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EX-99.1 - EX-99.1 - US BANCORP \DE\d807031dex991.htm
8-K - 8-K - US BANCORP \DE\d807031d8k.htm
Richard K. Davis
Chairman, President and CEO
Andy Cecere
Vice Chairman and CFO
U.S. Bancorp
3Q14 Earnings
Conference Call
U.S. Bancorp
3Q14 Earnings
Conference Call
October 22, 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;
breaches
in
data
security;
effects
of
mergers
and
acquisitions
and
related
integration;
effects
of
critical
accounting
policies
and
judgments;
and
management’s
ability
to
effectively
manage
credit
risk,
residual
value
risk,
market
risk,
operational
risk,
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
calculations
of
these
measures
are
provided
within
or
in
the
appendix
of
the
presentation.
These
disclosures
should
not
be
viewed
as
a
substitute
for
operating
results
determined
in
accordance
with
GAAP,
nor
are
they
necessarily
comparable
to
non-GAAP
performance
measures
that
may
be
presented
by
other
companies.


3
3Q14 Earnings
Conference Call
3Q14 Highlights
Net income of $1.5 billion; $0.78 per diluted common share
Positive operating leverage on a year-over-year basis
Average loan growth of 6.3% vs. 3Q13 (5.9% excluding Charter One
acquisition)
and 1.4% vs. 2Q14 (1.1% excluding Charter One acquisition)
Average deposit growth of 7.4% vs. 3Q13 (5.5% excluding Charter One
acquisition) and 3.3% vs. 2Q14 (1.7% excluding Charter One acquisition)
Net charge-offs declined 3.7% vs. 2Q14
Nonperforming assets decreased 6.2% vs. 3Q13 (excluding covered assets)
Capital generation continues to reinforce capital position
Common equity tier 1 capital ratio of 9.0% estimated for the Basel III fully implemented
standardized approach
Common equity tier 1 capital ratio of 9.7%; Tier 1 capital ratio
of 11.3%
Returned 78% of earnings to shareholders in 3Q14
Repurchased 16 million shares of common stock during the quarter


4
3Q14 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
FHA
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
4


5
3Q14 Earnings
Conference Call
* Gain on Visa Inc. Class B common stock sale
Taxable-equivalent basis
Revenue Growth
Year-Over-Year Change
(5.6%)
(4.4%)
(1.2%)
4.9%
2.0%
$ in millions
5
3Q14 Earnings
Conference Call


3Q14 Earnings
Conference Call
Loan and Deposit Growth
Year-Over-Year Growth
Average Balances
$ in billions
3Q14 Acquisition Adjusted
Loan Growth = 5.9%
Deposit Growth = 5.5%
190.0
210.0
230.0
250.0
270.0
3Q13
4Q13
1Q14
2Q14
3Q14
6.8%
$240.5
6.3%
$243.9
5.7%
$229.4
5.7%
$232.8
6.0%
$235.9
6.0%
$262.4
7.4%
$271.0
5.5%
$252.4
5.4%
$256.9
5.1%
$257.5
Loans
Deposits
6


7
3Q14 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)
7
3Q14 Earnings
Conference Call


8
3Q14 Earnings
Conference Call
Earnings Summary
$ in millions, except per-share data
Taxable-equivalent basis
YTD
YTD
3Q14
2Q14
3Q13
vs 2Q14
vs 3Q13
2014
2013
% B/(W)
Net Interest Income
2,748
$    
2,744
$    
2,714
$    
0.1
          
1.3
          
8,198
$    
8,095
$    
1.3
          
Noninterest Income
2,242
      
2,444
      
2,177
      
(8.3)
         
3.0
          
6,794
      
6,618
      
2.7
          
Total Revenue
4,990
      
5,188
      
4,891
      
(3.8)
         
2.0
          
14,992
    
14,713
    
1.9
          
Noninterest Expense
2,614
      
2,753
      
2,565
      
5.0
          
(1.9)
         
7,911
      
7,592
      
(4.2)
         
Operating Income
2,376
      
2,435
      
2,326
      
(2.4)
         
2.1
          
7,081
      
7,121
      
(0.6)
         
Net Charge-offs
336
         
349
         
328
         
3.7
          
(2.4)
         
1,026
      
1,153
      
11.0
        
Excess Provision
(25)
          
(25)
          
(30)
          
-
            
(16.7)
       
(85)
          
(90)
          
(5.6)
         
Income before Taxes
2,065
      
2,111
      
2,028
      
(2.2)
         
1.8
          
6,140
      
6,058
      
1.4
          
Applicable Income Taxes
579
         
602
         
598
         
3.8
          
3.2
          
1,733
      
1,797
      
3.6
          
Noncontrolling Interests
(15)
          
(14)
          
38
           
(7.1)
         
nm
(44)
          
119
         
nm
Net Income
1,471
      
1,495
      
1,468
      
(1.6)
         
0.2
          
4,363
      
4,380
      
(0.4)
         
Preferred Dividends/Other
66
           
68
           
68
           
2.9
          
2.9
          
200
         
217
         
7.8
          
NI to Common
1,405
$    
1,427
$    
1,400
$    
(1.5)
         
0.4
          
4,163
$    
4,163
$    
-
            
Diluted EPS
0.78
$      
0.78
$      
0.76
$      
-
            
2.6
          
2.29
$      
2.25
$      
1.8
          
Average Diluted Shares
1,807
      
1,821
      
1,843
      
0.8
          
2.0
          
1,819
      
1,854
      
1.9
          
% B/(W)


9
3Q14 Earnings
Conference Call
3Q14 Results -
Key Drivers
vs. 3Q13
Net Revenue increase of 2.0%
Net interest income increase of 1.3%; net interest margin of 3.16% vs. 3.43% in 3Q13
Noninterest income increase of 3.0%
Noninterest expense increase of 1.9%
Provision for credit losses higher by $13 million
Net charge-offs higher by $8 million, or 2.4%
Provision lower than NCOs by $25 million vs. $30 million in 3Q13
vs. 2Q14
Net Revenue decrease of 3.8% (0.3% increase excluding notable items)
Net interest income increase of 0.1%; net interest margin of 3.16%
vs. 3.27% in 2Q14
Noninterest income decrease of 8.3% (0.5% increase excluding
notable items)
Noninterest expense decrease of 5.0% (2.4% increase
excluding notable items)
Provision for credit losses lower by $13 million
Net charge-offs decreased by $13 million, or 3.7%
Provision lower than NCOs by $25 million vs. $25 million in 2Q14


10
3Q14 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
3Q14
2Q14
1Q14
4Q13
3Q13
Total U.S. Bancorp shareholders' equity
43.1
$    
42.7
$    
42.1
$    
41.1
$    
40.1
$    
Standardized Approach
Basel III transitional standardized approach/Basel I (a)
Common equity tier 1 capital
30.2
29.8
29.5
      
27.9
      
27.3
      
Tier 1 capital
35.4
34.9
34.6
      
33.4
      
32.7
      
Total risk-based capital
42.5
41.0
40.7
      
39.3
      
38.9
      
Common equity tier 1 capital ratio
9.7%
9.6%
9.7%
9.4%
9.3%
Tier 1 capital ratio
11.3%
11.3%
11.4%
11.2%
11.2%
Total risk-based capital ratio
13.6%
13.2%
13.5%
13.2%
13.3%
Leverage ratio
9.4%
9.6%
9.7%
9.6%
9.6%
Common equity tier 1 capital to RWA estimated for the
Basel III fully implemented standardized approach
9.0%
8.9%
9.0%
8.8%
8.6%
Advanced Approaches
Common equity tier 1 capital to RWA for the Basel III
transitional advanced approaches
12.4%
12.3%
Common equity tier 1 capital to RWA estimated for the 
Basel III fully implemented advanced approaches
11.8%
11.7%
Tangible common equity ratio
7.6%
7.5%
7.8%
7.7%
7.4%
Tangible common equity as a % of RWA
9.3%
9.2%
9.3%
9.1%
8.9%


11
3Q14 Earnings
Conference Call


12
3Q14 Earnings
Conference Call
Appendix


13
3Q14 Earnings
Conference Call
Average Loans
Key Points
$ in billions
vs. 3Q13
Average total loans grew by $14.5 billion, or 6.3%
(5.9% excluding Charter One acquisition)
Average total loans, excluding covered loans,
were higher by 7.7%
Average total commercial loans increased $9.3
billion, or 13.6%; average commercial real estate
loans increased $2.3 billion, or 6.1%
vs. 2Q14
Average total loans grew by $3.4 billion, or 1.4%
(1.1% excluding Charter One acquisition)
Average total loans, excluding covered loans,
were higher by 1.7%
Average total commercial loans increased $2.3
billion, or 3.1%; average commercial real estate
loans increased $0.3 billion, or 0.8%
Year-Over-Year Growth
5.7%
5.7%
6.0%
6.8%
6.3%
Covered
Commercial
CRE
Res Mtg
Retail
Credit Card
$229.4
$232.8
$235.9
$240.5
$243.9
Average Loans
13
3Q14 Earnings
Conference Call


14
3Q14 Earnings
Conference Call
Average Deposits
Average Deposits
Key Points
$ in billions
vs. 3Q13
Average total deposits increased by $18.6
billion, or 7.4% (5.5% excluding Charter One
acquisition)
Average low-cost deposits (NIB, interest
checking, money market and savings) 
increased by $24.9 billion, or 12.2%
vs. 2Q14
Average total deposits increased by $8.7
billion, or 3.3% (1.7% excluding Charter One
acquisition)
Average low-cost deposits increased by $9.2
billion, or 4.2%
Year-Over-Year Growth
5.5%
5.4%
5.1%
6.0%
7.4%
Time
Money Market
Checking and Savings
Noninterest-bearing
$252.4
$256.9
$257.5
$262.4
$271.0
14
3Q14 Earnings
Conference Call


15
3Q14 Earnings
Conference Call
Net Interest Income
Net Interest Income
Key Points
$ in millions
Taxable-equivalent basis
vs. 3Q13
Average earning assets grew by $31.4 billion,
or 10.0%
Net interest margin lower by 27 bps (3.16%
vs. 3.43%) driven by:
Lower reinvestment rates on investment securities,
as well as growth in the investment portfolio at
lower average rates, lower loan fees, and lower
rates on new loans
Partially offset by lower funding costs
vs. 2Q14
Average earning assets grew by $10.4 billion,
or 3.1%
Net interest margin lower by 11 bps (3.16%
vs. 3.27%) driven by:
Growth in lower rate investment securities and
lower loan fees
Year-Over-Year Change
(2.5%)
(1.8%)
(0.1%)
2.7%
1.3%
15
3Q14 Earnings
Conference Call


16
3Q14 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. 3Q13
Noninterest income increased by $65 million, or
3.0%, driven by:
Higher credit and debit card revenues (2.9% increase) due to
higher transaction volumes; higher merchant processing
revenue (4.3% increase) due to an increase in product fees and
higher volumes, partially offset by lower rates
Higher trust and investment management revenue (12.5%
increase) due to account growth, improved market conditions
and business expansion
Higher deposit service charges (2.8% increase) due to account
growth, the Charter One acquisition and pricing changes
Higher other income due primarily to gains on sales of other
equity investments and an increase in retail leasing revenue
Mortgage banking revenue decline of $68 million
vs. 2Q14
Noninterest income decreased by $202 million, or
8.3%, driven by:
Lower other income primarily due to the second quarter
Visa sale
Higher corporate payments (7.1% increase) due to seasonally
higher transaction volumes
Higher deposit service charges (8.2% increase) due to higher
transaction volumes
Lower commercial products revenue (5.4% decrease) due to
lower wholesale transaction activity
Mortgage banking revenue decline of $18 million
Year-Over-Year Change
(9.1%)
(7.4%)
(2.6%)
7.4%
3.0%
$2,177
$2,156
$2,108
$2,444
$2,242
All Other
Mortgage
Service Charges
Trust and Inv Mgmt
Payments
3Q13
4Q13
1Q14
2Q14
3Q14
Visa Gain
-
$        
-
$        
-
$        
214
$    
-
$        
Total
-
$        
-
$        
-
$        
214
$    
-
$        
Notable Noninterest Income Items
16
3Q14 Earnings
Conference Call


17
3Q14 Earnings
Conference Call
Noninterest Expense
Noninterest Expense
Key Points
$ in millions
vs. 3Q13
Noninterest expense was higher by $49 million, or
1.9%, driven by:
Higher compensation expense (4.0% increase) reflecting the
impact of merit increases, acquisitions, and higher staffing for
risk and compliance activities
Higher net occupancy and equipment expense (3.8% increase)
due to business initiatives and maintenance costs
Higher professional services expense (8.5% increase) due
mainly to mortgage servicing-related project costs
Higher other expense primarily due to Charter One merger
integration and mortgage servicing-related expenses, partially
offset by lower costs for investments in tax-advantaged projects
related to a change in 1Q14 in accounting for affordable housing
investments
Lower employee benefit expense (decrease of 10.1%) driven by
lower pension costs
vs. 2Q14
Noninterest expense was lower by $139 million, or
5.0%, driven by:
Lower other expense due to the 2Q FHA DOJ settlement,
partially offset by mortgage servicing-related expenses, the
Charter One merger integration costs, and seasonally higher
costs related to investments in tax-advantaged projects
Lower marketing and business development (18.8% decrease)
due to 2Q charitable contributions and the timing of various
marketing programs
Higher professional services expense (5.2% increase) primarily
due to higher mortgage servicing-related project costs
Year-Over-Year Change
(1.7%)
(0.1%)
3.0%
7.7%
1.9%
$2,565
$2,682
$2,544
$2,753
$2,614
All Other
Tech and Communications
Prof Svcs, Marketing and PPS
Occupancy and Equipment
Compensation and Benefits
3Q13
4Q13
1Q14
2Q14
3Q14
FHA DOJ settlement
-
$        
-
$        
-
$        
200
$    
-
$        
Total
-
$        
-
$        
-
$        
200
$    
-
$        
Notable Noninterest Expense Items
17
3Q14 Earnings
Conference Call


18
3Q14 Earnings
Conference Call
Credit Quality
-
Commercial Loans
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Continued new client growth led to 3.2% linked quarter loan growth and 14.8% year-over-year
growth; utilization rates improved modestly
Net charge-offs below historic norms and were largely unchanged
Nonperforming loans and delinquencies continued at historically low levels
3Q13
2Q14
3Q14
Average Loans
$62,856
$69,920
$72,190
30-89 Delinquencies
0.28%
0.23%
0.23%
90+ Delinquencies
0.08%
0.06%
0.05%
Nonperforming Loans
0.16%
0.24%
0.22%
$ in millions
18
3Q14 Earnings
Conference Call


Credit Quality
-
Commercial Leases
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Commercial lease balances increased slightly
Net charge-offs increased in the quarter but remain at low historic levels
Nonperforming loans and delinquencies continued at modest levels
3Q13
2Q14
3Q14
Average Loans
$5,208
$5,100
$5,155
30-89 Delinquencies
0.76%
0.75%
0.83%
90+ Delinquencies
0.00%
0.00%
0.00%
Nonperforming Loans
0.23%
0.31%
0.23%
$ in millions
19
3Q14 Earnings
Conference Call


Credit Quality
-
Commercial Real Estate
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Average loans increased 0.8% on a linked quarter basis and 6.1% year-over-year
Credit quality is stable at low levels; net charge-offs ratio of 0.04%
Delinquencies continued a downward trend
3Q13
2Q14
3Q14
Average Loans
$38,501
$40,497
$40,839
30-89 Delinquencies
0.16%
0.14%
0.12%
90+ Delinquencies
0.02%
0.06%
0.03%
Nonperforming Loans
0.92%
0.55%
0.59%
Performing TDRs*
$365
$330
$284
$ in millions
Investor
$20,552
Owner
Occupied
$11,413
Multi-family
$2,927
Retail
$670
Residential
Construction
$1,810
A&D
Construction
$631
Office
$897
Other
$1,939
* TDR = troubled debt  restructuring
20
3Q14 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 757, weighted average LTV
71%), as average loans increased 0.3% over 2Q14
81% 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
3Q13
2Q14
3Q14
Average Loans
$49,139
$51,815
$51,994
30-89 Delinquencies
0.70%
0.48%
0.46%
90+ Delinquencies
0.53%
0.49%
0.41%
Nonperforming Loans
1.46%
1.57%
1.62%
$ in millions
** Excludes GNMA loans, whose repayments are insured by the FHA or guaranteed by the Department of VA ($2,478 million 3Q14)
21
3Q14 Earnings
Conference Call


22
3Q14 Earnings
Conference Call
3Q13
2Q14
3Q14
Average Loans
$16,931
$17,384
$17,753
30-89 Delinquencies
1.25%
1.13%
1.23%
90+ Delinquencies
1.11%
1.06%
1.10%
Nonperforming Loans
0.55%
0.29%
0.22%
Credit Quality -
Credit Card
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Average loans increased 2.1% on a linked quarter basis; up 4.9% year-over-year
Delinquencies and losses have stabilized near historically low levels with some seasonal impacts
on delinquencies
Nonperforming loans continued to decline
$ in millions
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3Q14 Earnings
Conference Call


23
3Q14 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
declined
on
a
year-over-year
basis
3Q13
2Q14
3Q14
Average Loans
$15,648
$15,327
$15,704
30-89 Delinquencies
0.65%
0.50%
0.51%
90+ Delinquencies
0.25%
0.26%
0.26%
Nonperforming Loans
1.15%
1.11%
1.05%
Subprime: 2%
Wtd Avg LTV**: 90%
NCO: 6.22%
$ in millions
Prime: 95%
Wtd Avg LTV**: 72%
NCO: 0.50%
** LTV at origination
Other: 3%
Wtd Avg LTV**: 72%
NCO: 0.79%
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3Q14 Earnings
Conference Call


24
3Q14 Earnings
Conference Call
Credit Quality -
Retail Leasing
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Year-over-year
growth
(5.8%)
driven
by
high-quality
originations
(weighted
average
FICO
780)
Delinquencies
remained
relatively
stable
at
very
low
levels
Strong
used
auto
values
continued
to
contribute
to
historically
low
net
charge-offs
3Q13
2Q14
3Q14
Average Loans
$5,664
$6,014
$5,991
30-89 Delinquencies
0.15%
0.16%
0.14%
90+ Delinquencies
0.02%
0.00%
0.02%
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
24
3Q14 Earnings
Conference Call


25
3Q14 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
3Q13
2Q14
3Q14
Average Loans
$25,682
$26,587
$27,003
30-89 Delinquencies
0.48%
0.47%
0.49%
90+ Delinquencies
0.14%
0.11%
0.13%
Nonperforming Loans
0.10%
0.06%
0.06%
Installment
$6,072
Auto Loans
$14,404
Revolving
Credit
$3,231
Student
Lending
$3,296
$ in millions
25
3Q14 Earnings
Conference Call


26
3Q14 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 762)
Net charge-offs increased due to seasonality as well as growth initiatives beginning to mature
3Q13
2Q14
3Q14
Average Loans
$12,946
$14,108
$14,404
30-89 Delinquencies
0.30%
0.38%
0.41%
90+ Delinquencies
0.03%
0.03%
0.05%
Nonperforming Loans
0.02%
0.01%
0.03%
$ in millions
Auto Loans are included in Other Retail category
Direct: 6%
Wtd Avg FICO: 748
NCO: .06%
Indirect: 94%
Wtd Avg FICO: 763
NCO: 0.26%
26
3Q14 Earnings
Conference Call


27
3Q14 Earnings
Conference Call
Mortgage Repurchase
Mortgages Repurchased and Make-whole Payments
Mortgage Representation and Warranties Reserve
$ in millions
3Q14
2Q14
1Q14
4Q13
3Q13
Beginning Reserve
$69
$75
$83
$176
$190
Net Realized Losses
(1)
(2)
(10)
(63)
(13)
Change in Reserve
(6)
(4)
2
(30)
(1)
Ending Reserve
$62
$69
$75
$83
$176
Mortgages
repurchased
and make-whole
payments
$19
$30
$36
$32
$42
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      
= $29 million


28
3Q14 Earnings
Conference Call
Non-GAAP Financial Measures
$ in millions
3Q14
2Q14
1Q14
4Q13
3Q13
Total equity
43,829
$   
43,386
$   
42,743
$   
41,807
$   
41,552
$   
Preferred stock
(4,756)
     
(4,756)
     
(4,756)
     
(4,756)
     
(4,756)
     
Noncontrolling interests
(688)
        
(686)
        
(689)
        
(694)
        
(1,420)
     
Goodwill (net of deferred tax liability) (1)
(8,503)
     
(8,548)
     
(8,352)
     
(8,343)
     
(8,319)
     
Intangible assets, other than mortgage servicing rights
(877)
        
(925)
        
(804)
        
(849)
        
(878)
        
Tangible common equity (a)
29,005
     
28,471
     
28,142
     
27,165
     
26,179
     
Tangible common equity (as calculated above)
29,005
     
28,471
     
28,142
     
27,165
     
26,179
     
Adjustments (2)
187
         
224
         
239
         
224
         
258
         
Common equity tier 1 capital estimated for the Basel III fully
implemented standardized and advanced approaches (b)
29,192
     
28,695
     
28,381
     
27,389
     
26,437
     
Tier 1 capital, determined in accordance with prescribed
regulatory requirements using Basel I definition
33,386
     
32,707
     
Preferred stock
(4,756)
     
(4,756)
     
Noncontrolling interests, less preferred stock not eligible for Tier 1 capital
(688)
        
(686)
        
Tier 1 common equity using Basel I definition (c)
27,942
     
27,265
     
(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
3Q14 Earnings
Conference Call
Non-GAAP Financial Measures
$ in millions
3Q14
2Q14
1Q14
4Q13
3Q13
Total assets
391,284
389,065
371,289
364,021
360,681
Goodwill (net of deferred tax liability) (1)
(8,503)
     
(8,548)
     
(8,352)
     
(8,343)
     
(8,319)
     
Intangible assets, other than mortgage servicing rights
(877)
        
(925)
        
(804)
        
(849)
        
(878)
        
Tangible assets (d)
381,904
   
379,592
   
362,133
   
354,829
   
351,484
   
Risk-weighted assets, determined in accordance with prescribed
regulatory requirements (3)(e)
311,914
   
*
309,929
   
302,841
   
297,919
   
293,155
   
Adjustments (4)
12,837
     
*
12,753
     
13,238
     
13,712
     
13,473
     
Risk-weighted assets estimated for the Basel III fully implemented
standardized approach (f)
324,751
   
*
322,682
   
316,079
   
311,631
   
306,628
   
Risk-weighted assets, determined in accordance with prescribed
transitional advanced approaches regulatory requirements
243,905
   
*
241,929
   
Adjustments (5)
3,443
      
*
3,383
      
Risk-weighted assets estimated for the Basel III fully implemented
247,348
   
*
245,312
   
advanced approaches (g)
Ratios
Tangible common equity to tangible assets (a)/(d)
7.6
%
7.5
%
7.8
%
7.7
%
7.4
%
Tangible common equity to risk-weighted assets (a)/(e)
9.3
9.2
9.3
9.1
8.9
Tier 1 common equity to risk-weighted assets using Basel I definition (c)/(e)
--
--
--
9.4
9.3
Common equity tier 1 capital to risk-weighted assets estimated for the
Basel III fully implemented standardized approach (b)/(f)
9.0
8.9
9.0
8.8
8.6
Common equity tier 1 capital to risk-weighted assets estimated for the
Basel III fully implemented advanced approaches (b)/(g)
11.8
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.


U.S. Bancorp
3Q14 Earnings
Conference Call
U.S. Bancorp
3Q14 Earnings
Conference Call
October 22, 2014