Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - US BANCORP \DE\ | d834362d8k.htm |
 1
Goldman Sachs
U.S. Financial Services
Conference
December 10, 2014
Andrew Cecere
Vice Chairman, Chief Financial Officer
EXTENDING
THE ADVANTAGE
Exhibit 99.1 |
 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.
EXTENDING
THE ADVANTAGE |
 3
EXTENDING
THE ADVANTAGE
Agenda
Overview
Financial Management
Capital Management
4Q14 Update
Long-term Goals |
 4
EXTENDING
THE ADVANTAGE
U.S. Bancorp Dimensions
Asset Size
$391 billion
Deposits
$273 billion
Loans
$246 billion
Customers
17.9 million
NYSE Traded
USB
Market Capitalization*
$81 billion
Founded
1863
Bank Branches
3,177
ATMs
5,026
3Q14 Dimensions
* As of 12/5/14 |
 5
EXTENDING
THE ADVANTAGE
Industry Positions
Source: company reports, SNL and FactSet
Assets and deposits as of 9/30/14, market value as of 12/5/14
U.S.
U.S.
U.S.
Rank
Company
$ Billions
Rank
Company
$ Billions
Rank
Company
$ Billions
1
J.P. Morgan
$2,527
1
J.P. Morgan
$1,335
1
Wells Fargo
$285
2
Bank of America
2,124
2
Wells Fargo
1,131
2
J.P. Morgan
234
3
Citigroup
1,883
3
Bank of America
1,112
3
Bank of America
186
4
Wells Fargo
1,637
4
Citigroup
943
4
Citigroup
170
5
U.S. Bancorp
391
5
U.S. Bancorp
273
5
U.S. Bancorp
81
6
PNC
334
6
PNC
226
6
PNC
47
7
BB&T
187
7
SunTrust
137
7
BB&T
28
8
SunTrust
187
8
BB&T
131
8
SunTrust
21
9
Fifth Third
134
9
Fifth Third
97
9
Fifth Third
17
10
Regions
119
10
Regions
94
10
Regions
14
Assets
Deposits
Market Value |
 6
EXTENDING
THE ADVANTAGE
Agenda
Overview
Financial Management
Capital Management
4Q14 Update
Long-term Goals |
 7
EXTENDING
THE ADVANTAGE
Revenue Mix
By Business Line
Fee Income / Total Revenue
3Q14 YTD, taxable-equivalent basis, excluding securities gains (losses) net;
2Q14 fee income excludes $214 million gain on sale of Visa Class B common stock
Revenue percentages exclude Treasury and Corporate Support, see Appendix for
calculation 55%
45%
Diversified Business Mix
Consumer and
Small Business
Banking
42%
Payment Services
30%
Wealth Mgmt and
Securities Services
10%
Wholesale
Banking and
Commercial
Real Estate
18% |
 8
EXTENDING
THE ADVANTAGE
Peer Banks
Peer Bank Ticker Symbols
BAC
Bank of America
PNC
PNC
BBT
BB&T
RF
Regions
FITB
Fifth Third
STI
SunTrust
JPM
J.P. Morgan
USB
U.S. Bancorp
KEY
KeyCorp
WFC
Wells Fargo
Bank of America
SunTrust
Wells Fargo
KeyCorp
BBT
Fifth Third
Regions
PNC
J.P. Morgan
U.S. Bancorp |
 9
EXTENDING
THE ADVANTAGE
Source: SNL and company reports; Peer banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI
and WFC Efficiency
ratio
computed
as
noninterest
expense
divided
by
the
sum
of
net
interest
income
on
a
taxable-equivalent
basis
and
noninterest
income
excluding
securities
gains
(losses),
net
Industry Leading Returns
Return on
Average Assets
Return on Average
Common Equity
Efficiency Ratio
Full Year 2013
3Q14
NA |
 10
EXTENDING
THE ADVANTAGE
Efficient Expense Platform
Single processing platforms
Full consolidation of acquisitions
Operating scale in all significant
businesses
Business line monthly review
process
2013 Efficiency Ratio
Source of
Competitive Advantage
Source: SNL and company reports; Peer banks: BAC, BBT, FITB, JPM, KEY, PNC, RF, STI
and WFC Efficiency
ratio
computed
as
noninterest
expense
divided
by
the
sum
of
net
interest
income
on
a
taxable-equivalent
basis
and
noninterest
income
excluding
securities
gains
(losses),
net |
 11
EXTENDING
THE ADVANTAGE
$ in millions
Prior 5 Years
Average Balances
Year-Over-Year Growth
12.2%
3.9%
4.4%
6.9%
5.6%
Prior 5 Quarters
Average Balances
Year-Over-Year Growth
5.7%
5.7%
6.0%
6.8%
6.3%
Loan Growth |
 12
EXTENDING
THE ADVANTAGE
$ in millions
Prior 5 Years
Average Balances
Year-Over-Year Growth
23.2%
10.1%
15.4%
10.6%
6.3%
Prior 5 Quarters
Average Balances
Year-Over-Year Growth
5.5%
5.4%
5.1%
6.0%
7.4%
Deposit Growth |
 13
EXTENDING
THE ADVANTAGE
$ in millions
Source: company reports; reserve release is calculated as net charge-offs less
provision for credit losses over the five-quarter period Net
Charge-offs Net Charge-offs (Left Scale)
NCOs to Avg Loans (Right Scale)
Credit Quality
Reserve Release / Net Income
(Prior 5 quarters) |
 14
EXTENDING
THE ADVANTAGE
Debt ratings: holding company as of December 5, 2014
op=outlook positive
on=outlook negative
s=outlook stable
wn=watch negative
wp=watch positive
Flight to quality
Funding advantage
Advantages
Peer Debt Ratings
Top of Class Debt Ratings
Rating
Outlook
Rating
Outlook
Rating
Outlook
Rating
Outlook
USB
A1
s
A+
s
AA-
s
AA
s
WFC
A2
s
A+
on
AA-
s
AA
s
BBT
A2
on
A-
s
A+
s
A (high)
s
JPM
A3
s
A
on
A+
s
A (high)
s
PNC
A3
s
A-
s
A+
s
A (high)
s
FITB
Baa1
s
BBB+
s
A
s
A (low)
s
BAC
Baa2
s
A-
on
A
on
A (low)
s
STI
Baa1
s
BBB+
s
BBB+
op
A (low)
s
KEY
Baa1
s
BBB+
s
A-
s
BBB (high)
s
RF
Ba1
op
BBB
s
BBB
s
BBB
s
Moody's
S&P
Fitch
DBRS |
 15
EXTENDING
THE ADVANTAGE
Agenda
Overview
Financial Management
Capital Management
4Q14 Update
Long-term Goals |
 16
EXTENDING
THE ADVANTAGE
Capital Requirement
* Based on the final rules for the Basel III fully implemented standardized
approach Earnings Distribution Target
8.0%
0.5%
Volatility Buffer
0.5%
Potential
D-SIFI Buffer
2.5%
Capital
Conservation
Buffer
4.5%
Minimum
Capital
Requirement
9.0%*
Common Equity Tier 1
Basel III Target
USB 3Q14
Reported
Capital Management
Reinvest and
Acquisitions
Dividends
Share
Repurchases
20 -
40%
30 -
40%
30 -
40%
Dividends
30%
Reinvestment
30%
Share Repurchases
40%
Assumed ROTCE
20%
Discretionary Distributions
70%
Balance Sheet Growth
6%
Hypothetical Earnings Distribution Example |
 17
EXTENDING
THE ADVANTAGE
62%
11%
32%
Payout Ratio
71%
Capital Distributions
74%
Quarterly dividend increased 6.5%
in 2Q14 to $0.245 per share
One-year authorization to
repurchase up to $2.3 billion of
outstanding stock effective
April 1, 2014
Returned 78% of earnings to
shareholders during 3Q14 |
 18
EXTENDING
THE ADVANTAGE
Payments
Collective Point of Sale Solutions Ltd
FSV Payment Systems
TransCard’s heavy truck fuel card network
Financial institutions credit card portfolio of FIA
Card Services
Merchant processing portfolio of
Santander-Mexico
Merchant processing portfolio of Citizens
National Bank
Credit card portfolios from Citi
Merchant processing portfolio of MB Financial
Bank
Credit card portfolio of Town North Bank
Southern DataComm
Numerous small portfolios
Joint ventures:
•
Spain merchant services joint venture with
Banco Santander
•
Brazil merchant services company
Consumer and Wholesale
Chicago banking operations of RBS
Citizens Financial Group
Banking operations of BankEast (Knoxville, TN)
Banking operations of First Community
Bank (NM)
Banking subsidiaries of FBOP Corporation
BB&T’s Nevada banking operations
First Bank of Idaho
Downey Savings & Loan Association
PFF Bank & Trust
Mellon 1
st
Business Bank
Trust Businesses
Document custodian business of Ally Bank
Quintillion Limited
U.S. municipal bond trustee business of Deutsche Bank
AIS Fund Administration
Institutional trust business of Union Bank
Indiana corporate trust business of UMB Bank
Bank of America’s securitization trust administration business
Corporate trust administration business of F.N.B. Corporation
Corporate trust business of AmeriServ Financial
Bond trustee business of First Citizens Bank
Mutual fund servicing division of Fiduciary Management, Inc
Divestitures
Divestiture of FAF Advisors long-term asset
management business
Consumer
and Small
Business
Banking
Payment Services
Wealth Mgmt and
Securities Services
Wholesale
Banking and
Commercial
Real Estate
Prudent Acquisition Strategy |
 19
EXTENDING
THE ADVANTAGE
Agenda
Overview
Financial Management
Capital Management
4Q14 Update
Long-term Goals |
 20
EXTENDING
THE ADVANTAGE
4Q14 Update
Business Climate
Loan Growth
Net Interest Margin
Credit Quality
Noninterest Income / Expense |
 21
EXTENDING
THE ADVANTAGE
Agenda
Overview
Financial Management
Capital Management
4Q14 Update
Long-term Goals |
 22
EXTENDING
THE ADVANTAGE
Long-term Goals
Optimal business line mix
Investments generating
positive returns
Profitability:
Capital distributions:
Current Status
Four simple and stable business lines
Mortgage, wealth management, corporate
banking, international payments, branch
technology, internet and mobile channels,
and select acquisitions
3Q14 YTD Profitability:
3Q14 YTD Capital distributions:
Long-term Goals
•
ROE 14.7%
•
ROA 1.56%
•
Efficiency Ratio 52.8%
•
Distributed 74% of earnings
(dividends 31%, share repurchases 43%)
•
ROE 16-19%
•
ROA 1.60-1.90%
•
Efficiency Ratio low 50s
•
Earnings distribution 60-80% |
 23
EXTENDING
THE ADVANTAGE
Appendix |
 24
EXTENDING
THE ADVANTAGE
Non-GAAP Financial Measures
(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.
$ 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 |
 25
EXTENDING
THE ADVANTAGE
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
243,909
241,929
Adjustments (5)
3,443
3,383
Risk-weighted assets estimated for the Basel III fully implemented
247,352
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
(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. |
 26
EXTENDING
THE ADVANTAGE
$ in millions, taxable-equivalent basis, excluding securities gains (losses)
net Line of Business Financial Performance
Non-GAAP Financial Measures |
 27
EXTENDING
THE ADVANTAGE
Goldman Sachs
U.S. Financial Services
Conference
December 10, 2014 |