Andy Cecere Vice Chairman and COO Kathy Rogers Vice Chairman and CFO Goldman Sachs U.S. Financial Services Conference December 9, 2015 Exhibit 99.1 U.S. BANCORP | 1 |
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. U.S. BANCORP | 2 |
Agenda • Overview • Business Lines • Value Creation • Capital Management • 4Q15 Update U.S. BANCORP | 3 |
U.S. BANCORP | 4 U.S. Bancorp 3Q15 Dimensions Market value as of 12/2/15 NYSE Traded USB Founded 1863 Market Value $77B Branches 3,151 ATMs 5,001 Customers 18.5M Assets $416B Deposits $295B Loans $255B |
Industry Position Source: company reports, SNL and FactSet Assets and deposits as of 9/30/15, market value as of 12/2/15 Assets Market Value Deposits U.S. U.S. U.S. Rank Company $ Billions Rank Company $ Billions Rank Company $ Billions 1 J.P. Morgan 2,417 1 J.P. Morgan 1,273 1 Wells Fargo 281 2 Bank of America 2,153 2 Wells Fargo 1,202 2 J.P. Morgan 245 3 Citigroup 1,808 3 Bank of America 1,162 3 Bank of America 183 4 Wells Fargo 1,751 4 Citigroup 904 4 Citigroup 161 5 U.S. Bancorp 416 5 U.S. Bancorp 295 5 U.S. Bancorp 77 6 PNC 362 6 PNC 245 6 PNC 48 7 BB&T 209 7 BB&T 148 7 BB&T 30 8 SunTrust 187 8 SunTrust 146 8 SunTrust 22 9 Fifth Third 142 9 Fifth Third 101 9 Fifth Third 16 10 Regions 125 10 Regions 97 10 Regions 13 U.S. BANCORP | 5 |
Agenda • Overview • Business Lines • Value Creation • Capital Management • 4Q15 Update U.S. BANCORP | 6 |
Business Mix Payment Services • Retail Payment Solutions • Corporate Payment Systems • Global Merchant Acquiring Wealth Management and Securities Services • Wealth Management • Asset Management • Corporate Trust Services • Fund Services • Institutional Trust & Custody Consumer and Small Business Banking • Branch Banking • Small Business Banking • Consumer Lending • Mortgage Banking • Omnichannel Wholesale Banking and Commercial Real Estate • Corporate Banking • Commercial Banking • Commercial Real Estate Revenue Mix By Business Line Consumer and Small Business Banking Payment Services Wealth Mgmt and Securities Services Wholesale Banking and Commercial Real Estate U.S. BANCORP | 7 |
Payment Services Business Line Summary • Provides a full suite of payment processing services to consumers, small businesses, corporations and merchants – a unique position versus other banks • Expanding internationally in merchant acquiring through continued investment in partnerships and our international merchant payment platform • Leading player in payments innovation and emerging technologies including enhanced security and authentication Business Line Scale Ranking Annual Volume • #5 U.S. credit card issuer $64 billion • #5 U.S. debit card issuer $58 billion • #3 U.S. corporate card issuer $54 billion • #5 U.S. merchant acquirer / $375 billion #4 European merchant acquirer Retail Payment Solutions 60% Global Merchant Acquiring 30% Corporate Payment Systems 10% Revenue Contribution to USB Payment Services Revenue Mix 30% Source: The Nilson Report (Visa and MasterCard issuers) Revenue contribution and mix 3Q15 YTD; Revenue contribution percentages exclude Treasury and Corporate Support (see slide 25) Consumer and Small Business Banking Wealth Mgmt and Securities Services Wholesale Banking and Commercial Real Estate Payment Services U.S. BANCORP | 8 |
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 • #3 SBA lender Mortgage Banking 22% Community Banking 28% Consumer and Small Business Banking Revenue Mix 42% Metropolitan Banking 30% In-store and On-site Banking 7% Consumer Lending 13% Source: SNL and Inside Mortgage Finance Revenue contribution and mix 3Q15 YTD; Revenue contribution percentages exclude Treasury and Corporate Support (see slide 25) Revenue Contribution to USB Consumer and Small Business Banking Wealth Mgmt and Securities Services Wholesale Banking and Commercial Real Estate Payment Services U.S. BANCORP | 9 |
U.S. BANCORP | 10 Wholesale Banking and Commercial Real Estate Business Line Summary • Provides products and services to 90% of the Fortune 500 and 87% of the Fortune 1,000 • Expanded loan capital markets and derivatives, enhanced foreign exchange capabilities, added high- grade fixed income and municipal bond capabilities • National Commercial Real Estate business is relationship-based and serves strong national and regional developers Business Line Scale • $3.0 billion of revenue in 2014, $84 billion in loans and $87 billion in deposits (3Q15 average balances) • A leading treasury management provider • A leading provider of banking services to federal, state and municipal governments Corporate Banking 63% Commercial Real Estate 20% Commercial Banking 17% Wholesale Banking and Commercial RE Revenue Mix Revenue contribution and mix 3Q15 YTD; Revenue contribution percentages exclude Treasury and Corporate Support (see slide 25) Revenue Contribution to USB Consumer and Small Business Banking Wealth Mgmt and Securities Services Wholesale Banking and Commercial Real Estate Payment Services 17% |
U.S. BANCORP | 11 Wealth Management and Securities Services Business Line Summary • Delivers a full array of wealth management services through differentiated service delivery models to address the needs of a broad range of clients • Leading provider of corporate trust services in the U.S. with a growing international presence • Continued opportunity to expand all businesses through new products and services, building deeper relationships and strategic acquisitions Business Line Scale • $126 billion in assets under management and $5.1 trillion in assets under administration • #1 U.S. corporate trustee • #1 U.S. municipal trustee • #1 U.S. structured trustee • #3 Third party mutual fund servicer Wealth Management 40% Fund Services 20% Corporate Trust 30% Revenue Contribution to USB Wealth Mgmt and Securities Services Revenue Mix Source: Securities Data Corp (corporate trust) based on number of issues, Investment Company Institute (fund services) Revenue contribution and mix 3Q15 YTD; Revenue contribution percentages exclude Treasury and Corporate Support (see slide 25) US Bank Asset Mgmt 1% Institutional Trust & Custody 9% Consumer and Small Business Banking Wealth Mgmt and Securities Services Wholesale Banking and Commercial Real Estate Payment Services 11% |
Agenda • Overview • Business Lines • Value Creation • Capital Management • 4Q15 Update U.S. BANCORP | 12 |
Diversified Revenue 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 46% 45% 45% 45% 35% 40% 45% 50% 55% 2012 2013 2014 3Q15 YTD 3Q15 YTD, taxable-equivalent basis Business line revenue percentages exclude Treasury and Corporate Support (see slide 25) 55% 45% U.S. BANCORP | 13 |
Low Risk Balance Sheet 1.30% 1.38% 1.66% 1.71% 1.72% 1.75% 1.68% 2.19% 2.37% 2.39% 0.00% 1.00% 2.00% 3.00% 4.00% 3Q14 4Q14 1Q15 2Q15 3Q15 Up 50 bps Immediate Up 200 bps Gradual • The Company uses net interest income simulation analysis for measuring and analyzing consolidated interest rate risk, running 28 interest rate risk scenarios • Projections are largely dependent on assumptions of noninterest- bearing deposit runoff and non- maturity deposit re-pricing – We are appropriately conservative • The Company is currently asset sensitive • Well positioned for rising rates Sensitivity of Net Interest Income Key Points U.S. BANCORP | 14 |
Best in Class Debt Rating Debt ratings: holding company as of 12/2/15 USB is highest rated peer bank across all rating agencies • Funding advantage • Competitive advantages – Pricing – Flight-to-quality – Sales Force Confidence Rating Outlook Rating Outlook Rating Outlook Rating Outlook USB A1 s A+ s AA s AA s WFC A2 s A s AA- s AA s BBT A2 s A- s A+ s A (high) s JPM A3 s A- s A+ s A (high) s PNC A3 s A- s A+ s A (high) s BAC Baa1 s BBB+ s A s A (low) s FITB Baa1 s BBB+ s A s A (low) s STI Baa1 s BBB+ s A- s A (low) s KEY Baa1 wn BBB+ on A- on BBB (high) s RF Baa3 s BBB s BBB s BBB s S&P Fitch DBRS Moody's U.S. BANCORP | 15 |
U.S. BANCORP | 16 Source: SNL; Peer banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI and WFC Revenue contribution percentages exclude Treasury and Corporate Support (see slide 25) 3Q10 Loans $195 billion 3Q15 Loans $255 billion Commercial Commercial Real Estate Res Mtg and Home Equity Credit Card Other Retail Covered 24% 18% 25% 15% 10% 8% 33% 17% 27% 14% 2% 7% Ending Loans Achieving Growth Ending Deposits USB +31% Peer Median +17% Total Revenue 3Q10 Deposits $187 billion 3Q15 Deposits $295 billion 22% 55% 23% 28% 60% 12% Noninterest Bearing Checking and Savings Time USB +58% Peer Median +24% USB +13% -4% 3Q10 YTD Revenue $13.4 billion 3Q15 YTD Revenue $15.1 billion Payment Services Consumer and Small Business Banking Wealth Management and Securities Services Wholesale Banking and Commercial Real Estate 20% 8% 28% 44% 17% 11% 30% 42% Peer Median |
U.S. BANCORP | 17 Strong Credit Quality $ in millions Net Charge-offs Net Charge-offs (Left Scale) NCOs to Avg Loans (Right Scale) Nonperforming Assets Nonperforming Assets (Left Scale) NPAs to Loans plus ORE (Right Scale) $336 $308 $279 $296 $292 0.55% 0.50% 0.46% 0.48% 0.46% 0.00% 0.75% 1.50% 2.25% 3.00% 0 130 260 390 520 3Q14 4Q14 1Q15 2Q15 3Q15 $1,923 $1,808 $1,696 $1,577 $1,567 0.78% 0.73% 0.69% 0.63% 0.61% 0.00% 0.75% 1.50% 2.25% 3.00% 0 700 1,400 2,100 2,800 3Q14 4Q14 1Q15 2Q15 3Q15 |
U.S. BANCORP | 18 Industry Leading Returns 3Q15 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 1.44% 1.32% 1.17% 1.13% 1.11% 1.07% 1.03% 0.92% 0.83% 0.82% USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 14.1% 12.7% 11.5% 10.0% 9.6% 9.3% 8.2% 8.1% 7.0% 6.0% USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 53.9% 56.4% 58.2% 61.3% 61.6% 64.0% 66.5% 66.7% 67.3% 67.8% USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Return on Average Common Equity Efficiency Ratio |
U.S. BANCORP | 19 High Returns on Capital 19.4% 16.0% 14.1% 13.3% 12.7% 12.1% 11.1% 10.8% 10.1% 8.9% USB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Source: SNL and company reports Peer banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI and WFC High return / capital efficient businesses • Corporate Trust • Merchant Processing • Fund Services • Treasury Management • Corporate Payments Efficient expense platform Disciplined capital allocation process Return on Tangible Common Equity 3Q15 YTD |
Agenda • Overview • Business Lines • Value Creation • Capital Management • 4Q15 Update U.S. BANCORP | 20 |
U.S. BANCORP | 21 Capital Management Earnings 29% 31% 32% 32% 32% 42% 41% 38% 44% 48% 0% 25% 50% 75% 100% 2013 2014 1Q15 2Q15 3Q15 Dividends Share Repurchases • Annual dividend increased from $0.98 to $1.02 per share in 2Q15, a 4.1% increase • Five-quarter authorization to repurchase up to $3.0 billion of outstanding stock effective April 1, 2015 • CET1* at 9.2% in 3Q15, above target of 8.0% Capital Actions Reinvest and Acquisitions Dividends Share Repurchases 20 - 40% 30 - 40% 30 - 40% Payout Ratio 80% 70% 76% 71% 72% * Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach (see slide 26) Distribution Target |
Agenda • Overview • Business Lines • Value Creation • Capital Management • 4Q15 Update U.S. BANCORP | 22 |
U.S. BANCORP | 23 • Loan Growth: 1-1.5% growth • Credit Quality: Modest increase in NCOs • Net Interest Margin: Relatively stable • Mortgage Fees: Lower 5-15% due to seasonality • Noninterest Expense: Seasonally higher • Tax Rate: Moderately higher 4Q15 Linked Quarter Update |
U.S. BANCORP | 24 Appendix |
U.S. BANCORP | 25 Non-GAAP Financial Measures Line of Business Financial Performance Taxable-equivalent basis $ in millions Revenue Line of Business Financial Performance 3Q15 YTD Wholesale Banking and Commercial Real Estate 2,187 $ Consumer and Small Business Banking 5,334 Wealth Management and Securities Services 1,370 Payment Services 3,911 Treasury and Corporate Support 2,293 Consolidated Company 15,095 Less Treasury and Corporate Support 2,293 Consolidated Company excluding Treasury and Corporate Support 12,802 $ 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% |
(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 (loss) 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. September 30, June 30, March 31, December 31, September 30, (Dollars in Millions, Unaudited) 2015 2015 2015 2014 2014 Total equity $45,767 $45,231 $44,965 $44,168 $43,829 Preferred stock (4,756) (4,756) (4,756) (4,756) (4,756) Noncontrolling interests (692) (694) (688) (689) (688) Goodwill (net of deferred tax liability) (1) (8,324) (8,350) (8,360) (8,403) (8,503) Intangible assets, other than mortgage servicing rights (779) (744) (783) (824) (877) Tangible common equity (a) 31,216 30,687 30,378 29,496 29,005 Tangible common equity (as calculated above) 31,216 30,687 30,378 29,496 29,005 Adjustments (2) 118 125 158 172 187 Common equity tier 1 capital estimated for the Basel III fully implemented standardized and advanced approaches (b) 31,334 30,812 30,536 29,668 29,192 Total assets 415,943 419,075 410,233 402,529 391,284 Goodwill (net of deferred tax liability) (1) (8,324) (8,350) (8,360) (8,403) (8,503) Intangible assets, other than mortgage servicing rights (779) (744) (783) (824) (877) Tangible assets (c) 406,840 409,981 401,090 393,302 381,904 Risk-weighted assets, determined in accordance with prescribed transitional standardized approach regulatory requirements (d) 336,227 333,177 327,709 317,398 311,914 Adjustments (3) 3,532 3,532 3,153 11,110 12,837 Risk-weighted assets estimated for the Basel III fully implemented standardized approach (e) 339,759 336,709 330,862 328,508 324,751 Risk-weighted assets, determined in accordance with prescribed transitional advanced approaches regulatory requirements 248,048 245,038 254,892 248,596 243,909 Adjustments (4) 3,723 3,721 3,321 3,270 3,443 Risk-weighted assets estimated for the Basel III fully implemented advanced approaches (f) 251,771 248,759 258,213 251,866 247,352 Ratios Tangible common equity to tangible assets (a)/(c) 7.7 % 7.5 % 7.6 % 7.5 % 7.6 % Tangible common equity to risk-weighted assets (a)/(d) 9.3 9.2 9.3 9.3 9.3 Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach (b)/(e) 9.2 9.2 9.2 9.0 9.0 Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced approaches (b)/(f) 12.4 12.4 11.8 11.8 11.8 Non-GAAP Financial Measures U.S. BANCORP | 26 |
Goldman Sachs U.S. Financial Services Conference U.S. BANCORP | 27 |