USB - Earnings call transcript Q3 2021

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Operator

Welcome to U.S. Bancorp's Third Quarter 2021 Earnings Conference Call.

Following a review of the results by Andy Cecere, Chairman, President, and Chief Executive Officer; and Terry Dolan, Vice Chair and Chief Financial Officer, there will be a formal question-and-answer session. [Operator Instructions] This call will be recorded and available for replay beginning today at approximately 10 AM Central Time through Thursday, October 21, 2021 at 10:59 PM Central Time. I will now turn the conference call over to Jen Thompson, Director of Investor Relations and Economic Analysis for U.S. Bancorp.

Jen Thompson

good Chairman, With Terry President Chief Officer. and Andy today Dolan, Erica, Financial our Cecere, and you, morning, me everyone. are our Thank CEO; and

subject and today's a assumptions Andy presentation the materially described Andy. I'd today's slide risk well are like XX-K change at that are reports as and you file our release will During on available of of release and as and could any call Factors earnings to statements that Form on press analyst with to uncertainty. prepared X A copy remind in over our remarks, be their made current forward usbank.com. referencing are supplemental slide presentation, our turn on presentation. the call the to our website subsequent during Terry now and SEC. forward-looking looking schedules in Page I'll our

Andy Cecere

morning, Good Jen. everyone. joining you for Thanks, call. thank And our

will you of $X.XX remarks, total the reported share Terry per Following slide begin of $X.X earnings revenue third quarter, any In have. take and and our X. on I'll we prepared I billion. questions generate

pretax quarter driven continued growth revenue loss the this operating positive on economy across $XXX of quality growth pre-provision of released million by focus businesses, balances metrics. quarter, X.X% expected loan outlook credit in reserves management our was fee and and loan our in resulting net momentum average supported continued linked expense Our better on than leverage. by We

XXth. which value totaled XXth at than share $XX.XX June per X.X% Turning our was book to capital; September higher

metrics plan on Slide common X information we about XXth. update provides equity was of quarter. ratio initial banking, payment strong key providing business X, including in to X are third engagement. trends highlight September and CETX XX%. digital Our On we performance tangible our quarter which over at relationships return a Slide every Slide XX.X%

cyclical of a opportunities. for competitive and us and payments number complete advantage ecosystem is a secular Our provides growth

within there to few ecosystem. this a the next deepen significant believe years, potential we Over is relationships expand and

that is business a with business point $XX have Currently, which of our products half have this and of payments banking relationships, to just million under payments opportunity size a increase customers number customers banking The by starting banking have and services. businesses and to banking of relationships and connecting and connecting customers revenue. million product, as customers these both services, about our we products banking payments in business our with we product. of payments, our X.X under deepen about with our one relationships, Our third the banking define business is our

grow discussed business small previously, we by and next can XX% revenue few by the believe years. to we XX% As to our XX% over XX% we relationships related

Terry on over turn the Now provide quarter. more the to call detail let me will who

Terry Dolan

Thanks, Andy.

If impacted on the loans, Average This in X, June discussion which $X.X totaled a start of loan a levels with you mortgages. by quarter compared growth partially residential third growth balances in lower $X.X billion, trends. and growth as compared was as Slide review billion primarily to commercial with by other well earnings loans increased PPP balances by loans. card PPP loan were XXth, September credit at offset At of lower XX. turn X.X% I'll loans by installment followed retail balance driven quarter second sheet

a basis. third by X.X% on loans, quarter loans average linked PPP Excluding quarter grew

noninterest quarter XX both ratio deposits hit a quality X, year compared basis linked ago, declined. and second increased as year-over-year average points. higher and with linked on to net we declined with and Turning mix trends; Slide low continue to our quarter the Slide shift, basis, shows X basis, from while deposits assets year-over-year increased and compared X.X% of benefit deposits X.X% a quarter nonperforming favorable a bearing charge-off on to credit cost time a both record average

reflecting metrics. quarter, was release this credit strong reserve quality million $XXX Our primarily

Our The the allowance the quarter outlook credit per as totaled level for losses best Slide release In million. credit loans. earned allowance earnings we the portfolios. X.X% These of results of of economic provides estimate our and reflected trajectory or share. September $XXX reserve XXXX, quality a summary. an $X.X diluted XXth of billion within of XX third of $X.XX include

billion the increased net was primarily the Paycheck quarter, to taxable compared on income with basis by of interest XX, Program. Slide fully driven Protection higher fees second associated the by Turning with equivalent growth a X% $X.X loan

fees, stable, changing of lower related by loan yields, growth, of net loan the premium amortization in core offset been and Excluding additional an would interest impact reflecting quarter. loan the mix impact lower day and have income PPP the beneficial

commercial basis, growth interest and strong Slide provides in year information a in mortgage on driven by revenue as noninterest second higher mortgage margin noninterest XX% X.X% revenue, services net was than trust growth in deposit a sale compared with margins, our income, as payment XX fees. well trends with reflected higher Slide related a and and income ago fees, loan Our quarter. expected products than declined more highlights revenue volume on business. increase in and linked quarter increased compared management investment charges stable gain the production noninterest management offset treasury X.X% On as in sales. and XX payments revenue revenue payments decreases service income

in spend compared In CPS both to continues improving economic businesses business the from line. credit conditions about XXXX, our volume for volumes in sales card our benefit third while processing activity. payments quarter, and merchant was and pandemic the period Our exceeded

quarter credit prepaid linked As in to continues resulted related declined The quarter prepaid the reduced in a third revenue volume debit card impact stimulus diminish. as slight basis. in the of a decline volume card expected, on government and

and higher to fees by corporate increased business X.X% volumes. was merchant equipment processing XX%, expected well by However, by than higher improving as Merchant spend better which increased driven payment revenues as activity. revenue due sales

quarter. X.X% second reflected revenue the increased capital primarily incentives. compensation higher noninterest Slide XX, our This to highlights performance compared related and XX position. slide based increase to Turning expense

increased target we CETX forward expect I of a second September our to XX. At expect ratio program was announcement at will slightly of and be deferred will common XX.X%, third our June which ratio to the of Tier acquisition, After operate now between that X acquire the quarter share quarter, that due provide XX buyback have closing repurchase we we looking share MUFG Union X.X%. to capital agreed to until Our program our XXXX. at the beginning recent compared suspended the we guidance. our equity some Bank, ratio capital the

the third winds approach forgiveness period, quarter As we to and end decline of in with we the million to million the PPP expect compared quarter. fourth down $XX the fees PPP $XX

impact the we net PPP expect quarter Excluding be relatively taxable linked fully income of equivalent a interest stable basis. fees, to on

interest be to improving In expect the income strengthen interest to driven continue in revenue net margin to immaterial fourth PPP net the sales quarter, volumes. we by to and both expect We XXXX. total payments trends

and increase However, as of of Credit expect lead quality a lower investments. the third to than approximately the typically remains amortization advantaged some seasonally strong. is we affects quarter fourth as $XX seasonal investments see marketing the business quarter well quarter, In quarter, million, impacts in fourth in tax seasonal comparisons. which

Over lower remain quarters, than normal. charge-off few expect the to next we net ratio the

taxable it XX%. XXXX, the equivalent tax For of we hand remarks. I'll be to closing Andy our rate expect year to approximately back full for

Andy Cecere

We're highlighted To off strong opportunities in see a revenue fee Terry. the data we're supported we and third Thanks position growth excited by results across And growth organic fronts, digital momentum the franchise strong our were investment into our people, continued technology finishing the and on positive heading summarize, many in core XXXX. quality. credit solid quarter in several a by year loans, good analytics. about

to Our the particularly continue three spend as travel pandemic consumer levels. improved towards benefit business payments activity, businesses will recovers pre and for

our believe provide initiatives with gains secular growth for over and meaningful More medium payments a importantly, longer banking aimed term. share connecting at market potential the we

in and And Farm with banking but traction. our innings, to gaining the we're are still business Our grow. evolve partnership early State continues initiatives

by we're are the We encouraged seeing. results

demographically our announced digital a of recently penetrated under a customer leverage but across opportunities, Bank our base. expand achieve provides growth leading and broad and acquisition to capabilities set West markets cost organic our network Union loyal attractive product from synergies, our and distribution Aside platform Coast

will returns on now enable leading accelerate the revenue that like shareholders of the to equity for up throughout Q&A. open us this year. to earnings All and We'll come industry the deliver to to growth employees call thank have all continue closing, done our I'd and they've for our In expect.

Operator

of first Instructions] comes [Operator from Cassidy RBC. Gerard question the Your line from

GerardCassidy

on Good as new you morning, good X slide. interesting, morning, slide is Andy pointed out, a it's Andy, questions Terry. this slide. and Two very

area it banking the the about other banking payments Can X.X percent and long in be are put you only payments. will would that customers the with talked to are to Bank it million area the and the customers, banking you to? grow to it how that to circle business second, how growth business you if the there? take large that get on in to can -- that get get And that you you have get you both area? Union anticipating What that XX% You

AndyCecere

Bank So, comparable about Gerard, has XXX,XXX Union our customers.

about least. payables, relationships travel hand this to be XX:XX if us a can payroll, I side manage I your Again, first activity, So well and you we the million. dashboard, that added so get will viewpoint. to as think would will, one as that way set product do And the forth left that these customers both is expand. we're a their believe deepen that the allow receivables, combination, X.X at to thinking comprehensive And the helps business, question really to in

that believe well. XX:XX So as can I we do give

GerardCassidy

I as your points then do the you credit anticipate as a over out, one a through basis sustainable Very look you on it XX guys and think pointed What next XX months? things cycle. that are these thing good. record out of up in regarded as that you're normalize no seems think levels but low how on And you charge-offs, net XX Terry, like charge-offs. more And that I card such well the full do record follow to credit is word, because hate are normal low kind we there's

TerryDolan

looking your and forecasts question. cetera. being that's to really of great at we looking et point When up end on. at kind is about Yes, right a difficult And predict

what expect very lower start going it's Now, back there to until do doesn't these and quarters, probably probably levels get to kind normalize, stay few going for we a would that's we to at normal, as probably But which least it sometime predict. XXXX. XX XX end of define in to of is at is basis until the to points overall of hard XXXX kind and

Operator

Betsy from of with Stanley. Your Morgan line Graseck next question the comes

BetsyGraseck

to wanted understand beginning had in Hi, you seemed saw I there. I in signs good on into weaker, XQ side. I just nice One accelerating morning. Thanks. be we I see a a of some little growth where you're into might consumer because to questions. be that a I commercial as was general. in asked bit next seeing life wondering year, couple loan of what move am if And the But uptick

AndyCecere

business, that as to And account it. activities, up linked you quarter basis. been a so of very strengthen. part excuse will to all, but near dissipate, see It's start that we the government that stimulus me, credit comes down. quarter, strengthen. really lending continue we've Yes, a going this should in the spend, and as that will least slowly then, of first look that and the consumers puts modest probably down, also fourth kind fourth terms help of now. reasonably doing, card that think to would but growth, also that right well, expect growth balances will credit starts payment takes puts maybe And good as start I of been time, end I play historic to and card kind our if our been sort when of over high late. we is, balances at in we so which kind of which And we that rate to And on and into consumer as or would at expect And just of the is would come various growth at would of looking, spend, expect expect is big think both investing the auto strong takes, we in quarter to promotional has term, drive do out

PPP warehouse fair C&I consumer When as and forgiveness seeing in of the customers market have that is near those in challenge amount in on certainly you lots opportunity of particular C&I of a lending, supply been end are of all the So C&I challenging. payoffs and then of And type expect space in where up continue we lines, we we are particular is back confidence asset the kind strong growth side, of pipelines. at The said, little a securitization looking we the growth see areas we more chain seeing that space, relatively mortgage, also there term. to activities, that principal is some in finance is areas nice strength. of middle terms dampening are

And do expect the PPP. beyond area an once get so of we is opportunity of that drag we

some So some hopefully of and gives that of perspective in takes. the you terms kind of puts

BetsyGraseck

sizable would the obviously, you And fourth the think PPP in But be I fourth indicated it quarter, in is the quarter? down it Q-on-Q.

TerryDolan

Yes, up coming it ends down.

the down been decline But interest income of And further. the in for it terms quarter balances. does Betsy, that or the PPP and majority fourth bit a margin it to expectation, will quarter end net I is when probably come at the the immaterial stabilize this of talked then it's forgiven. vast saw XXXX. think at to it's tell be little You in about bit to and what down the we of does least we impact that going about our come again quarter, half And of by example, think fourth that, a really right is hard level little now,

BetsyGraseck

you And quarter, in fourth that? you in and quarter, would the how NII do contribution PPP is size the fourth -- the what to

AndyCecere

the That's was very and quarter. modest. fourth quarter in becomes the it certainly -- peak the it's quarter think third I modest

BetsyGraseck

about one angle plus wondering, we How All And you is on and there equal savings enhanced, that on when lot the for the from tech that thinking be the here we think about USA you right. we MUFG and you're should just the example. Because will getting about MUFG cost Union Okay. heard that call, a conference a then here? a this operation. be and of the anticipating also well, that announced your platform as legacy trajectory into lastly, but I'm forward side, is look deal, integrating one half, your Bank obviously as had efficiencies two

AndyCecere

so expectation quarter, the quarter, first I So sometime you of is timeframes, application remind conversion a the in that close fourth just into quarter for think, the a October submit the actually put, did our our third we to on is in X, second of with late transaction XXXX. integration early

services. view, would to has and the it's do first we XX% efficiencies As talked about what cost my second shift the that and of platform, the expect in allows talked opportunities, to benefit have about they on more we the which as savings, products and in and from that customer have real enhancement savings our for platform the majority of platform on the experience is is more better capabilities a our Betsy, a and And more year here call, also about, and the occur we XXXX. the we lift

as also well. there's component So revenue a

So it mind view, just is that in yes, one. that than more plus one in

Operator

John Your comes next from question with ISI. of the Pancari line Evercore

JohnPancari

us morning. a a I I want see on if see you beginning out. little if time, bit bit can bit elaborate elaborate had can upon activity; that payments is what Good Thanks. you the more you're pointing separately, in little I the on spend little to this you're increased maybe breaks 'XX at see color you know side. business. seeing the based want on can And mentioned if how you then in give trends to the your expectation you're a trends to payments more

TerryDolan

XXXX merchant it the businesses all, first XX in now pipe a kind terms debit take where sales part looking the levels. so percent credit, higher the than into card XXXX of was above, me said of if in almost to let as in the at above can we're plus respect maybe In were Andy as with then and card of what we you XXXX. so and we XXXX, comparable go seeing end quarter Yes, And X% XXXX, maybe as third merchant first processing. up about

really bit So the bit in But up also example, simply end entertainment the of a going Delta of is of subsides variant. as when I expect keep those we made recoveries. that and think to looking quite airline quarter down third And would accelerate because again. nice you the kind of know, travel, we And say, that you Delta probably, as kind to start kind about forward, an at merchant would have mind a as in still flattened a bit. variant

you fact impacting by as relative debit revenue, dissipates, credit up as And immaterial. I below there's card to XXXX, expect normalize to of XXXX up continues spend, will entertainment, card down much pretty would to or to that end business, been the volumes thing year of said, side the continue But just T&E be quite consumer about talk is strengthen. the looking opportunity, on the about If for And to XXXX. that will think the have would and to thing kind corporate is spend, but is XX% is that business, to quarter-over-quarter levels. driven travel of into prepaid still that then that the one relatively end we at still XXXX. and last that's so of card continue And the card at the equation the the by the the sales kind the payments XX%, impact I come again going government end strong stimulus there we

expect spend, well. strengthening commercial quarter-over- to I have We what we other quarter, would as seen continue say that would and

AndyCecere

entertainment said, is And to up what that I to levels pandemic summarize just increase to Terry in XX% XXXX. activity continue range and versus travel, And expect airlines, that's spend think pre so. or right, ex I would that Terry. exactly into

our Terry category, is XX% recovers, is XX% - corporate whatever of that in mentioned, that's if or you think as category down closer mentioned look that you entertainment well exists, what merchant which real is the down I in a XX%. as to Terry card, think it travel, which the at as range opportunities travel in lot opportunity about where

JohnPancari

anything fourth expense you. for carry thank then on investments, business? know great, you to you're is you're as later XXXX product. mentioned into quarter, the there into marketing pay money recently Okay, putting and now the the is buy at that some And going business you through I I least side, -- there launched the know

So just we curious expectations expense and in file should if there's business for consider that we ongoing XXXX? marketing investment as

TerryDolan

Yes, go investment from think up doesn't XXXX, of we as think I about kind here. probably of level the significantly

Operator

comes next Ebrahim Bank of the question Poonawala line Your from of with America.

EbrahimPoonawala

morning. Good

you on away actually the stimulus -- substantially. a lending? we next fading do drawdown enough pick want the address to the consumer one if are expect see side, rate cetera. pointed Just CRE lending And on, you before follow loan lending we you things. to from specifically some work see do government's just for in can as think you you're need given to if two up How you out, growth, program changing growth. potential the Or, that consumer approaching home CRE the -- around One from next about as disruption you big to with comments et savings up is US outlook year, see

TerryDolan

are to CRE with saw level first things CRE, pipelines, we question actually project reasonably strong. in the quarter like respect some basis quarter. Yes, linked The on of so the that this growth maybe, to

quarters, in couple As seeing of I pretty the think is think competition. about next the marketplace we're we kind of what strong though,

office and with terms improving because areas what to and impacts, see kind those some and watch starting trends it, we'll have valuations think for right the so competition. to I levels respect we positive to I kind regarding office just are maybe, financiers. that of by well. improving, when watch investment, of of at to CRE developers looking happens of pay occurs of in underlying occurs, those of in would we we're starting and some of collateral But I up that think see downs, of we're return what as with And returned down generally thing to now be end that pay terms see kind think as a watching of And sort to

AndyCecere

get we're I government of with on mean, of of support chain And into they credit dependent balances anticipate side relatively in to are customers I seeing you start believe stimulus and When going kind type overall, expect about being And that would starting that we upon strong we've spend. revolving we're are bullish grow, dissipate to that. credit the chips auto to continued I customers consumer fairly that of lending. and terms be things then that card from supply to to accelerate with possibly their equation, associated the do able consumer lending we here to in think looking impacts like that products, XXXX. actually see as will growth continue consumer and But on

EbrahimPoonawala

color. continue helpful just growth at grow. meaningful the next point in at two, way? when could you. to any any to separate we've talk in on a last you Thank of whether you terms XX stickiness your look deposit negative outlook the of actually that in do just in months, forward note, over deposit expect the seen And if expect growth balances the as to you you terms turn And to year deposit do of or It's look you

TerryDolan

about X% consumer peel third deposit particularly linked reasonably if the strong. of business quarter. you growth in it's areas year-over-year with our in at about banking of back Yes, quarter particularly onion, growth the and has the been growth XX% But been strong kind

fully wealth growth that that would about, we that amount excess we're we lot and the of would in well. dependent the a obviously, of would as will businesses rate that upon, seeing that fair also stick talked I expect expect management So a stick savings

been growing kind what a call think quite of have the we So core deposits, of I we think as kind bit. would balances we about

expect we in start liquidity deposits of the those system, would though, come sort runoff investors some out CLO utilize or does As see CDO, I of where like to would structure. that to invest

So business, runoff. within investment to expect see management our wealth would we services some

Operator

Your Siefers Sandler. Scott of comes question with from next the Piper line

ScottSiefers

be than origination taking pretty morning, to I A Good better guys. the mortgage had and can for level; question. a at address hoping of it of able and hoping levels revenues might the the margin durability address just Thanks the takes overall was quarter. Hey, solid just you I that anticipated was thought and on little I puts you some durability of horizontal. this current

TerryDolan

last a several great would money saw amount quarter, the is a little strong activities to money side. different when our couple purchase significant on Yes, the question. in of purchase is came third significant making of of the Scott, interest things. bit investment in I with refinancing area, volume Obviously focus of years, and a we've we course over been of on fairly rates a uptick One a because amount that the an say, applications down. respect

So to thing should that capabilities, grow invested space. market in the home up nice and the well. we're to continues retail hold second the banking to mortgage channel, and is in we've our sales digital And taking allow really share us a the lot extent that

Andy, of same the you way, add? opportunity the So the what performed well will while trend I mortgage as of industry. that have we banking would the in sort do kind industry, to think in revenue be

AndyCecere

Agree.

ScottSiefers

that is And or earnings it's a the does $XX hoping on impact? a of through emergence an that thank seasonal maybe more perfect, about you I then back earlier sort fourth advantages million from way expenses, particularly amortization the all comment increase up standpoint, wash thinking that go of quarter. then How in about for we should presumably, a you. corresponding and in be tax we color right, XXXX? fourth Does kind a come then All and -- as quarter that go headwind there little then in And the down just of -- made tax was given

TerryDolan

Yes. Great question.

in about happening the up the ends is space that overall quarter. what fourth of in production So particular year XX% the happens for

look of And in the we quarter, kind we fourth see then slowly in builds, and another so always comes the it then the quarter you quarter, a of and first in blip following fourth down see kind blip then year. it if back the historically,

So thing in fourth a seasonal it's the usually, it's quarter.

Operator

question of next Your with Usdin Ken the line Jefferies. comes from

KenUsdin

guys. the where thanks good understand statement? million sure can expenses that to that offset we Terry, just we make Hey, a morning, you in in see Hey, $XX lot. income the

TerryDolan

where flowing up of is basis. rate. lag Yes, the that what up kind that tax in through on is ends And a happening ends usually

a rate So the to we're in tax result the improving you'll see start of XXXX as investments today. making

KenUsdin

okay. quarter, offset in the well. rate, to Right, you tax -- And million in the do the as see fourth $XX that the in

TerryDolan

in we rate tax really the fourth That's in limited quarter. the Very why guided, it's yes; looking. more forward

KenUsdin

got Thank you. it. Okay,

you quarter, what and that down in waivers. an a were release on they fee get give little the us you the need what press from the also can update fee bit, of to rid in mentioned you waivers Secondly, rates were

TerryDolan

down with about and $XX repo first just rate, XX% million to million points about So of get they XX% quarter about it back basis due with were the second about the it basis the back dollars the versus just third in principally a second couple quarter we of XX points. XX the

KenUsdin

business, -- guys. what's correlation increases vis-à-vis mix it's see but your then in growth on merchants when see the in that I and terms again, between improvements in the improvements Okay, you with the volumes. can of when just dependent, volumes. we contrast know growth and in payments so we compare last merchant, mix Thanks great. the see we in, of And like businesses, just one, how the sales just

TerryDolan

an is right exchange. Typically happening now what's

So X%. the about thinner some the margin, X% what's little what's differential being down coming of a which areas about back being on they sales fees and are is some up causing have

these that's -- partly versus versus XX%. up and And look are up And XX%. numbers I'm so about this And if XXXX using you XXXX. it - about are sales is fees at XXXX,

as of And growth mix forward gap bit a being a would be expect there'll go bit look of back. a the a below growth because coming we there revenue differential So on partly slightly of sales a of forward, I what's basis.

KenUsdin

thanks. Okay,

Sorry. to forgot ask meaningful? was you time more? was the about Can airline on how one travel, the much had Can and that us I update? that tell expense ask I And a was? that one

TerryDolan

airline The travel. expense and on

what talking card the think credit business are that because -- you we're about really or our investment on making I -- you

KenUsdin

Yes, and expenses. through echo

TerryDolan

It principally goes --

Andy Cecere

about reserve? merchant you the talking Are airline

KenUsdin

Exactly, yes.

TerryDolan

you've fly. mean stable of Oh, starting people has are fundamentally couple relatively been last yes. to the because got that I quarters -- over are flying, people

has been material. not So that

Operator

Matt Deutsche Your Bank. next with question comes O'Connor from

MattO'Connor

Good morning. flexibility [Indiscernible] us an might to sensitivity? to and Can guys you rate your impact deal how on that? update give UB swaps the add The

TerryDolan

maybe bit so just to XX kind little asset asset we're expect sensitivity, last XX basis would at the would where that Union probably a today. our question Bank sensitive that And to we add points than the they kind more we Yes, range of to are. of is first, in

of been of If more at Matt, basis to cash, in a about we've better asset ways, point you looking -- that sort XX kind looking sensitive end at investment we've shock, quarter, different up a of for expanding entry X.X% point. first, XXX couple second holding a we're been

that as to has entity addition have that, been asset sensitivity expanding our in that so have up, looking strategies been hedge just at And different we been asset coming well.

the kind at moving have long rates We position right at start to in end. opportunity of least today going are probably So and have we're sensitivity. X.X% kind do up, about XXX, as the And that the the that asset of is expectation now. on that's we

when And be rates trying right so spot. a be in position the we're to be in and patient opportunistic to are

MattO'Connor

seasonality thought Okay, payment about question quarter, just a ends conservative And expected? am it's maybe what just said again little was than kind seems I elaborate is. on that payments, like separately, guess because a flat you it better guide Thank being up XQ. of on would it in that's that. which And And payments then on dig be But you. might XQ, the I and it you normal. as be talk not bit may this you I in remind thinking the us be just as when year helpful. And clarification side, corporate seasonal last

TerryDolan

fourth down because it's usually the because but government Yes, significant bit, the a coming But flat in have merchant third the quarter. up holiday in down little CPS ends actually a performs seasonally quarter bit a is affected the spending sales. better business card so is amount you that of of to quarter fourth in little

Operator

next line of Your question Mike Fargo comes from the with Mayo Securities. Wells

MikeMayo

the XX% six, just more, Hi, of combining what about better bit We're it we slide a banking are little you customers well, is looking are slide, the looking payments. talking elaborate banking customer to we But payments It's got if could customers. a looking at don't at? customers say, with new a your use line and don't half And we get banking want use lot payments bottom to use of it. What of is to them banking, at? services. you

And some that that? relationships You do you too. want XX% of are new them to how And that? to use the to products is frame going time related going by out enable you business small are XX% when XX% rolling to are seek that? help that what think you Over you I the I XX%. to by said to mean grow revenues and

TerryDolan

Mike, first, you Thanks the got correct. numbers

Second, dashboard those the about run The that banking numbers as have these services. to we and well offering on payroll, help slide this The is payables, including million has as products timeframe with payments we're Union going at added revenue. the progress be would combined the product give businesses a this as is to and to receivables, do X.X this as their and specifics, on starts dashboard you travel, thinking company years; to way that few by banking we'll add continue well to Bank. that another next XXX,XXX customers, about more

making to out dashboard, about been we as We rolling think it it enhancement we to and way every continue we'll each speak. And do the quarter. it. that And that's have each month

MikeMayo

better what for Okay, do be margins I on be these that. about the guess customer. I And you seems profit so on we a shopping. relationships? making it more service think stop more is one It how the like mean, should should you provide

what revenues. to assume would more you just the the XX%? to by, not earnings mean, So increase than I expect I XX%

TerryDolan

because because to I of a expect of high and marginal that the products revenue I go established. services as many they cost platforms Yes, these number. would the not higher already be is have the they are will. than quoting was earnings on we

MikeMayo

topic years has -- we're has leverage. since then shown positive of six it tech, and on operating Bancorp the since Okay, lastly, been U.S. shown

positive I there'll But talk row, you some two trajectory But you operating in won't that and you fourth quarter, are why? to quarters be on it now, Maybe with Union. a quarter quarter linked basis, leverage? in a operating that the commit have You noise having you looks if guess main so, XXXX maybe like about on you leverage. can didn't it. and show showed

TerryDolan

always Yes, company, investments the investments tech things, in environment. do to made a our some Mike, mentioned, with a we've Union, those of you there in they're going are two And be growth. efficiency noise of And it's going expensive more in to our going stack they're and revenue operating also creates as drive goal, create lot operations. modernization particular to the terms less will

all those So positives. I are think

'XX our we're a rates As curve yield dependent what and XXXX looking bit that's with our happens to that's the upon always but objective; objective.

Operator

next question JPMorgan. with Juneja line comes Your of Vivek the from

VivekJuneja

color Andy. they morning, you shrank Can on questions. morning, of Good securities, investment -- the Good Couple any outlook? Terry.

TerryDolan

about terms our Yes, expect kind in them again, I of moving are just rates, growth. mean, of and longer economic given be think that term is do to things other when up that pressures inflationary expectation, we the we

building maturities rates reinvest future kind So for and in the that we with of look balances, And opportunities cash of start holding asset we'll respect have to to sensitivity. things improve to off as to like reinvestment and that, our move. been

VivekJuneja

Thanks. Okay.

growth to trends? than you Another you if payments in elaborate? revenue I expected sales fees that one, different so, Did topics. be hear And say can better you

TerryDolan

around. No, other way Vivek, the

number sales comes generation of sales the in the through higher business and the have So partly will we new making investments some because occurring, be card, a as partly of for so we're in growth. example, growth the the investments revenue growth mix, bit than because impacts the revenue

Operator

comes question Research. with the Bill Carcache of next from Your Wolfe line

BillCarcache

utilization of commercial commercial does the rates to supply really so, color that I relatively Are supply chain follow up problems until And be an utilization extension suggest customers Good Any hearing that the are seeing. problems morning. growth on just resolved? having? would your suggests chain are that guys is line depressed you great. from unlikely the they're you are that softer loan if line the that anything you can to that improve that give on wanted

TerryDolan

able and in been their of to supply obviously, conversation products services, customers, is Yes, Certainly mean, in et But terms it resolve them. opportunity do to topic be as that chain brought ability something has bank the not of cetera. come financing. I chain terms supply for But in that offer start that necessarily impacting create let's or hasn't it a put clients, I with that up they lot with think utilization challenges will line and it's us themselves that up. discussed way,

BillCarcache

disintermediation broader likely Does your to a now BNPL think business partners for guys question. Understood, able you're customers? more other I card. that's is buy business, banks merchant who merchant the you helpful. How solutions guess someone in a way qualify risks discuss in merchant your acquiring pay Can And on, customer offering Separately later later for business? whether on a credit considering would that to buy solutions position be do to Or pose can't. BNPL? even guys typically to you separately, unique it that certainly the Elavon your puts really a about pay now card you turn not

incremental So thoughts essentially it to their Any card they're debit guys that just thinking the and that are around allows if how sales. drive merchants you you opportunity also BNPL using credit turn card is them into something and one? a about helps see

AndyCecere

of it. little the you brought, it's think of I most so both you described ways of Bill, topics the a Yes,

have first of now later on all, offer on. buy test card going cases a number offering. a We credit pay So we of already

pay have allow have Sometimes choosing going the customer planned merchants specific buy portfolio. be who card plan. to from a could forward. And to card And wants now a now to in can not otherwise payments payment would the set times you for sense customer merchant of that And increase base credit with a buy to a credit using a the of purchase partner acquire pay a current capability. have other very something customer purchase later sales to large later or that a that have, do

fronts. we're So working on all those

BillCarcache

the what players On in a providing services still be indicated custody USB custody the great, cryptocurrency a have you you could would among questions Andy, comfort and that guess provide recently opportunity your bank some services? some in my I But it there? some could providing cryptocurrency addressed. separate gives that And large doing unwillingness you is but you revenue discuss Got other guys controversy different around custody large thinking I services, largely those what's topic, have can't been there's be you'll it, clients. if announced squeeze institutional last guys about one. one frame CEOs at for Could way that they time if when providing and and that

AndyCecere

they currency administration back, fund we have and the fund me as large in custody we about class those offer that investment fund choose are the cryptocurrency we're have class, be looking to digital to an for a to fund that a so for, investors step it. that need is let provide those so participate our institutional thinking asset to And now transfer and service managers. clients, provides market Yes, agency if way one able to services, if business an will services that's

as actually banks their us that from really other cryptocurrency. selected a their customer number for So a of that we've And it we to standpoint. help classes NYDIG own for with sub-custodian's service is for do asset well, a sometimes that providing do base. And other

BillCarcache

the revenue opportunity, high level that any and it on Got color

AndyCecere

certainly. of We this opportunity. It's haven't innings capability, defined early revenue the

those is providing it And services really customers. to so full set a of

Operator

a follow the of Ken Jefferies. have question from up You line Usdin with

KenUsdin

income fourth in the interest was it Do to gave total what million expected was sorry net base PPP you have decline I first But us $XX Hey, -- of the you up. $XX in us given that's I time quarter. follow million in XQ? PPP just you've the wondering the a the number. for

TerryDolan

Yes, it $XXX about was million.

Operator

are further the speakers turn I'll closing this to back time, questions. no any And for at there call the remarks.

Andy Cecere

to was until deferred a share it finished the that will about asked would I of in quarter. transcript Jen closing. Actually second comment. we quarter one be after when or half XXXX clarify Maybe I the second me the something after the earlier, program be buyback mentioned

Jen Thompson

to you our Thank have any earnings the everyone you questions. if contact for Investor department listening Great. up And Relations follow call. please

Operator

participating. for Thank you

at time. this disconnect may You

Jen Thompson	Director of Investor Relations and Economic Analysis
Andy Cecere	Chairman, President and Chief Executive Officer
Terry Dolan	Vice Chair and Chief Financial Officer
Gerard Cassidy	RBC Capital Markets
Betsy Graseck	Morgan Stanley
John Pancari	Evercore ISI
Ebrahim Poonawala	Bank of America
Scott Siefers	Piper Sandler
Ken Usdin	Jefferies
Matt O'Connor	Deutsche Bank
Mike Mayo	Wells Fargo Securities
Vivek Juneja	JPMorgan
Bill Carcache	Wolfe Research

U.S. Bancorp (USB) 14 Oct 212021 Q3 Earnings call transcript