The CFA Society of Minnesota InvestMNt 2015 John Elmore Vice Chairman, Community Banking and Branch Delivery Kent Stone Vice Chairman, Consumer Banking Sales and Support August 5, 2015 Exhibit 99.1 |
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 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. |
3 Agenda U.S. Bancorp Overview Consumer and Small Business Banking Chicago Growth Success Balance Sheet Highlights Evolving Customer Expectations Branch and Omnichannel |
4 U.S. Bancorp |
5 U.S. Bancorp Dimensions Assets $419 billion Deposits $297 billion Loans $249 billion Customers 18.5 million NYSE Traded USB Market Capitalization $79 billion Founded 1863 Bank Branches 3,164 ATMs 5,020 2Q15 Dimensions As of 6/30/15, market capitalization as of 7/28/15 |
Industry Position Source: company reports, SNL and FactSet Assets and deposits as of 6/30/15, market value as of 7/28/15 U.S. U.S. U.S. Rank Company $ Billions Rank Company $ Billions Rank Company $ Billions 1 J.P. Morgan 2,450 1 J.P. Morgan $1,287 1 Wells Fargo $295 2 Bank of America 2,149 2 Wells Fargo 1,186 2 J.P. Morgan 252 3 Citigroup 1,827 3 Bank of America 1,150 3 Bank of America 187 4 Wells Fargo 1,721 4 Citigroup 908 4 Citigroup 176 5 U.S. Bancorp 419 5 U.S. Bancorp 297 5 U.S. Bancorp 79 6 PNC 354 6 PNC 240 6 PNC 51 7 BB&T 191 7 SunTrust 145 7 BB&T 30 8 SunTrust 189 8 BB&T 133 8 SunTrust 23 9 Fifth Third 142 9 Fifth Third 103 9 Fifth Third 17 10 Regions 122 10 Regions 97 10 Regions 14 Assets Deposits Market Value 6 |
Strong Diversification Revenue Mix By Business Line Consumer and Small Business Banking 42% Payment Services 30% Wealth Mgmt and Securities Services 11% Wholesale Banking and Commercial Real Estate 17% Fee Income / Total Revenue 2Q15 YTD, taxable-equivalent basis Business line revenue percentages exclude Treasury and Corporate Support, see appendix 55% 45% 46% 46% 45% 45% 45% 35% 40% 45% 50% 55% 2011 2012 2013 2014 1H15 7 |
Peer Banks Peer Bank Ticker Symbols BAC Bank of America PNC PNC BBT BB&T RF Regions FITB Fifth Third STI SunTrust JPM J.P. Morgan USB U.S. Bancorp KEY KeyCorp WFC Wells Fargo Bank of America SunTrust Wells Fargo KeyCorp BBT Fifth Third Regions PNC J.P. Morgan U.S. Bancorp 8 |
Industry Leading Returns Source: SNL and company reports; Peer banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI and WFC Efficiency ratio computed as noninterest expense divided by the sum of net interest income on a taxable-equivalent basis and noninterest income excluding net securities gains (losses) Return on Average Assets Return on Average Common Equity Efficiency Ratio Since 2008 2Q15 1.46% 1.33% 1.18% 1.04% 1.03% 1.02% 1.01% 0.99% 0.95% 0.90% USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 14.3% 12.7% 10.8% 9.7% 9.1% 8.7% 8.5% 8.2% 8.1% 6.7% USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 53.2% 58.2% 60.3% 60.6% 62.3% 64.4% 65.6% 65.6% 65.9% 69.8% USB 1.40% 1.23% 1.13% 0.91% 0.77% 0.70% 0.46% 0.26% 0.23% USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 14.2% 12.0% 9.6% 8.8% 8.2% 6.0% 3.6% 1.7% 1.4% USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 51.2% 57.7% 58.4% 60.9% 61.1% 63.7% 68.3% 69.8% 69.9% 73.8% USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 9 |
10 Loan and Deposit Growth $ in billions * Excluding the impact of the reclassification of approximately $3 billion of student loans to held for sale at the end of 1Q15 Prior 5 Years Average Balances Year-Over-Year Growth Prior 5 Quarters Average Balances Year-Over-Year Growth Loans Deposits 5% 9% 7% 6% 7% 3% 6% 7% 8% 4% 7% 6% 6% 4% 15% 11% 6% 7% 10% 6% 2Q15 adjusted* loan growth = 4.0% 240 244 246 248 247 262 271 275 278 286 $180 $210 $240 $270 $300 2Q14 3Q14 4Q14 1Q15 2Q15 193 201 215 227 242 185 213 236 250 267 $100 $150 $200 $250 $300 2010 2011 2012 2013 2014 |
11 Capital Actions 62% 76% 70% Payout Ratio 71% 72% Dividend increase announced June 16 Annual dividend increased from $0.98 to $1.02 per share, a 4.1% increase One-year authorization to repurchase up to $3.0 billion of outstanding common stock effective April 1, 2015 Returned 76% of earnings to shareholders during 2Q15 Earnings Distribution Target 27% 29% 31% 32% 32% 35% 42% 41% 38% 44% 0% 25% 50% 75% 100% 2012 2013 2014 1Q15 2Q15 Dividends Share Repurchases Reinvest and Acquisitions Dividends Share Repurchases 20 - 40% 30 - 40% 30 - 40% |
12 Agenda U.S. Bancorp Overview Consumer and Small Business Banking Chicago Growth Success Balance Sheet Highlights Evolving Customer Expectations Branch and Omnichannel |
13 Consumer and Small Business Banking Business Line Summary Provides a full suite of banking products and services to consumer and small business customers across 25-state branch footprint Differentiating U.S. Bank from competitors through continued improvement in the customer experience, investments in innovative products and deeper customer relationships Omnichannel strategy driving investments in industry- leading digital channel capabilities and new state-of-the- art branch formats Business Line Scale 25 contiguous state distribution footprint; #4 U.S. branch network; #1 in-store and on-site branch network #5 U.S. mortgage originator A leading SBA and auto lender Mortgage Banking 22% Consumer and Small Business Banking Revenue Mix 42% Metropolitan Banking 30% In-store and On-site Banking 7% Consumer Lending 14% Source: SNL and Inside Mortgage Finance Revenue contribution and mix 2Q15 YTD; Revenue contribution percentages exclude Treasury and Corporate Support Revenue Contribution to USB Community Banking 27% |
14 Successful Acquisition – Chicago Branches Acquired the Chicago-area branch banking franchise of RBS Citizens (branded as Charter One Bank) in 2014 Approximately $5 billion of deposits and $1 billion of loans Nearly doubled Chicago deposit base Consistent with our strategy - branch deals in market where we can deepen our presence |
15 Consumer Loans – Positive Momentum Auto Lending Continued growth in auto loans driven by high-quality originations in the indirect channel Average loans, $ in millions Year-Over-Year Growth = +10.6% Year-Over-Year Growth = +4.1% Home Equity Lending Originated primarily through the retail branch network to existing bank customers on their primary residences $14,108 $14,404 $14,644 $15,013 $15,609 13,000 14,000 15,000 16,000 17,000 2Q14 3Q14 4Q14 1Q15 2Q15 Auto $15,327 $15,704 $15,853 $15,897 $15,958 13,000 14,000 15,000 16,000 17,000 2Q14 3Q14 4Q14 1Q15 2Q15 Home Equity |
16 Consumer Deposits – Continued Strength Deposits Continued strong growth in consumer and small business banking deposits Growth in noninterest-bearing and low-cost interest checking and savings products was particularly strong Average Consumer and Small Business Banking deposits, $ in millions Year-Over-Year Growth = +8.0% $125,499 $130,612 $132,031 $133,375 $135,569 Time Savings Products Interest Checking Noninterest-bearing 0 40,000 80,000 120,000 160,000 2Q14 3Q14 4Q14 1Q15 2Q15 Deposits |
17 Customer Expectations are Evolving Access: Instant information availability Ubiquitous access across channels Convenience: Flexibility to change with minimal hassle Have solutions “come to customer” Personalization: Tailored products and services Work done automatically where possible Speed: No long waits on phone or in line Work done automatically where possible |
18 Single Channels are Adapting …and Bank Channels are Expanding Transaction center Responding to inbound customers Branch manager in the branch Primarily focused on good service through traditional retail activity Advice center External customer development Branch manager spends 50% of time in the community Central point of contact for retail, business banking, and wealth Branch of the past Branch of today |
19 Current Channel Offerings Provide Strong Connection to our Customers Mobile Banking Onsite Branch Phone Banking Anchor Branch Customer In-store Branch Drive-thru Branch Online Banking Cashless Branch ATM |
20 Omnichannel Strategy All channels comprise ‘Omnichannel’ Online Mobile ATM Telephone Branch The customer Omnichannel: How the customer interacts both seamlessly and holistically across the bank Strategic Pillars |
Appendix |
22 Non-GAAP Financial Measures Line of Business Financial Performance Taxable-equivalent basis $ in millions Revenue Line of Business Financial Performance 2Q15 YTD Wholesale Banking and Commercial Real Estate 1,447 $ Consumer and Small Business Banking 3,545 Wealth Management and Securities Services 907 Payment Services 2,553 Treasury and Corporate Support 1,496 Consolidated Company 9,948 Less Treasury and Corporate Support 1,496 Consolidated Company excluding Treasury and Corporate Support 8,452 $ Percent of Total Wholesale Banking and Commercial Real Estate 14% Consumer and Small Business Banking 36% Wealth Management and Securities Services 9% Payment Services 26% Treasury and Corporate Support 15% Total 100% Percent of Total excluding Treasury and Corporate Support Wholesale Banking and Commercial Real Estate 17% Consumer and Small Business Banking 42% Wealth Management and Securities Services 11% Payment Services 30% Total 100% |
The CFA Society of Minnesota InvestMNt 2015 August 5, 2015 |