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8-K - 8-K - US BANCORP \DE\d758215d8k.htm
EX-99.1 - EX-99.1 - US BANCORP \DE\d758215dex991.htm
Richard K. Davis
Chairman, President and CEO
Andy Cecere
Vice Chairman and CFO
U.S. Bancorp
2Q14 Earnings
Conference Call
U.S. Bancorp
2Q14 Earnings
Conference Call
July 16, 2014
Exhibit 99.2


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
moderate
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.
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
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;
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,
2013,
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
2Q14 Earnings
Conference Call
2Q14 Highlights
Record net income of $1.5 billion; $0.78 per diluted common share
2Q14 results included a $214 million gain on the sale of Visa Inc. Class B
common stock and a $200 million FHA DOJ settlement (no impact to
EPS)
Average loan growth of 6.8% vs. 2Q13 (6.7% excluding Charter One
acquisition)
and 2.0% vs. 1Q14 (1.9% excluding Charter One acquisition)
Average deposit growth of 6.0% vs. 2Q13 (5.8% excluding Charter One
acquisition) and 1.9% vs. 1Q14 (1.7% excluding Charter One acquisition)
Net charge-offs declined 11.0% vs. 2Q13
Nonperforming assets decreased 1.6% vs. 1Q14 and 8.1% vs. 2Q13 (excluding
covered assets)
Capital generation continues to reinforce capital position
Common equity tier 1 capital ratio of 8.9% estimated for the Basel III fully implemented
standardized approach
Common
equity
tier
1
capital
ratio
of
9.6%;
Tier
1
capital
ratio
of
11.3%
Returned 75% of earnings to shareholders in 2Q14
Repurchased 15 million shares of common stock during the quarter


4
2Q14 Earnings
Conference Call
Performance Ratios
Return on Average Common Equity
and Return on Average Assets
Efficiency Ratio and
Net Interest Margin
Return on Avg Common Equity
Return on Avg Assets
Efficiency Ratio
Net Interest Margin
* Excluding $214 million gain on Visa Inc. Class B common stock sale and $200 million DOJ settlement
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


5
2Q14 Earnings
Conference Call
* Gain on Visa Inc. Class B common stock sale
Taxable-equivalent basis
Revenue Growth
Year-Over-Year Change
(2.4%)
(5.6%)
(4.4%)
(1.2%)
4.9%
$ in millions


6
2Q14 Earnings
Conference Call
Loan and Deposit Growth
Year-Over-Year Growth
Average Balances
$ in billions
6.0%
$235.9
6.8%
$240.5
5.2%
$225.2
5.7%
$229.4
5.7%
$232.8
5.1%
$257.5
6.0%
$262.4
7.0%
$247.4
5.5%
$252.4
5.4%
$256.9


7
2Q14 Earnings
Conference Call
Credit Quality
* Excluding Covered Assets (assets subject to loss sharing agreements with FDIC)
Net Charge-offs
Nonperforming Assets*
$ in millions
Net Charge-offs (Left Scale)
NCOs to Avg Loans (Right Scale)
Nonperforming Assets (Left Scale)
NPAs to Loans plus ORE (Right Scale)


8
2Q14 Earnings
Conference Call
Earnings Summary
$ in millions, except per-share data
Taxable-equivalent basis
YTD
YTD
2Q14
1Q14
2Q13
vs 1Q14
vs 2Q13
2014
2013
% B/(W)
Net Interest Income
2,744
$    
2,706
$    
2,672
$    
1.4
          
2.7
          
5,450
$    
5,381
$    
1.3
          
Noninterest Income
2,444
      
2,108
      
2,276
      
15.9
        
7.4
          
4,552
      
4,441
      
2.5
          
Total Revenue
5,188
      
4,814
      
4,948
      
7.8
          
4.9
          
10,002
    
9,822
      
1.8
          
Noninterest Expense
2,753
      
2,544
      
2,557
      
(8.2)
         
(7.7)
         
5,297
      
5,027
      
(5.4)
         
Operating Income
2,435
      
2,270
      
2,391
      
7.3
          
1.8
          
4,705
      
4,795
      
(1.9)
         
Net Charge-offs
349
         
341
         
392
         
(2.3)
         
11.0
        
690
         
825
         
16.4
        
Excess Provision
(25)
          
(35)
          
(30)
          
(28.6)
       
(16.7)
       
(60)
          
(60)
          
-
            
Income before Taxes
2,111
      
1,964
      
2,029
      
7.5
          
4.0
          
4,075
      
4,030
      
1.1
          
Applicable Income Taxes
602
         
552
         
585
         
(9.1)
         
(2.9)
         
1,154
      
1,199
      
3.8
          
Noncontrolling Interests
(14)
          
(15)
          
40
           
6.7
          
nm
(29)
          
81
           
nm
Net Income
1,495
      
1,397
      
1,484
      
7.0
          
0.7
          
2,892
      
2,912
      
(0.7)
         
Preferred Dividends/Other
68
           
66
           
79
           
(3.0)
         
13.9
        
134
         
149
         
10.1
        
NI to Common
1,427
$    
1,331
$    
1,405
$    
7.2
          
1.6
          
2,758
$    
2,763
$    
(0.2)
         
Diluted EPS
0.78
$      
0.73
$      
0.76
$      
6.8
          
2.6
          
1.51
$      
1.49
$      
1.3
          
Average Diluted Shares
1,821
      
1,828
      
1,853
      
0.4
          
1.7
          
1,825
      
1,860
      
1.9
          
% B/(W)


9
2Q14 Earnings
Conference Call
2Q14 Results -
Key Drivers
vs. 2Q13
Net Revenue increase of 4.9% (0.5% excluding notable items)
Net interest income increase of 2.7%; net interest margin
of 3.27% vs. 3.43% in 2Q13
Noninterest income increase of 7.4% (2.0% decrease
excluding notable items)
Noninterest expense increase of 7.7% (0.2% decrease
excluding notable items)
Provision for credit losses lower by $38 million
Net charge-offs lower by $43 million, or 11.0%
Provision lower than NCOs by $25 million vs. $30 million in 2Q13
vs. 1Q14
Net Revenue increase of 7.8% (3.3% excluding notable items)
Net interest income increase of 1.4%; net interest margin of 3.27% vs. 3.35% in 1Q14
Noninterest income increase of 15.9% (5.8% excluding notable items)
Noninterest expense increase of 8.2% (0.4% excluding notable items)
Provision for credit losses higher by $18 million
Net charge-offs increased by $8 million
Provision lower than NCOs by $25 million vs. $35 million in 1Q14


10
2Q14 Earnings
Conference Call
Capital Position
$ in billions; RWA = risk-weighted assets
(a) 2014 amounts and ratios calculated under the Basel III transitional standardized approach; all prior periods under Basel I
2Q14
1Q14
4Q13
3Q13
2Q13
Total U.S. Bancorp shareholders' equity
42.7
$    
42.1
$    
41.1
$    
40.1
$    
39.7
$    
Standardized Approach
Basel III transitional standardized approach/Basel I (a)
Common equity tier 1 capital
29.8
29.5
27.9
      
27.3
      
26.8
      
Tier 1 capital
34.9
34.6
33.4
      
32.7
      
32.2
      
Total risk-based capital
41.0
40.7
39.3
      
38.9
      
38.4
      
Common equity tier 1 capital ratio
9.6%
9.7%
9.4%
9.3%
9.2%
Tier 1 capital ratio
11.3%
11.4%
11.2%
11.2%
11.1%
Total risk-based capital ratio
13.2%
13.5%
13.2%
13.3%
13.3%
Leverage ratio
9.6%
9.7%
9.6%
9.6%
9.5%
Common equity tier 1 capital to RWA estimated for the
Basel III fully implemented standardized approach
8.9%
9.0%
8.8%
8.6%
8.6%
Advanced Approaches
Common equity tier 1 capital to RWA for the Basel III
transitional advanced approaches
12.3%
Common equity tier 1 capital to RWA estimated for the 
Basel III fully implemented advanced approaches
11.7%
Tangible common equity ratio
7.5%
7.8%
7.7%
7.4%
7.5%
Tangible common equity as a % of RWA
9.2%
9.3%
9.1%
8.9%
8.9%


11
2Q14 Earnings
Conference Call
Capital Actions
Dividend increase announced June 17
th
Annual dividend increased from $0.92 to $0.98, a 6.5% increase
One year authorization to repurchase up to $2.3 billion of outstanding stock effective April 1, 2014
Returned 75% of earnings to shareholders during 2Q14
Reinvest and
Acquisitions
Dividends
Share
Repurchases
20 -
40%
Targets:
30 -
40%
30 -
40%
25%
2Q14
Actual:
44%
31%
Earnings Distribution


12
2Q14 Earnings
Conference Call


13
2Q14 Earnings
Conference Call
Appendix


14
2Q14 Earnings
Conference Call
Covered
Commercial
CRE
Res Mtg
Credit
Card
Retail
Average Loans
Average Loans
Key Points
$ in billions
vs. 2Q13
Average total loans grew by $15.3 billion, or 6.8%
(6.7% excluding Charter One acquisition)
Average total loans, excluding covered loans,
were higher by 8.3%
Average total commercial loans increased $8.3
billion, or 12.4%; average commercial real estate
loans increased $2.6 billion, or 6.9%; average
residential mortgage loans increased $4.9 billion,
or 10.5%
vs. 1Q14
Average total loans grew by $4.6 billion, or 2.0%
(1.9% excluding Charter One acquisition)
Average total loans, excluding covered loans,
were higher by 2.2%
Average total commercial loans increased $4.2
billion, or 5.9%; average commercial real estate
loans increased $0.4 billion, or 1.1%; average
residential mortgage loans increased $0.2 billion,
or 0.4%
Year-Over-Year Growth
5.2%
5.7%
5.7%
6.0%
6.8%
Covered
Commercial
CRE
Res Mtg
Retail
Credit Card
$225.2
$229.4
$232.8
$235.9
$240.5


2Q14 Earnings
Conference Call
Time
Money
Market
Checking
& Savings
Noninterest
-bearing
Average Deposits
Average Deposits
Key Points
$ in billions
vs. 2Q13
Average total deposits increased by $15.0
billion, or 6.0% (5.8% excluding Charter One
acquisition)
Average low cost deposits (NIB, interest
checking, money market and savings) 
increased by $17.6 billion, or 8.7%
vs. 1Q14
Average total deposits increased by $4.9
billion, or 1.9% (1.7% excluding Charter One
acquisition)
Average low cost deposits increased by $5.6
billion, or 2.6%
Year-Over-Year Growth
7.0%
5.5%
5.4%
5.1%
6.0%
Time
Money Market
Checking and Savings
Noninterest-bearing
$247.4
$252.4
$256.9
$257.5
$262.4
15


2Q14 Earnings
Conference Call
Net Interest Income
Net Interest Income
Key Points
$ in millions
Taxable-equivalent basis
vs. 2Q13
Average earning assets grew by $24.1 billion,
or 7.7%
Net interest margin lower by 16 bps (3.27%
vs. 3.43%) driven by:
Lower reinvestment rates on investment securities
and growth in the investment portfolio at lower
rates and lower rates on new loans
Partially offset by lower rates on deposits and
short-term borrowings and a reduction in higher
cost long-term debt
vs. 1Q14
Average earning assets grew by $9.8 billion,
or 3.0%
Net interest margin lower by 8 bps (3.27% vs.
3.35%) driven by:
Growth in lower rate investment securities
Lower rates on new loans, principally due to higher
growth in wholesale as compared to retail loans
Year-Over-Year Change
(1.5%)
(2.5%)
(1.8%)
(0.1%)
2.7%
16


2Q14 Earnings
Conference Call
Noninterest Income
Noninterest Income
Key Points
$ in millions
Payments = credit and debit card revenue, corporate payment products revenue and merchant processing;
Service charges = deposit  service charges, treasury management fees and ATM processing services
vs. 2Q13
Noninterest income increased by $168 million, or
7.4%, driven by:
Higher credit and debit card revenue (6.1% increase) and
corporate payments (3.4% increase) due to higher transaction
volumes; higher merchant processing revenue (2.9% increase)
due to an increase in product fees and higher volumes, partially
offset by lower rates
Higher trust and investment management revenue (9.5%
increase) due to account growth and improved market conditions
Higher deposit service charges (6.9% increase) due to account
growth and pricing changes
Higher commercial products revenue (5.7% increase) due to an
increase in bond underwriting fees and a higher volume of tax-
advantaged project fees
Higher other income, primarily due to the Visa gain
Mortgage banking revenue decline of $118 million
vs. 1Q14
Noninterest income increased by $336 million, or
15.9%, driven by:
Higher credit and debit card revenue (8.4% increase), corporate
payments (5.2% increase), and merchant processing revenue
(7.9% increase) due to seasonally higher transaction volumes
Higher trust and investment management revenues (2.3%
increase) due to improved market conditions and account growth
Higher deposit service charges (8.9% increase) due to seasonally
higher transaction volumes
Higher commercial products revenue (7.8% increase) due to
higher wholesale transaction activity
Mortgage banking revenue increase of $42 million
Higher other income, primarily due to the Visa gain
Year-Over-Year Change
(3.4%)
(9.1%)
(7.4%)
(2.6%)
7.4%
$2,276
$2,177
$2,156
$2,108
$2,444
Trust and
Inv Mgmt
Service
Charges
All Other
Mortgage
Payments
All Other
Mortgage
Service Charges
Trust and Inv Mgmt
Payments
2Q13
3Q13
4Q13
1Q14
2Q14
Visa Gain
-
$        
-
$        
-
$        
-
$        
214
$    
Total
-
$        
-
$        
-
$        
-
$        
214
$    
Notable Noninterest Income Items
17


2Q14 Earnings
Conference Call
Noninterest Expense
Noninterest Expense
Key Points
$ in millions
vs. 2Q13
Noninterest expense was higher by $196 million, or
7.7%, driven by:
Higher other expense due primarily to the FHA DOJ settlement
partially offset by lower costs related to investments in tax-
advantaged projects
Higher compensation expense (2.5% increase) due to the
impact of merit increases and higher staffing for risk and
compliance activities
Higher net occupancy and equipment expense (3.0% increase)
due to business initiatives and higher rent expense and
maintenance costs
Higher professional services expense (6.6% increase) due
mainly to mortgage servicing-related project costs
Lower employee benefits expense (7.2% decrease) driven by
lower pension costs
vs. 1Q14
Noninterest expense was higher by $209 million, or
8.2%, driven by:
Higher other expense due to the FHA DOJ settlement
Higher compensation expense (0.9% increase) due to merit
increases and seasonal contract labor
Higher professional services expense (16.9% increase) due to
higher mortgage servicing-related project costs
Higher marketing and business development expense (21.5%
increase) due to a charitable foundation contribution and the
timing of various marketing programs
Lower employee benefits expense (11.1% decrease) due to
seasonally lower payroll tax expense
Year-Over-Year Change
(1.7%)
(1.7%)
(0.1%)
3.0%
7.7%
$2,557
$2,565
$2,682
$2,544
$2,753
Occupancy
and Equipment
Prof Services,
Marketing
and PPS
All Other
Tech and Comm
Compensation
and Benefits
All Other
Tech and Communications
Prof Svcs, Marketing and PPS
Occupancy and Equipment
Compensation and Benefits
2Q13
3Q13
4Q13
1Q14
2Q14
FHA DOJ settlement
-
$        
-
$        
-
$        
-
$        
200
$    
Total
-
$        
-
$        
-
$        
-
$        
200
$    
Notable Noninterest Expense Items
18


2Q14 Earnings
Conference Call
Credit Quality
-
Commercial Loans
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Continued new client growth led to 6.5% linked quarter loan growth and 13.7% year-over-year
growth; utilization rates improved modestly
Net
charge-offs
below
historic
norms
but
increased
due
to
both
higher
gross
charge-offs
and
slightly lower recoveries
Nonperforming loans and delinquencies were largely unchanged
2Q13
1Q14
2Q14
Average Loans
$61,507
$65,645
$69,920
30-89 Delinquencies
0.23%
0.25%
0.23%
90+ Delinquencies
0.10%
0.07%
0.06%
Nonperforming Loans
0.14%
0.25%
0.24%
$ in millions
19


2Q14 Earnings
Conference Call
Credit Quality
-
Commercial Leases
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Commercial lease balances were down slightly
Net charge-offs remained at low levels
Nonperforming loans and delinquencies continued at modest levels
2Q13
1Q14
2Q14
Average Loans
$5,255
$5,189
$5,100
30-89 Delinquencies
0.74%
0.74%
0.75%
90+ Delinquencies
0.00%
0.00%
0.00%
Nonperforming Loans
0.27%
0.27%
0.31%
$ in millions
20


2Q14 Earnings
Conference Call
Credit Quality
-
Commercial Real Estate
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Average loans increased 1.1% on a linked quarter basis and 6.9% year-over-year
Credit quality is stable at low levels; net recovery ratio of 0.04% marked the fifth consecutive quarter of
net recoveries
Nonperforming loans of 0.55% continued a downward trend
2Q13
1Q14
2Q14
Average Loans
$37,884
$40,050
$40,497
30-89 Delinquencies
0.23%
0.14%
0.14%
90+ Delinquencies
0.03%
0.06%
0.06%
Nonperforming Loans
1.11%
0.67%
0.55%
Performing TDRs*
$494
$359
$330
$ in millions
Investor
$20,687
Owner
Occupied
$11,314
Multi-family
$2,800
Retail
$553
Residential
Construction
$1,759
A&D
Construction
$592
Office
$866
Other
$1,926
* TDR = troubled debt  restructuring
21


2Q14 Earnings
Conference Call
Credit Quality
-
Residential Mortgage
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Modest growth in high quality originations (weighted average FICO 759, weighted average LTV
72%), as average loans increased 0.4% over 1Q14
80% of the balances have been originated since the beginning of 2009, the origination quality
metrics and performance to date have significantly outperformed prior vintages with similar
seasoning
2Q13
1Q14
2Q14
Average Loans
$46,873
$51,584
$51,815
30-89 Delinquencies
0.78%
0.59%
0.48%
90+ Delinquencies
0.53%
0.64%
0.49%
Nonperforming Loans
1.43%
1.50%
1.57%
$ in millions
** Excludes GNMA loans, whose repayments are insured by the FHA or guaranteed by the Department of VA ($2,816 million 2Q14)
22


2Q14 Earnings
Conference Call
2Q13
1Q14
2Q14
Average Loans
$16,416
$17,407
$17,384
30-89 Delinquencies
1.17%
1.19%
1.13%
90+ Delinquencies
1.10%
1.21%
1.06%
Nonperforming Loans
0.65%
0.38%
0.29%
Credit Quality -
Credit Card
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Average loans flat on a linked quarter basis; up 5.9% year-over-year
Delinquencies have stabilized near historically low levels
Nonperforming loans continued to decline
$ in millions
23


2Q14 Earnings
Conference Call
Credit Quality -
Home Equity
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
High-quality originations (weighted average FICO on commitments was 767, weighted average
CLTV
71%)
originated
primarily
through
the
retail
branch
network
to
existing
bank
customers
on
their primary residence
Net charge-offs ratio continued to decline on a linked quarter basis
2Q13
1Q14
2Q14
Average Loans
$15,989
$15,366
$15,327
30-89 Delinquencies
0.74%
0.57%
0.50%
90+ Delinquencies
0.25%
0.33%
0.26%
Nonperforming Loans
1.23%
1.09%
1.11%
Subprime: 2%
Wtd Avg LTV**: 90%
NCO: 6.01%
$ in millions
Prime: 95%
Wtd Avg LTV**: 72%
NCO: 0.50%
** LTV at origination
Other: 3%
Wtd Avg LTV**: 72%
NCO: 0.81%
24


2Q14 Earnings
Conference Call
Credit Quality -
Retail Leasing
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Strong year-over-year growth (6.4%), driven by high-quality originations (weighted average FICO 771)
Delinquencies remained relatively stable at very low levels
Strong used auto values continued to contribute to historically low net charge-offs
2Q13
1Q14
2Q14
Average Loans
$5,653
$5,979
$6,014
30-89 Delinquencies
0.14%
0.16%
0.16%
90+ Delinquencies
0.00%
0.02%
0.00%
Nonperforming Loans
0.02%
0.02%
0.02%
$ in millions
* Manheim Used Vehicle Value Index source: www.manheimconsulting.com, January 1995 = 100, quarter value = average monthly ending
value
25


2Q14 Earnings
Conference Call
Credit Quality -
Other Retail
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Auto
loan
growth
continued
to
offset
declines
in
student
lending
loan
balances
Net charge-offs and delinquencies remained low on a linked quarter and year-over-year
basis
2Q13
1Q14
2Q14
Average Loans
$25,224
$26,312
$26,587
30-89 Delinquencies
0.46%
0.40%
0.47%
90+ Delinquencies
0.14%
0.13%
0.11%
Nonperforming Loans
0.11%
0.08%
0.06%
Installment
$5,846
Auto Loans
$14,108
Revolving
Credit
$3,224
Student
Lending
$3,409
$ in millions
26


2Q14 Earnings
Conference Call
Credit Quality -
Auto Loans
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Continued growth in auto loans driven by high-quality originations in the Indirect Channel
(weighted average FICO 763)
Net charge-offs and delinquencies remained at historically low levels
2Q13
1Q14
2Q14
Average Loans
$12,575
$13,815
$14,108
30-89 Delinquencies
0.30%
0.26%
0.38%
90+ Delinquencies
0.02%
0.03%
0.03%
Nonperforming Loans
0.02%
0.02%
0.01%
$ in millions
Auto Loans are included in Other Retail category
Direct: 7%
Wtd Avg FICO: 748
NCO: (.02%)
Indirect: 93%
Wtd Avg FICO: 758
NCO: 0.12%
27


2Q14 Earnings
Conference Call
Mortgage Repurchase
Mortgages Repurchased and Make-whole Payments
Mortgage Representation and Warranties Reserve
$ in millions
2Q14
1Q14
4Q13
3Q13
2Q13
Beginning Reserve
$75
$83
$176
$190
$233
Net Realized Losses
(2)
(10)
(63)
(13)
(16)
Change in Reserve
(4)
2
(30)
(1)
(27)
Ending Reserve
$69
$75
$83
$176
$190
Mortgages
repurchased
and make-whole
payments
$30
$36
$32
$42
$41
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      
= $35 million
28


2Q14 Earnings
Conference Call
Non-GAAP Financial Measures
$ in millions
2Q14
1Q14
4Q13
3Q13
2Q13
Total equity
43,386
$   
42,743
$   
41,807
$   
41,552
$   
41,050
$   
Preferred stock
(4,756)
     
(4,756)
     
(4,756)
     
(4,756)
     
(4,756)
     
Noncontrolling interests
(686)
        
(689)
        
(694)
        
(1,420)
     
(1,367)
     
Goodwill (net of deferred tax liability) (1)
(8,548)
     
(8,352)
     
(8,343)
     
(8,319)
     
(8,317)
     
Intangible assets, other than mortgage servicing rights
(925)
        
(804)
        
(849)
        
(878)
        
(910)
        
Tangible common equity (a)
28,471
     
28,142
     
27,165
     
26,179
     
25,700
     
Tangible common equity (as calculated above)
28,471
     
28,142
     
27,165
     
26,179
     
25,700
     
Adjustments (2)
224
         
239
         
224
         
258
         
195
         
Common equity tier 1 capital estimated for the Basel III fully
implemented standardized and advanced approaches (b)
28,695
     
28,381
     
27,389
     
26,437
     
25,895
     
Tier 1 capital, determined in accordance with prescribed
regulatory requirements using Basel I definition
33,386
     
32,707
     
32,219
     
Preferred stock
(4,756)
     
(4,756)
     
(4,756)
     
Noncontrolling interests, less preferred stock not eligible for Tier 1 capital
(688)
        
(686)
        
(685)
        
Tier 1 common equity using Basel I definition (c)
27,942
     
27,265
     
26,778
     
*
Preliminary data.  Subject to change prior to filings with applicable regulatory agencies. 
(1) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements beginning March 31, 2014.
(2) Includes net losses on cash flow hedges included in accumulated other comprehensive income and other adjustments.
(3)
Beginning March 31, 2014, calculated under the Basel III transitional standardized approach; all other periods calculated under Basel I.
(4) Includes higher risk-weighting for unfunded loan commitments, investment securities, residential mortgages, mortgage servicing rights and other adjustments.
(5)
Primarily reflects higher risk-weighting for mortgage servicing rights.
29


2Q14 Earnings
Conference Call
Non-GAAP Financial Measures
$ in millions
2Q14
1Q14
4Q13
3Q13
2Q13
Total assets
389,065
371,289
364,021
360,681
353,415
Goodwill (net of deferred tax liability) (1)
(8,548)
     
(8,352)
     
(8,343)
     
(8,319)
     
(8,317)
     
Intangible assets, other than mortgage servicing rights
(925)
        
(804)
        
(849)
        
(878)
        
(910)
        
Tangible assets (d)
379,592
   
362,133
   
354,829
   
351,484
   
344,188
   
Risk-weighted assets, determined in accordance with prescribed
regulatory requirements (3)(e)
309,929
   
*
302,841
   
297,919
   
293,155
   
289,613
   
Adjustments (4)
12,753
     
*
13,238
     
13,712
     
13,473
     
12,476
     
Risk-weighted assets estimated for the Basel III fully implemented
standardized approach (f)
322,682
   
*
316,079
   
311,631
   
306,628
   
302,089
   
Risk-weighted assets, determined in accordance with prescribed
transitional advanced approaches regulatory requirements
241,929
   
*
Adjustments (5)
3,383
      
*
Risk-weighted assets estimated for the Basel III fully implemented
245,312
   
*
advanced approaches (g)
Ratios *
Tangible common equity to tangible assets (a)/(d)
7.5
%
7.8
%
7.7
%
7.4
%
7.5
%
Tangible common equity to risk-weighted assets (a)/(e)
9.2
9.3
9.1
8.9
8.9
Tier 1 common equity to risk-weighted assets using Basel I definition (c)/(e)
--
--
9.4
9.3
9.2
Common equity tier 1 capital to risk-weighted assets estimated for the
Basel III fully implemented standardized approach (b)/(f)
8.9
9.0
8.8
8.6
8.6
Common equity tier 1 capital to risk-weighted assets estimated for the
Basel III fully implemented advanced approaches (b)/(g)
11.7
*
Preliminary data.  Subject to change prior to filings with applicable regulatory agencies. 
(1) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements beginning March 31, 2014.
(2) Includes net losses on cash flow hedges included in accumulated other comprehensive income and other adjustments.
(3)
Beginning March 31, 2014, calculated under the Basel III transitional standardized approach; all other periods calculated under Basel I.
(4) Includes higher risk-weighting for unfunded loan commitments, investment securities, residential mortgages, mortgage servicing rights and other adjustments.
(5)
Primarily reflects higher risk-weighting for mortgage servicing rights.
30


U.S. Bancorp
2Q14 Earnings
Conference Call
U.S. Bancorp
2Q14 Earnings
Conference Call
July 16, 2014