Attached files
| file | filename |
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| EX-99.1 - PRESS RELEASE ISSUED BY U.S. BANCORP - US BANCORP \DE\ | dex991.htm |
| 8-K - CURRENT REPORT FORM 8-K - US BANCORP \DE\ | d8k.htm |
 U.S.
Bancorp 2Q11 Earnings
Conference Call
U.S. Bancorp
2Q11 Earnings
Conference Call
July 20, 2011
Richard K. Davis
Chairman, President and CEO
Andy Cecere
Vice Chairman and CFO
Exhibit 99.2 |
 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. Global and domestic economies could fail to recover from the recent
economic downturn or could experience another severe contraction, which could
adversely affect U.S. Bancorp’s revenues and the values of its assets
and liabilities. Global financial markets could experience a recurrence of significant turbulence, which could reduce the availability of
funding to certain financial institutions and lead to a tightening of credit, a
reduction of business activity, and increased market volatility. Continued
stress
in
the
commercial
real
estate
markets,
as
well
as
a
delay
or
failure
of
recovery
in
the
residential
real
estate
markets,
could
cause
additional
credit
losses
and
deterioration
in
asset
values.
In
addition,
U.S.
Bancorp’s
business
and
financial
performance
is
likely
to
be
impacted
by
effects
of
recently enacted and future legislation and regulation. U.S. Bancorp’s
results could also be adversely affected by continued deterioration in general
business
and
economic
conditions;
changes
in
interest
rates;
deterioration
in
the
credit
quality
of
its
loan
portfolios
or
in
the
value
of
the
collateral
securing
those
loans;
deterioration
in
the
value
of
securities
held
in
its
investment
securities
portfolio;
legal
and
regulatory
developments;
increased
competition from both banks and non-banks; changes in customer behavior and
preferences; effects of mergers and acquisitions and related integration;
effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, residual value risk,
market risk, operational risk, interest rate risk and liquidity risk.
For discussion of these and other risks that may cause actual results to differ
from expectations, refer to U.S. Bancorp’s Annual Report on
Form 10-K for the year ended December 31, 2010, 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
reconciliations
of
those
measures
to
GAAP
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
2Q11 Earnings
Conference Call
2Q11 Highlights
Net income of $1.2 billion; $0.60 per diluted common share
Total net revenue of $4.7 billion, up 3.8% vs. 2Q10
•
Net interest income growth of 5.6% vs. 2Q10
•
Noninterest income growth of 1.7% vs. 2Q10
Average loan growth of 4.0% (3.5% excluding acquisitions) vs. 2Q10 and
average loan growth of 0.6% (0.5% excluding acquisitions) vs. 1Q11
Strong average low cost deposit
1
growth of 17.1% (12.3% excluding
acquisitions) vs. 2Q10 and average low cost deposit growth of 3.7% vs. 1Q11
(3.5% excluding acquisitions)
Net charge-offs declined 7.2% vs. 1Q11 and nonperforming assets (excluding
covered assets) declined 6.2% vs. 1Q11
Capital generation continues to strengthen capital position
•
Tier
1
common
equity
ratio
of
8.4%
(8.1%
under
anticipated
Basel
III
guidelines)
•
Tier 1 capital ratio of 11.0%
1
Low cost deposits include noninterest-bearing, interest checking, money market
and savings deposits |
 4
2Q11 Earnings
Conference Call
Performance Ratios
15.9%
14.5%
13.7%
12.8%
13.4%
11.8%*
1.54%
1.38%
1.31%
1.26%
1.09%
0%
5%
10%
15%
20%
2Q10
3Q10
4Q10
1Q11
2Q11
0%
1%
2%
3%
4%
51.6%
51.1%
52.5%
51.9%
52.4%
3.67%
3.69%
3.83%
3.91%
3.90%
30%
40%
50%
60%
70%
2Q10
3Q10
4Q10
1Q11
2Q11
1%
2%
3%
4%
5%
ROCE and ROA
Efficiency Ratio and
Net Interest Margin
Return on Avg Common Equity
Return on Avg Assets
Efficiency Ratio
Net Interest Margin
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
* Adjusted
for
ITS
transaction
(reported
net
income
$862
million
-
$118
million
ITS
transaction
equity
impact
+
$13
million
debt extinguishment costs (net of tax) = adjusted net income of $757 million)
|
 5
2Q11 Earnings
Conference Call
2Q11
1Q11
4Q10
3Q10
2Q10
Shareholders' equity
32.5
$
30.5
$
29.5
$
29.2
$
28.2
$
Tier 1 capital
27.8
26.8
25.9
24.9
24.0
Total risk-based capital
35.1
34.2
33.0
32.3
31.9
Tier 1 common equity ratio
8.4%
8.2%
7.8%
7.6%
7.4%
Tier 1 capital ratio
11.0%
10.8%
10.5%
10.3%
10.1%
Total risk-based capital ratio
13.9%
13.8%
13.3%
13.3%
13.4%
Leverage ratio
9.2%
9.0%
9.1%
9.0%
8.8%
Tangible common equity ratio
6.5%
6.3%
6.0%
6.2%
6.0%
Tangible common equity as a
percent of risk-weighted assets
8.0%
7.6%
7.2%
7.2%
6.9%
Capital Position
$ in billions |
 6
2Q11 Earnings
Conference Call
150
170
190
210
230
2Q10
3Q10
4Q10
1Q11
2Q11
Loans
Deposits
Loan and Deposit Growth
Average Balances
Year-Over-Year Growth
2Q11 Acquisition Adjusted
Loan Growth = 3.5%
Deposit Growth = 9.6%
2.4%
$197.6
4.0%
$198.8
4.0%
$191.2
5.8%
$192.5
2.0%
$195.5
11.9%
$204.3
14.2%
$209.4
12.3%
$183.3
9.8%
$182.7
5.2%
$190.3
$ in billions |
 7
2Q11 Earnings
Conference Call
Taxable-equivalent basis
Revenue Growth
Year-Over-Year Growth
8.7%
7.9%
7.9%
4.6%
3.8%
$ in millions
4,519
4,587
4,721
4,519
4,690
3,000
3,500
4,000
4,500
5,000
2Q10
3Q10
4Q10
1Q11
2Q11 |
 8
2Q11 Earnings
Conference Call
Credit Quality
$ in millions, linked quarter change
* Excluding Covered Assets (assets subject to loss sharing agreements with FDIC),
1Q11 change in NPAs excludes FCB acquisition ($287 million) Change
in
Net
Charge-offs
Change
in
Nonperforming
Assets*
NCO $ Change (Left Scale)
NCO % Change (Right Scale)
NPA $ Change (Left Scale)
NPA % Change (Right Scale) |
 9
2Q11 Earnings
Conference Call
Credit Quality -
Outlook
The Company expects the level of Net Charge-offs and Nonperforming
Assets to trend lower during 3Q11
-8%
-9%
-1%
-8%
18%
23%
16%
36%
28%
0%
6%
0%
-1%
-16%
-40.0%
-20.0%
0.0%
20.0%
40.0%
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
Delinquencies*
Changes in Criticized Assets*
* Excluding Covered Assets (assets subject to loss sharing agreements with
FDIC) 1Q11 change in criticized assets excludes FCB acquisition
0.72%
0.84%
1.04%
1.00%
1.11%
1.34%
1.48%
1.44%
1.45%
1.70%
1.62%
1.18%
1.04%
1.06%
0.44%
0.52%
0.61%
0.66%
0.72%
0.78%
0.88%
0.78%
0.72%
0.68%
0.56%
0.46%
0.41%
0.43%
0.0%
0.5%
1.0%
1.5%
2.0%
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
30 to 89 %
90+ % |
 10
2Q11 Earnings
Conference Call
Credit Quality -
Reserves
Allowance for Credit Losses
Allowance for Credit Losses
Provision/NCO's
$ in millions
77%
94%
97%
100%
102%
115%
125%
140%
150%
167%
200%
150%
151%
166%
100%
0
1,500
3,000
4,500
6,000
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
60%
95%
130%
165%
200%
5,536
5,439
5,264
4,986
4,571
4,105
3,639
2,898
2,648
2,435
2,260
5,540
5,531
5,498
5,308 |
 11
2Q11 Earnings
Conference Call
Earnings Summary
$ in millions, except per-share data
Taxable-equivalent basis
YTD
YTD
2Q11
1Q11
2Q10
vs 1Q11
vs 2Q10
2011
2010
% B/(W)
Net Interest Income
2,544
$
2,507
$
2,409
$
1.5
5.6
5,051
$
4,812
$
5.0
Noninterest Income
2,146
2,012
2,110
6.7
1.7
4,158
4,028
3.2
Total Revenue
4,690
4,519
4,519
3.8
3.8
9,209
8,840
4.2
Noninterest Expense
2,425
2,314
2,377
(4.8)
(2.0)
4,739
4,513
(5.0)
Operating Income
2,265
2,205
2,142
2.7
5.7
4,470
4,327
3.3
Net Charge-offs
747
805
1,114
7.2
32.9
1,552
2,249
31.0
Excess Provision
(175)
(50)
25
--
--
(225)
200
--
Income before Taxes
1,693
1,450
1,003
16.8
68.8
3,143
1,878
67.4
Applicable Income Taxes
514
421
251
(22.1)
(104.8)
935
463
(101.9)
Noncontrolling Interests
24
17
14
41.2
71.4
41
20
105.0
Net Income
1,203
1,046
766
15.0
57.0
2,249
1,435
56.7
Preferred Dividends/Other
36
43
(96)
16.3
--
79
(75)
--
NI to Common
1,167
$
1,003
$
862
$
16.4
35.4
2,170
$
1,510
$
43.7
Diluted EPS
0.60
$
0.52
$
0.45
$
15.4
33.3
1.12
$
0.79
$
41.8
Average Diluted Shares
1,929
1,928
1,921
(0.1)
(0.4)
1,929
1,920
(0.5)
% B/(W) |
 12
2Q11 Earnings
Conference Call
2Q11 Results -
Key Drivers
vs. 2Q10
Net Revenue growth of 3.8%
•
Net
interest
income
growth
of
5.6%;
net
interest
margin
of
3.67%
vs.
3.90%
•
Noninterest income growth of 1.7%
Noninterest expense growth of 2.0%
Provision for credit losses lower by $567 million
•
Net charge-offs lower by $367 million
•
Provision lower than NCOs by $175 million vs. provision in excess of NCOs of $25
million in 2Q10 vs. 1Q11
Net
Revenue
growth
of
3.8%
(4.9%
excluding
securities
losses
and
1Q11
gain
related
to
FCB acquisition)
•
Net
interest
income
growth
of
1.5%;
net
interest
margin
of
3.67%
vs.
3.69%
•
Noninterest income growth of 6.7% (9.3% excluding securities losses and 1Q11 gain
related to FCB acquisition)
Noninterest expense growth of 4.8%
Provision for credit losses lower by $183 million
•
Net charge-offs lower by $58 million
•
Provision lower than NCOs by $175 million vs. provision lower than NCOs by $50
million in 1Q11 |
 13
2Q11 Earnings
Conference Call
YTD
YTD
2Q11
1Q11
2Q10
2011
2010
Revenue Items
Securities gains (losses), net
(8)
$
(5)
$
(21)
$
(13)
$
(55)
$
Gain related to FCB acquisition
-
46
-
46
-
Expense Items
ITS transaction debt extinguishment and expense
-
-
18
-
18
Incremental Provision
(175)
(50)
25
(225)
200
ITS transaction equity impact (net of tax)*
-
-
118
-
118
Notable Items
$ in millions
* Not a component of net income, but does impact net income applicable to U.S.
Bancorp common shareholders and earnings per diluted common share
|
 14
2Q11 Earnings
Conference Call
Net Interest Income
2,409
2,477
2,499
2,507
2,544
3.90%
3.91%
3.83%
3.69%
3.67%
1,500
1,800
2,100
2,400
2,700
2Q10
3Q10
4Q10
1Q11
2Q11
2.0%
3.0%
4.0%
5.0%
6.0%
Net Interest Income
Net Interest Margin
Net Interest Income
Key Points
$ in millions
Taxable-equivalent basis
vs. 2Q10
Average earning assets grew by $30.1 billion,
or 12.2% (11.6% excluding acquisitions)
Net interest margin lower by 23 bp (3.67% vs.
3.90%) driven by:
•
Higher balances in lower yielding investment
securities
•
Higher cash position at the Federal Reserve
vs. 1Q11
Average earning assets grew by $3.6 billion,
or 1.3% (1.2% excluding acquisitions)
Net interest margin lower by 2 bp (3.67% vs.
3.69%) driven by:
•
Higher balances in lower yielding investment
securities, offset by lower cash position at the
Federal Reserve
Year-Over-Year Growth
14.5%
14.8%
5.9%
4.3%
5.6% |
 2Q11 Earnings
Conference Call
Average Loans
8.0%
3.0%
(4.5%)
(8.7%)
(14.3%)
3.9%
3.0%
1.6%
1.1%
1.3%
22.0%
20.3%
15.8%
14.3%
11.9%
0.7%
1.0%
2.3%
3.4%
3.2%
0
60
120
180
240
2Q10
3Q10
4Q10
1Q11
2Q11
Average Loans
Key Points
$ in billions
Year-Over-Year Growth
4.0%
5.8%
2.0%
2.4%
4.0%
$191.2
$192.5
$195.5
$197.6
$198.8
Retail
Res Mtg
Covered
CRE
Commercial
vs. 2Q10
Average total loans grew by $7.6 billion, or 4.0%
(3.5% excluding acquisitions)
Average total loans, excluding covered loans,
were higher by 6.7%
Average commercial loans increased $3.7 billion,
or 8.0% (7.8% excluding acquisitions)
vs. 1Q11
Average total loans grew by $1.2 billion, or 0.6%
(0.5% excluding acquisitions)
Average total loans, excluding covered loans,
were higher by 1.2%
Average commercial loans grew by $1.3 billion,
or 2.8%
Covered
Commercial
CRE
Res Mtg
Retail
15 |
 16
2Q11 Earnings
Conference Call
Average Deposits
(10.8%)
(0.8%)
(7.4%)
1.9%
5.1%
47.7%
13.8%
2.9%
11.6%
11.8%
19.9%
17.8%
17.5%
17.2%
17.3%
6.8%
7.4%
4.8%
16.3%
22.1%
0
60
120
180
240
2Q10
3Q10
4Q10
1Q11
2Q11
Average Deposits
Key Points
$ in billions
Year-Over-Year Growth
12.3%
9.8%
5.2%
11.9%
14.2%
$183.3
$182.7
$190.3
$204.3
$209.4
Noninterest
-bearing
Checking
& Savings
Time
Money
Market
vs. 2Q10
Average total deposits increased by $26.1
billion, or 14.2% (9.6% excluding acquisitions)
Average low cost deposits (NIB, interest
checking, money market and savings),
increased by $23.9 billion, or 17.1% (12.3%
excluding acquisitions)
vs. 1Q11
Average total deposits increased by $5.1
billion, or 2.5% (2.3% excluding acquisitions)
Average low cost deposits increased by $5.8
billion, or 3.7% (3.5% excluding acquisitions)
Time
Money Market
Checking & Savings
Noninterest-bearing |
 17
2Q11 Earnings
Conference Call
2Q10
3Q10
4Q10
1Q11
2Q11
Valuation losses
(21)
$
(9)
$
(14)
$
(5)
$
(8)
$
Other non-operating gains
-
-
103
46
-
Total
(21)
$
(9)
$
89
$
41
$
(8)
$
Notable Noninterest Income Items
All Other
Mortgage
Service Charges
Trust & Inv Mgmt
Payments
Noninterest Income
9.4%
(1.6%)
(7.1%)
(3.4%)
5.9%
0
700
1400
2100
2800
2Q10
3Q10
4Q10
1Q11
2Q11
Noninterest Income
Key Points
$ in millions
Year-Over-Year Growth
2.7%
0.8%
10.2%
4.9%
1.7%
$2,146
$2,110
$2,110
$2,222
$2,012
Trust &
Inv Mgmt
Service
Charges
All Other
Mortgage
Payments
Payments = credit and debit card revenue, corporate payment products revenue and
merchant processing services; Service charges = deposit service charges,
treasury management fees and ATM processing services
vs. 2Q10
Noninterest income grew by $36 million, or 1.7%,
driven by:
•
Payments revenue (5.9% growth)
•
Commercial products revenue (6.3% growth)
•
Lower deposit service charges due to Reg E and fee
policy changes
•
Mortgage banking revenue decrease of $4 million
24% decrease in production volume
Favorable net change in MSR valuation and related hedging
(hedge $81 2Q11 vs. $55 2Q10)
vs. 1Q11
Noninterest income grew by $134 million, or 6.7%,
driven by:
•
Payments revenue (8.9% growth) and deposit service
charges (13.3% growth) both seasonally higher
•
Commercial products revenue (14.1% growth)
•
Mortgage banking revenue increase of $40 million
33% decrease in production volume, higher application volume
Favorable net change in MSR valuation and related hedging
(hedge $81 2Q11 vs. $62 1Q11)
Notable items, including net securities losses,
unfavorable by $49 million |
 18
2Q11 Earnings
Conference Call
2Q10
3Q10
4Q10
1Q11
2Q11
ITS transaction
18
$
-
$
-
$
-
$
-
$
Total
18
$
-
$
-
$
-
$
-
$
Notable Noninterest Expense Items
Noninterest Expense
(14.4%)
1.6%
6.0%
10.2%
8.6%
0
700
1400
2100
2800
2Q10
3Q10
4Q10
1Q11
2Q11
Noninterest Expense
Key Points
$ in millions
Year-Over-Year Growth
11.6%
16.2%
11.5%
8.3%
2.0%
$2,425
$2,377
$2,385
$2,485
$2,314
Occupancy
& Equipment
Prof Services,
Marketing
& PPS
All Other
Tech & Comm
Compensation
& Benefits
vs. 2Q10
Noninterest expense was higher by $48 million,
or 2.0%, majority of variance driven by:
•
Increased compensation (6.1%) and employee
benefits (22.1%)
•
Increase in net occupancy & equipment (10.2%)
related to business expansion initiatives and
technology-related projects
•
Other expense lower primarily due to favorable
changes in other loan expense, integration expenses,
and costs related to insurance and litigation matters,
partially offset by an increase in FDIC deposit
insurance
vs. 1Q11
Noninterest expense was higher by $111 million,
or 4.8%, majority of variance driven by:
•
Higher compensation (4.7%) due to higher incentives
and commissions
•
Professional services and marketing and business
development expenses higher primarily due to timing
of initiatives and seasonally lower 1Q11
•
Other expense higher mainly due to FDIC deposit
insurance expense and seasonally higher investments
in affordable housing and other tax-advantaged
projects
All Other
Tech & Communications
Prof Svcs, Marketing and PPS
Occupancy & Equip
Compensation & Benefits |
 19
2Q11 Earnings
Conference Call
Mortgage Repurchase
Mortgages Repurchased and Make-whole Payments
Mortgage Representation and Warranties Reserve
$ in millions
2Q11
1Q11
4Q10
3Q10
2Q10
Beginning Reserve
$181
$180
$147
$101
$73
Net Realized Losses
(43)
(32)
(27)
(24)
(20)
Additions to Reserve
35
33
60
70
48
Ending Reserve
$173
$181
$180
$147
$101
Mortgages
repurchased
and make-whole
payments
$72
$90
$69
$53
$27
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 = $123
million
Repurchase requests expected to
decline over the next few quarters |
 20
2Q11 Earnings
Conference Call
Regulatory Environment
Existing regulatory oversight actions
Future regulatory oversight actions
•
Dodd-Frank Wall Street Reform and Consumer Protection Act
Consumer Financial Protection Bureau
•
Residential mortgage foreclosure policy and procedures
FY 2010
Annual
Actual
Run Rate
Overdraft Legislation
$255
$440 -
$480
Pricing and Policy Changes
Card Act
$160
$250
Net Interest Margin and Fee Income
Durbin Amendment
--
$300*
$ in millions, estimated reduction to revenue
* 4Q11 impact approximately $75 million ($0.24 per average transaction starting
4Q11) |
 21
2Q11 Earnings
Conference Call
Positioned to Win |
 22
2Q11 Earnings
Conference Call
Appendix |
 23
2Q11 Earnings
Conference Call
Credit Quality
-
Commercial Loans
40,095
40,726
41,700
42,683
44,135
2.23%
1.49%
1.11%
1.19%
0.75%
0
15,000
30,000
45,000
60,000
2Q10
3Q10
4Q10
1Q11
2Q11
0.0%
1.5%
3.0%
4.5%
6.0%
Average Loans
Net Charge-offs Ratio
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Delinquencies and nonperforming loans continue to improve
Utilization
rates
remain
historically
low
although
loan
balances
grew
2Q10
1Q11
2Q11
Average Loans
40,095
42,683
44,135
30-89 Delinquencies
0.73%
0.58%
0.46%
90+ Delinquencies
0.24%
0.13%
0.09%
Nonperforming Loans
1.65%
1.02%
0.78%
20%
25%
30%
35%
40%
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
Revolving Line Utilization Trend
$ in millions |
 24
2Q11 Earnings
Conference Call
Credit Quality
-
Commercial Leases
6,245
6,058
6,012
6,030
5,919
1.41%
1.18%
1.12%
0.94%
0.88%
0
2,000
4,000
6,000
8,000
2Q10
3Q10
4Q10
1Q11
2Q11
0.0%
1.5%
3.0%
4.5%
6.0%
Average Loans
Net Charge-offs Ratio
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Net charge-offs improved, declining to 0.88% for the quarter
Credit quality continues to improve as delinquencies and nonperforming loans
declined 2Q10
1Q11
2Q11
Average Loans
6,245
6,030
5,919
30-89 Delinquencies
1.55%
1.18%
1.00%
90+ Delinquencies
0.03%
0.03%
0.02%
Nonperforming Loans
1.87%
0.90%
0.73%
$ in millions
Equipment
Finance
$2,376
Small Ticket
$3,543 |
 25
2Q11 Earnings
Conference Call
Credit Quality
-
Commercial Real Estate
34,164
34,190
34,577
35,179
35,499
2.67%
2.40%
2.51%
1.44%
1.85%
0.90%
0.59%
1.33%
1.72%
1.11%
5.67%
4.61%
6.54%
4.56%
7.31%
0
10,000
20,000
30,000
40,000
2Q10
3Q10
4Q10
1Q11
2Q11
0.0%
2.5%
5.0%
7.5%
10.0%
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Early and late stage delinquencies, as well as nonperforming loans, all decreased
on a linked quarter basis
Net
charge-offs
increased
on
a
linked
quarter
basis,
but
have
decreased
28%
on
a
year-over-
year basis
2Q10
1Q11
2Q11
Average Loans
34,164
35,179
35,499
30-89 Delinquencies
0.98%
0.74%
0.45%
90+ Delinquencies
0.09%
0.02%
0.01%
Nonperforming Loans
4.75%
4.15%
3.84%
Performing TDRs
69
184
225
$ in millions
Multi-family
$1,670
Other
$1,049
Office
$870
A&D
Construction
$951
Retail
$965
Condo
Construction
$398
Residential
Construction
$1,167
Investor
$17,190
Owner
Occupied
$11,239
CRE Mortgage
CRE Construction
Average Loans
Net Charge-offs Ratio
NCO Ratio -
Comm Mtg
NCO Ratio -
Construction
TDR = troubled debt restructuring |
 26
2Q11 Earnings
Conference Call
1,939
1,890
1,804
1,747
1,672
0
600
1,200
1,800
2,400
2Q10
3Q10
4Q10
1Q11
2Q11
Credit Quality
-
Residential Mortgage
26,821
27,890
29,659
31,777
32,734
2.06%
1.88%
1.75%
1.65%
1.46%
0
9,000
18,000
27,000
36,000
2Q10
3Q10
4Q10
1Q11
2Q11
0.0%
1.5%
3.0%
4.5%
6.0%
Average Loans
Net Charge-offs Ratio
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Strong growth in high quality originations (weighted average FICO 753, weighted
average LTV 71%) as average loans increased 3.0% over 1Q11 driven by demand
for refinancing Continue to help home owners by successfully modifying 5,111
loans (owned and serviced) in 2Q11, representing $955 million in
balances Nonperforming loans declined as delinquency and foreclosure
inventory improved 2Q10
1Q11
2Q11
Average Loans
26,821
31,777
32,734
30-89 Delinquencies
1.75%
1.22%
1.11%
90+ Delinquencies
1.85%
1.33%
1.13%
Nonperforming Loans
2.23%
2.12%
2.03%
Residential Mortgage
Performing TDRs
$ in millions |
 27
2Q11 Earnings
Conference Call
Credit Quality -
Home Equity
19,332
19,289
19,119
18,801
18,634
1.64%
1.75%
1.72%
1.62%
1.64%
0
6,000
12,000
18,000
24,000
2Q10
3Q10
4Q10
1Q11
2Q11
0.0%
1.5%
3.0%
4.5%
6.0%
Average Loans
Net Charge-offs Ratio
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Strong credit quality portfolio (weighted average FICO 747, weighted average CLTV
72%) originated primarily through the retail branch network to existing bank
customers on their primary residence Loan demand remains soft for home equity
products Early and late stage delinquencies continue to improve
2Q10
1Q11
2Q11
Average Loans
19,332
18,801
18,634
30-89 Delinquencies
0.89%
0.81%
0.78%
90+ Delinquencies
0.68%
0.71%
0.65%
Nonperforming Loans
0.16%
0.23%
0.22%
Traditional: 87%
Wtd Avg LTV: 71%
NCO: 1.22%
Consumer Finance: 13%
Wtd Avg LTV: 80%
NCO: 4.37%
$ in millions |
 28
2Q11 Earnings
Conference Call
2Q10
1Q11
2Q11
Average Loans
16,329
16,124
15,884
30-89 Delinquencies
1.86%
1.44%
1.34%
90+ Delinquencies
2.38%
1.62%
1.32%
Nonperforming Loans
1.04%
1.61%
1.59%
Credit Quality -
Credit Card
16,329
16,510
16,403
16,124
15,884
7.79%
7.11%
6.65%
6.21%
5.45%
5.62%
6.45%
7.21%
7.84%
8.53%
0
5,000
10,000
15,000
20,000
2Q10
3Q10
4Q10
1Q11
2Q11
0.0%
4.0%
8.0%
12.0%
16.0%
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Both early and late stage delinquencies continue to improve
Net charge-offs declined for the fourth consecutive quarter
Nonperforming loans were stable in the second quarter
$ in millions
* Excluding portfolio purchases where the acquired loans were recorded at fair
value at the purchase date Average Loans
Net Charge-offs Ratio
Net Charge-offs Ratio Excluding Acquired Portfolios*
Core Portfolio
$15,403
Portfolios Acquired
at Fair Value
$481 |
 2Q11 Earnings
Conference Call
Credit Quality -
Retail Leasing
4,364
4,289
4,459
4,647
4,808
0.37%
0.19%
0.09%
0.09%
0.00%
0
2,000
4,000
6,000
8,000
2Q10
3Q10
4Q10
1Q11
2Q11
0.0%
1.0%
2.0%
3.0%
4.0%
Average Loans
Net Charge-offs Ratio
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Average
loans
continue
to
increase
as
demand
for
new
auto
leases
remains
strong
Retail leasing delinquencies continue to improve, reaching pre-recession
levels Strong used auto values continue to reduce end of term risk and net
charge-offs 2Q10
1Q11
2Q11
Average Loans
4,364
4,647
4,808
30-89 Delinquencies
0.46%
0.26%
0.20%
90+ Delinquencies
0.05%
0.04%
0.02%
Nonperforming Loans
--%
--%
--%
$ in millions
90
100
110
120
130
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
Manheim Used Vehicle Value Index*
* Manheim Used Vehicle Value Index source: www.manheimconsulting.com,
January 1995 = 100, quarter value = average monthly ending value
29 |
 30
2Q11 Earnings
Conference Call
Credit Quality -
Other Retail
23,357
24,281
24,983
24,691
24,498
1.70%
1.65%
1.45%
1.33%
1.16%
0
7,000
14,000
21,000
28,000
2Q10
3Q10
4Q10
1Q11
2Q11
0.0%
1.5%
3.0%
4.5%
6.0%
Average Loans
Net Charge-offs Ratio
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Average balances increased 4.9% over 2Q10 as demand for auto loans remains
strong Net charge-offs and delinquencies continue to decline while
nonperforming loans remain stable 2Q10
1Q11
2Q11
Average Loans
23,357
24,691
24,498
30-89 Delinquencies
0.85%
0.63%
0.62%
90+ Delinquencies
0.32%
0.25%
0.20%
Nonperforming Loans
0.13%
0.13%
0.13%
Installment
$5,297
Auto Loans
$10,974
Revolving
Credit
$3,336
Student
Lending
$4,891
$ in millions |
 31
2Q11 Earnings
Conference Call
$ in millions
2Q11
1Q11
4Q10
3Q10
2Q10
Total equity
33,341
$
31,335
$
30,322
$
29,943
$
28,940
$
Preferred stock
(2,606)
(1,930)
(1,930)
(1,930)
(1,930)
Noncontrolling interests
(889)
(828)
(803)
(792)
(771)
Goodwill (net of deferred tax liability)
(8,300)
(8,317)
(8,337)
(8,429)
(8,425)
Intangible assets (exclude mortgage servicing rights)
(1,277)
(1,342)
(1,376)
(1,434)
(1,525)
Tangible common equity (a)
20,269
18,918
17,876
17,358
16,289
Tier 1 Capital, determined in accordance with prescribed
regulatory requirements using Basel I definition
27,795
26,821
25,947
24,908
24,021
Trust preferred securities
(3,267)
(3,949)
(3,949)
(3,949)
(3,949)
Preferred stock
(2,606)
(1,930)
(1,930)
(1,930)
(1,930)
Noncontrolling interests, less preferred stock not eligible for Tier I
capital (695)
(694)
(692)
(694)
(694)
Tier 1 common equity using Basel I definition (b)
21,227
20,248
19,376
18,335
17,448
Tier 1 capital, determined in accordance with prescribed
regulatory requirements using anticipated Basel III definition
23,931
21,855
Preferred stock
(2,606)
(1,930)
Noncontrolling interests of real estate investment trusts
(667)
(667)
Tier 1 common equity using anticipated Basel III definition
(c) 20,658
19,258
Total assets
320,874
311,462
307,786
290,654
283,243
Goodwill (net of deferred tax liability)
(8,300)
(8,317)
(8,337)
(8,429)
(8,425)
Intangible assets (exclude mortgage servicing rights)
(1,277)
(1,342)
(1,376)
(1,434)
(1,525)
Tangible assets (d)
311,297
301,803
298,073
280,791
273,293
Risk-weighted assets, determined in accordance
with prescribed regulatory requirements using Basel I definition (e)
252,882
247,486
247,619
242,490
237,145
Risk-weighted assets using anticipated Basel III definitions (f)
256,205
250,931
Ratios
Tangible common equity to tangible assets (a)/(d)
6.5%
6.3%
6.0%
6.2%
6.0%
Tier 1 common equity to risk-weighted assets using Basel I definition
(b)/(e) 8.4%
8.2%
7.8%
7.6%
7.4%
Tier 1 common equity to risk-weighted assets using anticipated Basel III
definition (c)/(f) 8.1%
7.7%
Tangible common equity to risk-weighted assets (a)/(e)
8.0%
7.6%
7.2%
7.2%
6.9%
2Q11 risk-weighted assets are preliminary data, subject to change prior to
filings with applicable regulatory agencies Anticipated Basel III definitions
reflect adjustments for changes to the related elements as proposed in December 2010 by regulatory agencies
Non-Regulatory Capital Ratios |
 U.S.
Bancorp 2Q11 Earnings
Conference Call
U.S. Bancorp
2Q11 Earnings
Conference Call
July 20, 2011 |