Merrill Lynch. Financial Services Conference. Richard K. Davis President and COO

Transcription

1 Merrill Lynch Financial Services Conference Richard K. Davis President and COO November 16, 2006

2 Forward-looking Statements 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. These statements often include the words may, could, would, should, believes, expects, anticipates, estimates, intends, plans, targets, potentially, probably, projects, outlook or similar expressions. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of the Company. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including changes in general business and economic conditions, changes in interest rates, 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, and effects of critical accounting policies and judgments. For discussion of these and other risks that may cause actual results to differ from expectations, refer to our Annual Report on Form 10-K for the year ended December 31, 2005, on file with the Securities and Exchange Commission, including the sections entitled Risk Factors and Corporate Risk Profile. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events. 2

3 U.S. Bancorp Today Attractive Growth Franchise Diversified Business Revenue Mix Low-cost Provider Industry-leading Performance Metrics Industry-leading Capital Generation Shareholder Focused 3

4 U.S. Bancorp Overview Canada Dimensions Q AK HI NM OK MI PA WV NC SC VT NY VA NH ME MA RI CT NJ DE MD DC Asset Size $217 billion Deposits $121 billion Loans $144 billion Customers 13.6 million NYSE Traded USB Market Capitalization $59 billion Founded 1863 MS AL GA Metropolitan and FL Community Banking United States 2,462 banking offices in 24 states Ireland Specialized Services/Offices UK Commercial Banking Consumer Banking Corporate Banking Payments Spain Wealth Management Technology and Operations Services Payment Processing in North America and in Europe TX LA France Netherlands Belgiu m Norway Germany Denmark Italy Austria Sweden Poland 4

5 Revenue Mix Revenue Mix By Business Line Wealth Mgmt 14% Wholesale 21% Payments 23% Consumer 41% Other 1% 52.0% 48.0% 44.0% 40.0% 36.0% Fee Income / Total Revenue 41.3% 44.1% 46.5% 50.1% YTD 2006 YTD 3Q2006 Excluding securities gains (losses) net 5

6 Revenue Mix vs Peer Banks U.S. Bancorp Peer Composite Net Int Income Payment Revenue Trust Revenue Service Charges 1% 2% 11% 8% 8% 3% 10% Mortgage Inv Bking / Trading / Equity Inv All Other 9% 19% 50% 10% 7% 9% 53% 6 YTD 3Q2006, Source: company reports Peer Banks: BAC, BBT, CMA, FITB, KEY, NCC, PNC, RF, STI, WB, WFC and WM

7 Line of Business Results Net Income Mix By Business Line 3Q06 vs. 3Q05 Net Income Growth Wealth Mgmt 12% Payments 20% Other 3% 24.0% 18.0% 12.0% 20.5% 21.7% Wholesale 26% Consumer 39% 6.0% 3.8% 6.7% 0.0% Wholesale Consumer Wealth Mgmt Payments YTD 3Q2006 7

8 Wholesale Banking Trends Commercial Real Estate 18% Revenue Mix Corporate Banking 45% Commercial Banking 37% Business Units Corporate Banking Commercial Banking Commercial Real Estate Business Line Scale Top 3 bank agricultural lender Top 4 commercial real estate Top 5 treasury management provider Leading depository bank for federal, state and municipal governments Leading correspondent banking depository for community banks YTD 3Q2006 8

9 Wholesale Banking Trends 400 3Q06 vs 3Q05 Net Income +3.8% Revenue +2.2% Net Income Revenue Q05 4Q05 1Q06 2Q06 3Q $ in millions Net Income Revenue 9

10 Wealth Management Trends Institutional Trust & Custody Revenue Mix 9% Asset Mgmt 9% Corporate Trust 26% Private Client 38% Fund Services 9% Investment & Insurance 9% Business Units Private Client Group Corporate Trust Asset Management (FAF) Fund Services Institutional Trust Investments & Insurance Business Line Scale #1 municipal finance trustee #1 ABS/MBS trustee Top 5 bank-affiliated U.S. mutual fund family Top 5 full-service, third-party provider of mutual fund services $146 billion in assets under management YTD 3Q

11 Wealth Management Trends 250 3Q06 vs 3Q05 Net Income +20.5% Revenue +16.7% Net Income Revenue 50 3Q05 4Q05 1Q06 2Q06 3Q $ in millions Net Income Revenue 11

12 Payment Services Trends Transaction Corporate Services Payment 11% 6% Revenue Mix Retail Payment Solutions 51% Merchant Processing 32% Business Units Retail Payment Solutions Corporate Payment Systems Transaction Services Merchant Payment Services Business Line Scale Top 2 fleet card issuer and largest freight payment provider Top 3 network of owned ATMs Top 3 U.S. merchant acquirer Top 4 European merchant acquirer Top 4 commercial card issuer Top 6 debit card issuer Top 8 general purpose retail credit card issuer YTD 3Q

13 Payment Services Trends 350 3Q06 vs 3Q05 Net Income +21.7% Revenue +14.1% Net Income Revenue Q05 4Q05 1Q06 2Q06 3Q $ in millions Net Income Revenue 13

14 Consumer Banking Trends Other 3% Revenue Mix Metropolitan Banking 39% Consumer Lending 12% 6% Mortgage 5% Community Banking 35% In-store Products and Services Metropolitan Banking In-store Banking Community Banking Consumer Lending Mortgage Banking Small Business Banking / SBA Lending Investment Sales Business Line Scale Top 3 in-store branch network Top 3 small business lender Top 4 bank indirect auto finance Top 5 branch network Top 25 home mortgage lender YTD 3Q

15 Consumer Banking Trends Consumer Banking 3Q06 vs 3Q05 Net Income +6.7% Revenue -0.6% Retail Banking 1 3Q06 vs 3Q05 Net Income +7.5% Revenue +3.4% ,453 1,433 1,433 1,444 1,490 1, ,336 1,350 1,400 1,350 Net Income , ,370 1,310 Revenue Net Income , , , ,300 1,250 Revenue 350 3Q05 4Q05 1Q06 2Q06 3Q06 1, Q05 4Q05 1Q06 2Q06 3Q06 1,200 Net Income Revenue Net Income Revenue 1 Consumer Banking less Mortgage Banking $ in millions 15

16 Consumer Banking Consumer Banking Metropolitan Banking Community Banking In-Store Banking Small Business Banking Direct Lending Investment Sales Home Mortgage Consumer Lending Indirect Lending Consumer Finance Student Banking Manufactured Housing 16

17 The Branch is at the Center Profit and loss statement at the branch level Managers are running their own business as entrepreneurs Measurement and incentives are the keys to management Service metrics Loan production and balances Checking account growth Deposit balances Fee income growth Expense management 17

18 Segment Differentiation Metropolitan Banking 916 Branches Concierge service through traditional branches in larger, metropolitan markets Community Banking 1,056 Branches Full consumer and business banking services delivered through a relationship management model In-store Banking 490 Branches Small footprint branches in highly convenient grocery store locations 18

19 Branch Banking Initiatives Branch Deposits PowerBank Small Business Banking BLAST / My Choice Banking Distribution Customer Service 19

20 Branch Deposits $ in Billions 25,000 20,000 15,000 10,000 CAGR + 2.2% + 9.3% % -1.7% 5,000 3Q04 3Q05 3Q06 NIB * Savings/NOW * Money Market Time 20 Quarter average balance Metro, In-store and Community Banking *Adjusted for Silver Elite Product change from NIB to Savings/NOW in 4Q04

21 Consumer Banking Trends Growth in Net New Checking Accounts 6.0% 6.1% 5.8% 4.7% 3.4% 1.5% YTD 06 YTD 3Q2006 annualized 21

22 PowerBank Deliver a higher overall level of customer service and convenience than market average More hours & tellers, Sunday banking More online convenience in bank lobbies More advertising and marketing Upgraded facilities Later deposit acceptance Free coin machines in selected locations Aggressive kid s banking program Pilot in St. Louis starting April 2006 Launch in Portland, Spring

23 Small Business Sales and Service Initiative Small Business Specialists Focus on smaller businesses and fundamental bank services Business Banking Officers Focus on mid-sized small businesses and commercial real estate Client Managers Focus on larger, higher value customers Small Business Service Center Call center dedicated to serving needs of small business customers and branches with questions on business services 23

24 Small Business Project GOLD: Small Business (Credit Scored) Implemented in October 2005 On-line delivery of credit at U.S. Bank branch locations (facilities to $100,000) Most decisions in real-time Branch participation in delivering small business credit has increased from 20-30% per month to 60-70% Monthly branch production increased from $19 MM pre- Project Gold to $47MM following implementation 24

25 Small Business Monthly Credit Scored Production: 2006 vs ,000 40,000 Project Gold Launch Credit Production Has Accelerated 20,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2005 Production 2006 Production $ in thousands 25

26 SBA Production Grown Dramatically SBA Unit Production 5,000 4,655 4,000 3,000 CAGR = 54% 3,245 2,000 1, ,488 1, Number of Units U.S. Government fiscal year 26

27 BLAST Banker Leads, Alerts, and Sales Tools Customer management system Leads for all marketing campaigns Customer and prospects Alerts for key customer events New accounts at 10 and 45 days Large deposits and withdrawals Customer profiles Banker reminders Roll-out Complete 27

28 My Choice Banking One-on-one customer negotiation tool to aid bankers in profiling, showing the economic value of financial relationships Focused on emerging affluent customers Customers choose their own solutions Non-U.S. Bank products and services they wish to move to U.S. Bank Special pricing and offers they wish to receive in exchange Customers are motivated to move business Pilot complete, bank-wide implementation Q

29 My Choice Banking 1 Customer invited into branch for 20 minute financial review BEFORE My Choice Banking AFTER My Choice Banking $1,500 Checking Account $1,500 Checking Account with active usage of Internet Bill Pay and a U.S. Bank Visa Check Card. $5,000 Savings Account $25,000 Money Market Account $15,000 Home Equity Line of Credit $10,000 Auto Loan 3 Win Win Outcome $30,000 Money Market $15,000 Home Equity Line of Credit $100,000 Mortgage Investment referral for $85, k rollover and 529 College Savings Plan 2 $100,000 Mortgage Branch Banker and customer discuss current financial relationships, and needs Mass Affluent Customer Win : Save $1,328 in product savings Earn $500 in credits that can be used to select additional special offers and pricing from U.S. Bank U.S. Bank Win : Converting a single service customer Significantly more profitable relationship customer $10,000 Auto Loan 4 Banker helps the customer transfer accounts and activate additional banking services 29

30 Branch Distribution Branch Expansion Net 3Q03 3Q06 Additions In-store Branch Network Traditional Branch Network 1,924 1, Acquisition Vail Banks & United Financial Total Branch Network 2,201 2, Proforma with United Financial 30

31 Branch Distribution States Targeted for Expansion 31

32 Customer Service Five Star Service Guarantee 1996 The creation of U.S. Bank exclusive and original Five Star Service Guarantee 32

33 Customer Service Branch Loyalty Monthly survey, measuring since 2Q 2004 Improved from initial loyalty of 59.5% to 64.6% in 10/06 Focus on improving problem resolution which leads to improved recommend scores Introduced into incentive plans in 1Q 2005 Likely to Continue 83.0% Overall Satisfaction 80.4% Loyal 64.6% Scores of 9 and 10 on a 10 point scale Will Recommend 70.5% 33 U.S. Bank Market Probe Bank Branch Monthly Survey Last 3 months (Aug/Sept/Oct)

34 Merrill Lynch Financial Services Conference Richard K. Davis President and COO November 16, 2006