UBS 2007 Global Financial Services Conference. Richard K. Davis President and CEO

Transcription

1 UBS 2007 Global Financial Services Conference Richard K. Davis President and CEO May 15, 2007

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, 2006, 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 Overview NORWAY CANADA SWEDEN IRELAND UNITED KINGDOM DENMARK NETHERLANDS BELGIUM GERMANY POLAND FRANCE AUSTRIA SPAIN ITALY Metropolitan and Community Banking 2,498 banking offices in 24 states Specialized Services/Offices Commercial Banking Consumer Banking Commercial Real Estate Corporate Banking Payment Services UNITED STATES Wealth Management Technology and Operations Services Payment Processing Nationally and in Europe Dimensions Q Asset Size $221 billion Deposits $118 billion Loans $145 billion Customers 14.2 million NYSE Traded USB Market Value $61 billion Founded

4 Goals Minimum 20% ROE Reducing Credit and Earnings Volatility Providing High-Quality Customer Service Investing For Future Growth Targeting 80% Return of Earnings to Shareholders 10% Long-Term EPS Growth 4

5 Profitability 30.0% Return on Common Equity 27.0% 24.0% 21.4% 22.5% 23.6% 22.4% 21.0% Target 20.0% % 15.0% Q07 ROE from continuing operations 5

6 Profitability 3.00% 40.0% 2.75% 32.6% 33.9% 34.9% 33.6% 35.0% ROA 2.50% 2.25% 2.17% 2.21% 2.23% 2.09% 30.0% 25.0% Profit Margin 2.00% 20.0% 1.75% Q % 6 ROA from continuing operations Profit margin excluding securities gains (losses) net ROA Profit Margin

7 Credit Quality 1.25% 1.25% 1.07% 1.00% 1.00% 0.75% 0.98% 0.64% 0.75% 0.50% 0.60% 0.52% 0.41% 0.50% 0.45% 0.40% 0.39% 0.47% 0.50% 0.25% 0.47% 0.39% 0.25% 0.34% 0.36% 0.41% 0.38% 0.40% 0.00% % 1Q06 2Q06 3Q06 4Q06 1Q07 Charge-off Ratio NPA Ratio NPA Ratio equals nonperforming assets to loans plus ORE 7

8 Revenue Mix Revenue Mix By Business Line 52.0% Fee Income / Total Revenue 50.2% 50.4% Wealth Mgmt 15% Payments 25% 48.0% 44.0% 44.1% 46.5% Wholesale 20% Consumer 41% 40.0% 36.0% Q07 1Q2007 Excluding securities gains (losses) net 8

9 Customer Service Consumer Bank Loyalty Monthly survey, measuring since 1Q 2002 Improved to 61% loyalty in 4Q or 10 rating Focus on improving problem resolution which leads to improved recommend scores 4Q2006 Problem Incidence score much improved 12.6% Likely to Continue 78.2% Overall Satisfaction 68.7% Loyal 61% Scores of 9 and 10 on a 10 point scale Will Recommend 68.4% U.S. Bank Market Probe Bank Loyalty Survey 3 month average 4Q2006 9

10 Building Momentum in Customer Loyalty 65% 60% 55% 50% Retail Customer Loyalty Scores by Quarter with Trend Line (Linear Regression) 52.5% 53.5% 51.3% 51.3% 51.0% 49.8% 50.1% 49.5% 48.4% 49.6% 58.4% 58.3% 58.7% 57.1% 57.7% 54.9% 55.3% 55.7% 56.0% 61.0% 45% 40% 35% 1Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2005 Q Q Q Q Q Loyal customers are those who give the bank a 9 or 10 score on all three questions: overall satisfaction, willingness to recommend and likely to continue doing business with U.S. Bank Source: Monthly Customer Loyalty Tracking 10

11 Capital Investments Average $467 Million per Year Since Major Investments Branch investments ($ in millions) In-store branch initiatives Treasury management technology (Single Point) euroconex processing platform ATM network Check imaging /30/2007 Mortgage technology Regulatory compliance Approved by Capital Expenditure Committee 11

12 Acquisition Investments Consumer Banking United Financial Corp Vail Banks, Inc Bay View Bank Leader Mortgage Co Wealth Management LaSalle Bank Corporate Trust SunTrust Corporate Trust Wachovia Corporate Trust and Institutional Custody National City Corporate Trust State Street Corporate Trust Invested $4 Billion Since 2002 Merchant Payment Services First Horizon Merchant Services Citibank Card Acceptance Certegy Merchant Acquiring SouthTrust Merchant Portfolio euroconex Union Bank Merchant Portfolio Corporate Payment Systems Schneider Payment Services Multi Service Aviation Business Advent Business Systems Transaction Services Genpass, Inc 12

13 Earnings Distributed to Shareholders 175.0% 165% 140.0% 105.0% 109% 90% 112% 59% 102% Target 80% 70.0% 55% 63% 40% 35.0% 11% 44% 46% 50% 53% 63% 0.0% Q07 Dividends Share Repurchase 13

14 Long-term Growth Expectations 2006 vs 2005 Long-term Net Interest Income (TEB) (4.2%) 5 7% Noninterest Income 11.1% 9 11% Total Revenue 2.9% 7 9% Noninterest Expense 5.4% 5 6% Provision for Credit Losses (18.3%) 7 9% Net Income 5.8% 8 10% EPS 7.9% 9 11% Noninterest income and total revenue excluding securities gains (losses) net 14

15 Net Interest Income % 4.25% % 4.00% Margin Pressures $ in billions % 3.51% + 4.4% 3.50% Credit Spreads Yield Curve % + 4.4% % Deposit Migration Q % Y/Y growth Average Earning Assets Net Interest Margin 15

16 Revenue Mix vs Peer Banks U.S. Bancorp Peer Composite Net Interest Income Payment Fee Revenue Trust Fee Revenue Service Charges Mortgage Fees Inv Bking, Trading, Equity Invest All Other Fee Income 10% 1% 2% 11% 20% 6% 50% 9% 3% 10% 7% 8% 10% 53% 16 1Q2007, Source: company reports Peer Banks: BAC, BBT, CMA, FITB, KEY, NCC, PNC, RF, STI, WB, WFC and WM

17 Noninterest Income Fee Income Mix By Business Line Fee Income Y/Y Growth Payments 39% Wealth Mgmt 22% Wholesale 13% Consumer 25% Other 1% Dollars in Millions 8,000 6,000 4,000 2, % 11.1% 5.0% Q07 4Q 3Q 2Q 1Q Mix as of 1Q2007 Revenue excluding securities gains (losses) net 17

18 Noninterest Income Dollars in Millions 3,000 2,250 1, % Payments Fee Income 17.9% 11.4% Q07 Growth Drivers euroconex European Expansion Healthcare Payments Initiative Financial Institution Partnerships Wholesale and Small Business Cross-sell Y/Y growth 1Q 2Q 3Q 4Q 18

19 Noninterest Income Dollars in Millions 2,000 1,500 1, Wealth Management Fee Income 3.6% 19.5% 6.3% Growth Drivers Corporate Trust Retirement Planning Initiative FAF Advisors Wholesale Distribution Funds Services Alternative Investments Q07 Y/Y growth 1Q 2Q 3Q 4Q 19

20 Noninterest Income Dollars in Millions 4,000 3,000 2,000 1,000 0 Consumer and Commercial Fee Income 6.4% 4.4% -0.9% Q07 Growth Drivers Building Deeper Relationships Initiative Treasury Management PowerBank Foreign Exchange / Derivatives Small Business Y/Y growth Excluding Mortgage Banking 1Q 2Q 3Q 4Q 20

21 Noninterest Expense 70.0% Efficiency Ratio 60.0% 59.0% 58.2% 58.9% 57.6% Peer Bank Rank # % 45.3% 44.3% 45.4% 46.0% 40.0% 30.0% Q07 Efficiency Ratio Peer Bank Median 21 Source: SNL and company reports Peer Banks: BAC, BBT, CMA, FITB, KEY, NCC, PNC, RF, STI, USB, WB, WFC and WM

22 Credit Quality 0.70% Net Charge-off Ratio 0.80% Nonperforming Asset Ratio 0.55% 0.40% 0.25% 0.50% 0.47% 0.38% 0.36% 0.34% 0.42% 0.39% 0.35% 0.28% 0.28% 0.65% 0.50% 0.35% 0.48% 0.45% 0.51% 0.47% 0.39% 0.40% 0.54% 0.41% 0.60% 0.40% 0.10% 1Q06 2Q06 3Q06 4Q06 1Q % 1Q06 2Q06 3Q06 4Q06 1Q07 Source: company reports Peer Banks: BAC, BBT, CMA, FITB, KEY, NCC, PNC, RF, STI, USB, WB, WFC and WM NPA Ratio equals nonperforming assets to loans plus ORE 22 USB Peer Bank Average

23 Goals Minimum 20% ROE Reducing Credit and Earnings Volatility Providing High-Quality Customer Service Investing For Future Growth Targeting 80% Return of Earnings to Shareholders 10% Long-Term EPS Growth 23

24 Dividends per Share $ $ Year CAGR 20.8% $ $0.60 $ $ Q07 24

25 Total Shareholder Return As of 4/30/07 1 Year 3 Year 5 Year U.S. Bancorp 14.0% 14.8% 12.3% S&P 500 Commercial Bank Index 4.5% 11.1% 9.4% S&P 500 Index 15.2% 12.2% 8.5% Source: FactSet 3 & 5 year TSR annualized 25

26 Total Shareholder Return $500 A $100 investment in U.S. Bancorp in 1996 was worth $468 in 2007! U.S. Bancorp $468 $400 $300 Peer Bank Rank # 1 S&P 500 Commercial Bank Index $274 $200 $100 S&P 500 Index $236 $ Source: Bloomberg as of 4/30/07 12/31/96 = $100 Peer banks: BAC, BBT, CMA, FITB, KEY, NCC, PNC, RF, STI, USB, WB, WFC and WM

27 U.S. Bancorp Consistent Predictable Repeatable 27

28 UBS 2007 Global Financial Services Conference Richard K. Davis President and CEO May 15, 2007