CRE Construction 21 |
1Q15 Earnings Conference Call Credit Quality - Residential Mortgage Average Loans and Net Charge-offs Ratios Key Statistics Key Points Originations are of high credit quality (weighted average FICO 755, weighted average LTV 69%) 82% 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 1Q14 4Q14 1Q15 Average Loans $51,584 $51,872 $51,426 30-89 Delinquencies 0.59% 0.43% 0.38% 90+ Delinquencies 0.64% 0.40% 0.33% Nonperforming Loans 1.50% 1.67% 1.61% $ in millions *Excludes GNMA loans, whose repayments are insured by the FHA or guaranteed by the Department of VA ($2,157 million in 1Q15) $51,584 $51,815 $51,994 $51,872 $51,426 0.45% 0.44% 0.32% 0.30% 0.0% 0.5% 1.0% 1.5% 2.0% 0 15,000 30,000 45,000 60,000 1Q14 2Q14 3Q14 4Q14 1Q15 Average Loans Net Charge -offs Ratio $1,962 $1,922 $1,899 $1,866 $1,851 0 1,000 2,000 3,000 4,000 1Q14 2Q14 3Q14 4Q14 1Q15 Residential Mortgage Performing TDRs* 22 0.28% |
23 1Q15 Earnings Conference Call 1Q14 4Q14 1Q15 Average Loans $17,407 $17,990 $17,823 30-89 Delinquencies 1.19% 1.24% 1.16% 90+ Delinquencies 1.21% 1.13% 1.19% Nonperforming Loans 0.38% 0.16% 0.13% Credit Quality - Credit Card Average Loans and Net Charge-offs Ratios Key Statistics Key Points Average loans seasonally declined 0.9% on a linked quarter basis; up 2.4% year-over-year Delinquencies and losses remain near historically low levels with some seasonal impacts Nonperforming loans continued to decline $ in millions 0 5,000 10,000 15,000 20,000 1Q14 2Q14 3Q14 4Q14 1Q15 0.0% 2.0% 4.0% 6.0% 8.0% $17,407 $17,384 $17,753 $17,990 $17,823 3.96% 3.92% 3.53% 3.53% 3.71% Average Loans Net Charge -offs Ratio Credit Card Nonperforming Loans 0.0% 0.5% 1.0% 1.5% 2.0% 0 20 40 60 80 1Q14 2Q14 3Q14 4Q14 1Q15 $65 $52 $40 $30 $22 0.38% 0.29% 0.22% 0.16% 0.13% |
1Q15 Earnings Conference Call Credit Quality - Home Equity Average Loans and Net Charge-offs Ratios Key Statistics Key Points High-quality originations (weighted average FICO on commitments was 766, weighted average CLTV 71%) originated primarily through the retail branch network to existing bank customers on their primary residences Net charge-offs ratio declined on a linked quarter and year-over-year basis 1Q14 4Q14 1Q15 Average Loans $15,366 $15,853 $15,897 30-89 Delinquencies 0.57% 0.54% 0.41% 90+ Delinquencies 0.33% 0.26% 0.25% Nonperforming Loans 1.09% 1.07% 1.07% Subprime: 1% Wtd Avg LTV*: 90% NCO: 3.51% $ in millions Prime: 96% Wtd Avg LTV*: 72% NCO: 0.29% *LTV at origination Other: 3% Wtd Avg LTV*: 72% NCO: 0.81% $15,366 $15,327 $15,704 $15,853 $15,897 0.82% 0.60% 0.61% 0.43% 0.36% 0.0% 1.0% 2.0% 3.0% 4.0% 0 5,000 10,000 15,000 20,000 1Q14 2Q14 3Q14 4Q14 1Q15 Average Loans Net Charge -offs Ratio Home Equity 24 |
1Q15 Earnings Conference Call Credit Quality - Retail Leasing Average Loans and Net Charge-offs Ratios Key Statistics Key Points Continued high-quality originations (weighted average FICO 789) support the portfolio’s stable credit profile Delinquencies remained relatively stable at very low levels Strong used auto values continued to contribute to historically low net charge-offs 1Q14 4Q14 1Q15 Average Loans $5,979 $5,939 $5,819 30-89 Delinquencies 0.16% 0.18% 0.12% 90+ Delinquencies 0.02% 0.02% 0.00% 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 of monthly ending values $5,979 $6,014 $5,991 $5,939 $5,819 0.00% 0.07% 0.00% 0.07% 0.07% 0.0% 0.2% 0.4% 0.6% 0.8% 0 2,000 4,000 6,000 8,000 1Q14 2Q14 3Q14 4Q14 1Q15 Average Loans Net Charge -offs Ratio 100 110 120 130 140 Manheim Used Vehicle Index* 25 |
26 1Q15 Earnings Conference Call Credit Quality - Other Retail Average Loans and Net Charge-offs Ratios Key Statistics Key Points Growth in auto and installment loans continued to offset declines in student lending loan balances Student lending balances were moved to held for sale at the end of the quarter Net charge-offs and delinquencies improved on a linked quarter basis reflecting seasonality and remained low year-over-year 1Q14 4Q14 1Q15 Average Loans $26,312 $27,317 $27,604 30-89 Delinquencies 0.40% 0.51% 0.44% 90+ Delinquencies 0.13% 0.12% 0.11% Nonperforming Loans 0.08% 0.06% 0.06% Installment $6,274 Auto Loans $15,013 Revolving Credit $3,272 Student Lending $3,045 $ in millions $26,312 $26,587 $27,003 $27,317 $27,604 0.69% 0.68% 0.72% 0.76% 0.60% 0.0% 0.5% 1.0% 1.5% 2.0% 0 10,000 20,000 30,000 40,000 1Q14 2Q14 3Q14 4Q14 1Q15 Average Loans Net Charge -offs Ratio Other Retail |
27 1Q15 Earnings Conference Call Credit Quality - Auto Loans Average Loans and Net Charge-offs Ratios Key Statistics Key Points Continued growth (8.7% year-over-year) in auto loans driven by high-quality originations in the indirect channel (weighted average FICO 765) Net charge-offs seasonally improved on a linked quarter basis, and as expected, increased year-over-year as growth initiatives continued to mature 1Q14 4Q14 1Q15 Average Loans $13,815 $14,644 $15,013 30-89 Delinquencies 0.26% 0.45% 0.30% 90+ Delinquencies 0.03% 0.03% 0.01% Nonperforming Loans 0.02% 0.03% 0.03% $ in millions Auto Loans are included in Other Retail category Direct: 6% Wtd Avg FICO: 748 NCO: 0.05% Indirect: 94% Wtd Avg FICO: 763 NCO: 0.20% $13,815 $14,108 $14,404 $14,644 $15,013 0.09% 0.11% 0.25% 0.33% 0.19% 0.0% 0.5% 1.0% 1.5% 2.0% 0 4,000 8,000 12,000 16,000 1Q14 2Q14 3Q14 4Q14 1Q15 Average Loans Net Charge -offs Ratio Indirect and Direct Channel |
28 1Q15 Earnings Conference Call Mortgage Repurchase Mortgages Repurchased and Make-whole Payments Mortgage Representation and Warranties Reserve $ in millions 1Q15 4Q14 3Q14 2Q14 1Q14 Beginning Reserve $46 $62 $69 $75 $83 Net Realized Losses (2) (15) (1) (2) (10) Change in Reserve 2 (1) (6) (4) 2 Ending Reserve $46 $46 $62 $69 $75 Mortgages repurchased and make-whole payments $12 $14 $19 $30 $36 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 of $22 million |
1Q15 Earnings Conference Call Non-GAAP Financial Measures March 31, December 31, September 30, June 30, March 31, (Dollars in Millions, Unaudited) 2015 2014 2014 2014 2014 Total equity $44,965 $44,168 $43,829 $43,386 $42,743 Preferred stock (4,756) (4,756) (4,756) (4,756) (4,756) Noncontrolling interests (688) (689) (688) (686) (689) Goodwill (net of deferred tax liability) (1) (8,360) (8,403) (8,503) (8,548) (8,352) Intangible assets, other than mortgage servicing rights (783) (824) (877) (925) (804) Tangible common equity (a) 30,378 29,496 29,005 28,471 28,142 Tangible common equity (as calculated above) 30,378 29,496 29,005 28,471 28,142 Adjustments (2) 158 172 187 224 239 Common equity tier 1 capital estimated for the Basel III fully implemented standardized and advanced approaches (b) 30,536 29,668 29,192 28,695 28,381 Total assets 410,233 402,529 391,284 389,065 371,289 Goodwill (net of deferred tax liability) (1) (8,360) (8,403) (8,503) (8,548) (8,352) Intangible assets, other than mortgage servicing rights (783) (824) (877) (925) (804) Tangible assets (c) 401,090 393,302 381,904 379,592 362,133 Risk-weighted assets, determined in accordance with prescribed regulatory requirements (d) 327,709 * 317,398 311,914 309,929 302,841 Adjustments (3) 3,153 * 11,110 12,837 12,753 13,238 Risk-weighted assets estimated for the Basel III fully implemented standardized approach (e) 330,862 * 328,508 324,751 322,682 316,079 Risk-weighted assets, determined in accordance with prescribed transitional advanced approaches regulatory requirements 254,892 * 248,596 243,909 241,929 Adjustments (4) 3,321 * 3,270 3,443 3,383 Risk-weighted assets estimated for the Basel III fully implemented advanced approaches (f) 258,213 * 251,866 247,352 245,312 Ratios * Tangible common equity to tangible assets (a)/(c) 7.6 % 7.5 % 7.6 % 7.5 % 7.8 % Tangible common equity to risk-weighted assets (a)/(d) 9.3 9.3 9.3 9.2 9.3 Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach (b)/(e) 9.2 9.0 9.0 8.9 9.0 Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced approaches (b)/(f) 11.8 11.8 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. (2) Includes net losses on cash flow hedges included in accumulated other comprehensive income and other adjustments. (3) Includes higher risk-weighting for unfunded loan commitments, investment securities, residential mortgages, mortgage servicing rights and other adjustments. (4) Primarily reflects higher risk-weighting for mortgage servicing rights. 29 |
April 15, 2015 U.S. Bancorp 1Q15 Earnings Conference Call U.S. Bancorp 1Q15 Earnings Conference Call |