Exhibit 99.1

 

																U.S. Bancorp Reports First Quarter 2019 Results • Net revenue of $5,577 million and net income of $1,699 million • Industry leading return on average assets of 1.49% and return on average common equity of 14.3%
1Q19 Key Financial Data																1Q19 Highlights
PROFITABILITY METRICS		1Q19				4Q18				1Q18						• Net income of $1,699 million and diluted earnings per    common share of $1.00   • Industry leading return on average assets of 1.49% and    return on average common equity of 14.3%   • Return on tangible common equity of 18.4%   • Returned 77% of 1Q earnings to shareholders through    dividends and share buybacks   • Net interest income grew 2.9% year-over-year (2.8% on a    taxable-equivalent basis) with positive operating leverage of    1.0% on a year-over-year basis   • Average total loans grew 0.9% on a linked quarter basis and    2.4% (3.7% excluding the impact of loan sales) year- over    -year   • Nonperforming assets decreased 16.5% on a year-over-    year basis
Return on average assets (%)			1.49				1.59				1.50
Return on average common equity (%)			14.3				15.8				14.9
Return on tangible common equity (%) (a)			18.4				20.2				19.3
Net interest margin (%)			3.16				3.15				3.13
Efficiency ratio (%) (a)			55.4				56.3				55.9
INCOME STATEMENT (b)		1Q19				4Q18				1Q18
Net interest income (taxable-equivalent basis)			$3,286				$3,331				$3,197
Noninterest income			$2,291				$2,498				$2,272
Net income attributable to U.S. Bancorp			$1,699				$1,856				$1,675
Diluted earnings per common share			$1.00				$1.10				$.96
Dividends declared per common share			$.37				$.37				$.30
BALANCE SHEET (b)		1Q19				4Q18				1Q18
Average total loans			$286,110				$283,677				$279,388
Average total deposits			$335,366				$334,365				$334,580
Net charge-off ratio			.52%				.49%				.49%
Book value per common share (period end)			$28.81				$28.01				$26.54
Basel III standardized CET1 (c)			9.3%				9.1%				9.0%
(a) See Non-GAAP Financial Measures reconciliation on page 16
(b) Dollars in millions, except per share data
(c) CET1 = Common equity tier 1 capital ratio

 

 

CEO Commentary

“As our financial results indicate, we had a good start to the year with momentum continuing across our lending and fee businesses. In the first quarter, our industry-leading returns on assets and equity were supported by solid loan growth, disciplined expense management and stable credit quality. Our balance sheet is strong and growing as evidenced by an 8.6% increase in our book value per share compared with a year ago. During the quarter, we returned 77 percent of our earnings to shareholders through dividends and share buybacks. We are pleased with our results this quarter and remain focused on the long-term success of this company - and the disciplined investment in people and technology that will drive that success. We are launching a number of digital initiatives combining the best of technology and innovation to help make our customers’ financial lives simpler and more productive. I would like to thank our employees for all they do to create value for our customers, communities and shareholders.”   — Andy Cecere, Chairman, President and CEO, U.S. Bancorp

In the Spotlight

 

 

 

    Investor contact: Jennifer Thompson, 612.303.0778 | Media contact: Rebekah Fawcett, 612.303.9986

		U.S. Bancorp First Quarter 2019 Results

 

INCOME STATEMENT HIGHLIGHTS
($ in millions, except per-share data)														Percent Change
		1Q				4Q				1Q				1Q19 vs				1Q19 vs
		2019				2018				2018				4Q18				1Q18
Net interest income			$3,259				$3,303				$3,168				(1.3)				2.9
Taxable-equivalent adjustment			27				28				29				(3.6)				(6.9)
Net interest income (taxable-equivalent basis)			3,286				3,331				3,197				(1.4)				2.8
Noninterest income			2,291				2,498				2,272				(8.3	)			.8
Total net revenue			5,577				5,829				5,469				(4.3	)			2.0
Noninterest expense			3,087				3,280				3,055				(5.9)				1.0
Income before provision and income taxes			2,490				2,549				2,414				(2.3)				3.1
Provision for credit losses			377				368				341				2.4				10.6
Income before taxes			2,113				2,181				2,073				(3.1)				1.9
Income taxes and taxable-equivalent adjustment			405				319				391				27.0				3.6
Net income			1,708				1,862				1,682				(8.3)				1.5
Net (income) loss attributable to noncontrolling interests			(9)				(6)				(7)				(50.0)				(28.6)
Net income attributable to U.S. Bancorp			$1,699				$1,856				$1,675				(8.5)				1.4
Net income applicable to U.S. Bancorp common shareholders			$1,613				$1,777				$1,597				(9.2)				1.0
Diluted earnings per common share			$1.00				$1.10				$.96				(9.1)				4.2

Net income attributable to U.S. Bancorp was $1,699 million for the first quarter of 2019, which was 1.4 percent higher than the first quarter of 2018, and 8.5 percent lower than the fourth quarter of 2018. Diluted earnings per common share were $1.00 in the first quarter of 2019, compared with $0.96 in the first quarter of 2018 and $1.10 in the fourth quarter of 2018. The fourth quarter of 2018 included $0.03 per diluted common share of notable items related to the impact of the gain on sale of the Company’s ATM servicing business and the sale of a majority of the Company’s FDIC covered loans, charges related to severance, certain asset impairments, an accrual for legal matters, and the favorable impact to deferred tax assets and liabilities related to changes in estimates from tax reform. Given the sale of the third-party ATM processing business during the fourth quarter of 2018, ATM processing services revenue and deposit service charges were combined for reporting purposes.

The increase in net income year-over-year was due to total net revenue growth of 2.0 percent partially offset by noninterest expense growth of 1.0 percent. Net interest income increased 2.9 percent (2.8 percent on a taxable-equivalent basis), mainly a result of the impact of rising interest rates, loan growth, and higher yields on reinvestment of securities, partially offset by higher rates on deposits and funding mix. Noninterest income increased 0.8 percent compared with a year ago, driven by growth in corporate payment products and merchant processing services revenue, along with other noninterest revenue, partially offset by declines in credit and debit card revenue, mortgage banking revenue and deposit service charges. Deposit service charges include ATM processing services revenue and decreased as a result of the sale of the third-party ATM processing business in the fourth quarter of 2018. Noninterest expense increased 1.0 percent primarily due to increased compensation expense, along with higher technology and communications expense in support of business growth. Partially offsetting these expense categories was lower other noninterest expense driven by lower costs related to tax-advantaged projects and FDIC assessment costs.

Net income decreased on a linked quarter basis primarily due to a decrease in total net revenue of 4.3 percent, partially offset by a reduction in noninterest expense of 5.9 percent. The decrease in total net revenue reflected a decline in net interest income of 1.3 percent (1.4 percent on a taxable-equivalent basis) primarily due to two fewer days in the first quarter along with higher rates on deposits, lower interest recoveries, and funding mix, partially offset by loan growth. Excluding the fourth quarter of 2018 notable items, noninterest income decreased 5.4 percent compared with the fourth quarter of 2018 driven by lower credit and debit card revenue and lower ATM processing services revenue as a result of the business sale. Excluding the fourth quarter of 2018 notable items, noninterest expense decreased 0.6 percent on a linked quarter basis primarily driven by lower professional services and marketing and business development expense, partially offset by seasonally higher employee benefits and an increase in other noninterest expense.

 

 

        2

		U.S. Bancorp First Quarter 2019 Results

 

NET INTEREST INCOME
(Taxable-equivalent basis; $ in millions)														Change
		1Q 2019				4Q 2018				1Q 2018				1Q19 vs 4Q18		1Q19 vs 1Q18
Components of net interest income
Income on earning assets			$4,381				$4,341				$3,822			$40			$559
Expense on interest-bearing liabilities			1,095				1,010				625			85			470
Net interest income			$3,286				$3,331				$3,197			$(45)			$89
Average yields and rates paid
Earning assets yield			4.22%				4.11%				3.75%			.11%			.47%
Rate paid on interest-bearing liabilities			1.38				1.26				.81			.12			.57
Gross interest margin			2.84%				2.85%				2.94%			(.01)%			(.10)%
Net interest margin			3.16%				3.15%				3.13%			.01%			.03%
Average balances
Investment securities (a)			$114,179				$114,138				$113,493			$41			$686
Loans			286,110				283,677				279,388			2,433			6,722
Earning assets			419,494				420,472				411,849			(978)			7,645
Interest-bearing liabilities			322,156				319,289				311,615			2,867			10,541
(a) Excludes unrealized gain (loss)

Net interest income on a taxable-equivalent basis in the first quarter of 2019 was $3,286 million, an increase of $89 million (2.8 percent) over the first quarter of 2018. The increase was principally driven by the impact of rising interest rates, earning assets growth, and higher yields on securities, partially offset by deposit pricing and funding mix shift. Average earning assets were $7.6 billion (1.9 percent) higher than the first quarter of 2018, reflecting increases of $6.7 billion (2.4 percent) in average total loans, $686 million (0.6 percent) in average investment securities, and $1.2 billion (7.8 percent) in average other earning assets. Excluding the impact of the second quarter of 2018 sale of the Company’s federally guaranteed student loan portfolio and the fourth quarter of 2018 sale of the majority of the Company’s FDIC covered loans, average total loans grew 3.7 percent compared with the first quarter of 2018.

Net interest income on a taxable-equivalent basis decreased $45 million (1.4 percent) on a linked quarter basis primarily driven by two fewer days in the first quarter and lower interest recoveries, partially offset by loan growth. Average earning assets were $978 million (0.2 percent) lower on a linked quarter basis, reflecting decreases of $2.5 billion (12.5 percent) in average other earning assets due to a seasonal decrease in cash balances and $1.0 billion (32.0 percent) in average loans held for sale primarily due to the sale of the majority of the Company’s FDIC covered loans in the fourth quarter of 2018, partially offset by an increase of $2.4 billion (0.9 percent) in average total loans.

The net interest margin in the first quarter of 2019 was 3.16 percent, compared with 3.13 percent in the first quarter of 2018 and 3.15 percent in the fourth quarter of 2018. The increase in the net interest margin year-over-year was primarily due to rising interest rates, higher reinvestment rates on maturing securities, and loan portfolio mix, partially offset by deposit and funding mix. The increase in net interest margin on a linked quarter basis was primarily due to loan portfolio mix, lower cash balances, and the impact of the fourth quarter rate hike on assets, partially offset by the impact of deposit and funding mix.

Average investment securities in the first quarter of 2019 increased $686 million (0.6 percent) over the first quarter of 2018 and $41 million over the fourth quarter of 2018 due to purchases of mortgage-backed and state and political securities, net of prepayments and maturities.

 

 

        3

		U.S. Bancorp First Quarter 2019 Results

 

AVERAGE LOANS
($ in millions)														Percent Change
		1Q 2019				4Q 2018				1Q 2018				1Q19 vs 4Q18		1Q19 vs 1Q18
Commercial			$96,447				$95,025				$91,933			1.5		4.9
Lease financing			5,513				5,490				5,532			.4		(.3)
Total commercial			101,960				100,515				97,465			1.4		4.6
Commercial mortgages			28,459				28,930				29,176			(1.6)		(2.5)
Construction and development			11,011				11,219				11,190			(1.9)		(1.6)
Total commercial real estate			39,470				40,149				40,366			(1.7)		(2.2)
Residential mortgages			65,582				64,476				60,174			1.7		9.0
Credit card			22,597				22,396				21,284			.9		6.2
Retail leasing			8,586				8,489				7,982			1.1		7.6
Home equity and second mortgages			15,993				16,065				16,195			(.4)		(1.2)
Other			31,922				31,587				32,874			1.1		(2.9)
Total other retail			56,501				56,141				57,051			.6		(1.0)
Covered loans (a)			--				--				3,048			--		nm
Total loans			$286,110				$283,677				$279,388			.9		2.4
(a)  During the fourth quarter of 2018, the majority of the Company’s covered loans were sold or the loss share coverage expired, with any remaining loan balances reclassified to be included in their respective portfolio category.

Average total loans were $6.7 billion (2.4 percent) higher than the first quarter of 2018. Excluding the impact of the second quarter of 2018 sale of the Company’s federally guaranteed student loan portfolio and the fourth quarter of 2018 sale of the majority of the Company’s FDIC covered loans, average total loans grew 3.7 percent over the prior year quarter. The increase was due to growth in residential mortgages (9.0 percent), total commercial loans (4.6 percent), credit card loans (6.2 percent), and retail leasing (7.6 percent). These increases were partially offset by decreases in covered loans due to the fourth quarter of 2018 sale, total commercial real estate loans (2.2 percent) due to customers paying down balances and other loans (2.9 percent) which were impacted by the sale of student loans.

Average total loans were $2.4 billion (0.9 percent) higher than the fourth quarter of 2018 driven by growth in residential mortgages (1.7 percent) and total commercial loans (1.4 percent), partially offset by a decrease in total commercial real estate loans (1.7 percent).

 

 

        4

		U.S. Bancorp First Quarter 2019 Results

 

AVERAGE DEPOSITS
($ in millions)														Percent Change
		1Q 2019				4Q 2018				1Q 2018				1Q19 vs 4Q18		1Q19 vs 1Q18
Noninterest-bearing deposits			$73,433				$77,160				$79,482			(4.8)		(7.6)
Interest-bearing savings deposits
Interest checking			72,177				71,013				70,358			1.6		2.6
Money market savings			99,432				99,594				103,367			(.2)		(3.8)
Savings accounts			45,216				44,544				44,388			1.5		1.9
Total savings deposits			216,825				215,151				218,113			.8		(.6)
Time deposits			45,108				42,054				36,985			7.3		22.0
Total interest-bearing deposits			261,933				257,205				255,098			1.8		2.7
Total deposits			$335,366				$334,365				$334,580			.3		.2

Average total deposits for the first quarter of 2019 were $786 million (0.2 percent) higher than the first quarter of 2018. Average noninterest-bearing deposits decreased $6.0 billion (7.6 percent) year-over-year primarily due to the continued deployment by customers of business deposits within Corporate and Commercial Banking and corporate trust balances within Wealth Management and Investment Services. Average total savings deposits were $1.3 billion (0.6 percent) lower year-over-year driven by decreases in corporate trust balances within Wealth Management and Investment Services along with the run-off related to the business merger of a large financial customer, partially offset by increases in Consumer and Business Banking. Average time deposits were $8.1 billion (22.0 percent) higher than the prior year quarter. Changes in time deposits are largely related to those deposits managed as an alternative to other funding sources such as wholesale borrowing, based largely on relative pricing and liquidity characteristics.

Average total deposits increased $1.0 billion (0.3 percent) from the fourth quarter of 2018. On a linked quarter basis, average noninterest-bearing deposits decreased $3.7 billion (4.8 percent) reflecting decreases in Corporate and Commercial Banking and Consumer and Business Banking. Average total savings deposits increased $1.7 billion (0.8 percent) on a linked quarter basis primarily due to increases in Consumer and Business Banking and Corporate and Commercial Banking. Average time deposits, which are managed based on funding needs, relative pricing and liquidity characteristics, increased $3.1 billion (7.3 percent) on a linked quarter basis.

 

 

        5

		U.S. Bancorp First Quarter 2019 Results

 

NONINTEREST INCOME
($ in millions)														Percent Change
		1Q 2019				4Q 2018				1Q 2018				1Q19 vs 4Q18				1Q19 vs 1Q18
Credit and debit card revenue			$304				$382				$324				(20.4)				(6.2)
Corporate payment products revenue			162				163				154				(.6)				5.2
Merchant processing services			378				389				363				(2.8)				4.1
Trust and investment management fees			399				409				398				(2.4)				.3
Deposit service charges			217				253				261				(14.2)				(16.9)
Treasury management fees			146				143				150				2.1				(2.7)
Commercial products revenue			219				225				220				(2.7)				(.5)
Mortgage banking revenue			169				171				184				(1.2)				(8.2)
Investment products fees			45				48				46				(6.3)				(2.2)
Securities gains (losses), net			5				5				5				--				--
Other			247				310				167				(20.3)				47.9
Total noninterest income			$2,291				$2,498				$2,272				(8.3)				.8

First quarter noninterest income of $2,291 million was $19 million (0.8 percent) higher than the first quarter of 2018 driven by growth in corporate payment products revenue and merchant processing services reflecting higher sales volumes. Other noninterest income also increased year-over-year primarily due to higher equity investment income, tax-advantaged investment syndication revenue, and transition services agreement revenue associated with the ATM processing business sale in 2018. These increases were partially offset by lower credit and debit card revenue, lower deposit service charges, and lower mortgage banking revenue. Credit and debit card revenue decreased $20 million (6.2 percent) reflecting fewer billing cycle processing days in the first quarter of 2019, a change in the accounting for prepaid card revenue in the first quarter of 2018, and industry trends in post-holiday consumer spending. Deposit service charges decreased $44 million (16.9 percent) driven by the sale of the Company’s ATM third-party servicing business in 2018. The decrease in mortgage banking revenue of $15 million (8.2 percent) was due to changes in mortgage servicing rights valuations, net of hedging activities, and lower servicing income, partially offset by higher production volume.

Noninterest income was $207 million (8.3 percent) lower in the first quarter of 2019 compared with the fourth quarter of 2018 reflecting lower payment services revenue, deposit service charges, and other noninterest income. Payment services revenue decreased $90 million (9.6 percent) primarily due to seasonally lower sales across all payment business segments and fewer billing cycle processing days within the credit and debit card business segment. Deposit service charges decreased $36 million (14.2 percent) primarily due to the sale of the Company’s ATM third-party servicing business and the seasonal impact of two fewer days in the first quarter of 2019. Other noninterest income decreased $63 million (20.3 percent) on a linked quarter basis primarily due to the notable items in the fourth quarter of 2018. Excluding the notable items, other noninterest income increased 5.6 percent on a linked quarter basis.

 

 

        6

		U.S. Bancorp First Quarter 2019 Results

 

NONINTEREST EXPENSE
($ in millions)														Percent Change
		1Q				4Q				1Q				1Q19 vs				1Q19 vs
		2019				2018				2018				4Q18				1Q18
Compensation			$1,559				$1,568				$1,523				(.6)				2.4
Employee benefits			333				308				330				8.1				.9
Net occupancy and equipment			277				266				265				4.1				4.5
Professional services			95				133				83				(28.6)				14.5
Marketing and business development			89				115				97				(22.6)				(8.2)
Technology and communications			257				254				235				1.2				9.4
Postage, printing and supplies			72				80				80				(10.0)				(10.0)
Other intangibles			40				41				39				(2.4)				2.6
Other			365				515				403				(29.1)				(9.4)
Total noninterest expense			$3,087				$3,280				$3,055				(5.9)				1.0

First quarter noninterest expense of $3,087 million was $32 million (1.0 percent) higher than the first quarter of 2018 primarily due to higher personnel costs and technology investment, partially offset by lower other noninterest expense. Compensation expense increased $36 million (2.4 percent) principally due to the impact of hiring to support business growth and merit increases. Other noninterest expense decreased $38 million (9.4 percent) due to lower FDIC assessment costs, driven by the elimination of the surcharge in the fourth quarter of 2018, and lower costs related to tax-advantaged projects, partially offset by other expenses.

Noninterest expense decreased $193 million (5.9 percent) on a linked quarter basis. The fourth quarter of 2018 included notable items related to severance charges and legal accruals recorded in noninterest expense. Excluding the impact of the fourth quarter of 2018 notable items noninterest expense decreased $19 million (0.6 percent) due to seasonally lower costs related to tax-advantaged projects and professional services, along with lower marketing and business development expense driven by the timing of certain marketing campaigns. Partially offsetting these decreases were increases in employee benefits expense of $25 million (8.1 percent) due to seasonally higher payroll taxes.

Provision for Income Taxes

The provision for income taxes for the first quarter of 2019 resulted in a tax rate of 19.2 percent on a taxable-equivalent basis (effective tax rate of 18.1 percent), compared with 18.9 percent (effective tax rate of 17.7 percent) in the first quarter of 2018, and 14.6 percent on a taxable-equivalent basis (effective tax rate of 13.5 percent) in the fourth quarter of 2018. Tax expense for the first quarter of 2019 reflected the favorable conclusion of a state tax matter. The fourth quarter of 2018 tax rates reflected the favorable impact of deferred tax assets and liabilities adjustments related to tax reform estimates. Excluding the changes in estimates related to deferred tax assets and liabilities, the taxable-equivalent rate was 20.1 percent in the fourth quarter of 2018.

 

 

        7

		U.S. Bancorp First Quarter 2019 Results

 

ALLOWANCE FOR CREDIT LOSSES
($ in millions)		1Q								4Q								3Q								2Q								1Q
		2019				% (a)				2018				% (a)				2018				% (a)				2018				% (a)				2018				% (a)
Balance, beginning of period			$4,441								$4,426								$4,411								$4,417								$4,417
Net charge-offs
Commercial			71				.30				64				.27				63				.27				54				.23				56				.25
Lease financing			2				.15				3				.22				3				.22				4				.29				4				.29
Total commercial			73				.29				67				.26				66				.26				58				.24				60				.25
Commercial mortgages			--				--				(8	)			(.11	)			(5	)			(.07	)			--				--				(4	)			(.06	)
Construction and development			--				--				1				.04				(4	)			(.14	)			--				--				1				.04
Total commercial real estate			--				--				(7	)			(.07	)			(9	)			(.09	)			--				--				(3	)			(.03	)
Residential mortgages			3				.02				2				.01				4				.03				4				.03				7				.05
Credit card			225				4.04				219				3.88				206				3.75				210				3.97				211				4.02
Retail leasing			4				.19				3				.14				3				.14				3				.15				3				.15
Home equity and second mortgages			(1	)			(.03	)			1				.02				(1	)			(.02	)			(2	)			(.05	)			(1	)			(.03	)
Other			63				.80				68				.85				59				.74				59				.76				64				.79
Total other retail			66				.47				72				.51				61				.43				60				.43				66				.47
Total net charge-offs			367				.52				353				.49				328				.46				332				.48				341				.49
Provision for credit losses			377								368								343								327								341
Other changes			--								--								--								(1	)							--
Balance, end of period			$4,451								$4,441								$4,426								$4,411								$4,417
Components
Allowance for loan losses			$3,990								$3,973								$3,954								$3,920								$3,918
Liability for unfunded credit commitments			461								468								472								491								499
Total allowance for credit losses			$4,451								$4,441								$4,426								$4,411								$4,417
Gross charge-offs			$473								$442								$428								$437								$453
Gross recoveries			$106								$89								$100								$105								$112
Allowance for credit losses as a percentage of
Period-end loans			1.55								1.55								1.57								1.57								1.59
Nonperforming loans			519								544								544								484								431
Nonperforming assets			443								449								441								404								367
(a)  Annualized and calculated on average loan balances

 

 

        8

		U.S. Bancorp First Quarter 2019 Results

 

Credit quality was relatively stable on a linked quarter and year-over-year basis. The Company’s provision for credit losses for the first quarter of 2019 was $377 million, which was $9 million (2.4 percent) higher than the prior quarter and $36 million (10.6 percent) higher than the first quarter of 2018.

Total net charge-offs in the first quarter of 2019 were $367 million, compared with $353 million in the fourth quarter of 2018, and $341 million in the first quarter of 2018. Net charge-offs increased $14 million (4.0 percent) compared with the fourth quarter of 2018 due to higher total commercial real estate, total commercial loans and credit card net charge-offs, partially offset by lower total other retail net charge-offs. Net charge-offs increased $26 million (7.6 percent) compared with the first quarter of 2018 primarily due to higher total commercial loan and credit card net charge-offs. The net charge-off ratio was 0.52 percent in the first quarter of 2019, compared with 0.49 percent in the fourth quarter of 2018 and in the first quarter of 2018.

The allowance for credit losses was $4,451 million at March 31, 2019, compared with $4,441 million at December 31, 2018, and $4,417 million at March 31, 2018. The ratio of the allowance for credit losses to period-end loans was 1.55 percent at March 31, 2019, and at December 31, 2018, compared with 1.59 percent at March 31, 2018. The ratio of the allowance for credit losses to nonperforming loans was 519 percent at March 31, 2019, compared with 544 percent at December 31, 2018, and 431 percent at March 31, 2018.

Nonperforming assets were $1,005 million at March 31, 2019, compared with $989 million at December 31, 2018, and $1,204 million at March 31, 2018. The ratio of nonperforming assets to loans and other real estate was 0.35 percent at March 31, 2019, compared with 0.34 percent at December 31, 2018, and 0.43 percent at March 31, 2018. The year-over-year decrease in nonperforming assets was driven by decreases in nonperforming residential mortgages, total commercial loans, and other real estate owned. Accruing loans 90 days or more past due were $595 million at March 31, 2019, compared with $584 million at December 31, 2018, and $702 million at March 31, 2018.

 

DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES
(Percent)		Mar 31				Dec 31				Sep 30				Jun 30				Mar 31
		2019				2018				2018				2018				2018
Delinquent loan ratios - 90 days or more past due excluding nonperforming loans
Commercial			.07				.07				.06				.06				.06
Commercial real estate			.01				--				.01				.01				.01
Residential mortgages			.18				.18				.19				.18				.22
Credit card			1.29				1.25				1.18				1.15				1.29
Other retail			.19				.19				.17				.16				.18
Covered loans			--				--				.86				4.46				4.57
Total loans			.21				.20				.20				.23				.25
Delinquent loan ratios - 90 days or more past due including nonperforming loans
Commercial			.34				.27				.28				.28				.37
Commercial real estate			.33				.29				.27				.27				.31
Residential mortgages			.62				.63				.69				.84				.93
Credit card			1.29				1.25				1.18				1.15				1.29
Other retail			.49				.54				.49				.48				.48
Covered loans			--				--				.86				4.68				4.77
Total loans			.51				.49				.48				.55				.62

 

 

        9

		U.S. Bancorp First Quarter 2019 Results

 

ASSET QUALITY (a)
($ in millions)
		Mar 31 2019				Dec 31 2018				Sep 30 2018				Jun 30 2018				Mar 31 2018
Nonperforming loans
Commercial			$247				$186				$193				$199				$274
Lease financing			24				23				23				25				27
Total commercial			271				209				216				224				301
Commercial mortgages			79				76				77				72				86
Construction and development			48				39				28				32				33
Total commercial real estate			127				115				105				104				119
Residential mortgages			287				296				317				400				430
Credit card			--				--				--				--				--
Other retail			173				197				175				178				168
Covered loans			--				--				--				6				6
Total nonperforming loans			858				817				813				912				1,024
Other real estate			93				111				100				108				124
Covered other real estate			--				--				19				20				20
Other nonperforming assets			54				61				72				51				36
Total nonperforming assets			$1,005				$989				$1,004				$1,091				$1,204
Accruing loans 90 days or more past due			$595				$584				$551				$640				$702
Performing restructured loans, excluding GNMA			$2,173				$2,218				$2,272				$2,194				$2,222
Performing restructured GNMA			$1,578				$1,639				$1,668				$1,665				$1,566
Nonperforming assets to loans plus ORE (%)			.35				.34				.36				.39				.43
(a) Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due

 

 

        10

		U.S. Bancorp First Quarter 2019 Results

 

COMMON SHARES
(Millions)		1Q 2019				4Q 2018				3Q 2018				2Q 2018				1Q 2018
Beginning shares outstanding			1,608				1,623				1,636				1,649				1,656
Shares issued for stock incentive plans, acquisitions and other corporate purposes			3				1				1				--				4
Shares repurchased			(12)				(16)				(14)				(13)				(11)
Ending shares outstanding			1,599				1,608				1,623				1,636				1,649

 

CAPITAL POSITION
($ in millions)		Mar 31 2019						Dec 31 2018						Sep 30 2018						Jun 30 2018						Mar 31 2018
Total U.S. Bancorp shareholders’ equity			$52,057						$51,029						$50,375						$49,628						$49,187
Basel III Standardized Approach
Common equity tier 1 capital			$35,732						$34,724						$34,097						$34,161						$33,539
Tier 1 capital			41,748						40,741						40,114						39,611						38,991
Total risk-based capital			49,194						48,178						47,531						47,258						46,640
Common equity tier 1 capital ratio			9.3			%			9.1			%			9.0			%			9.1			%			9.0			%
Tier 1 capital ratio			10.9						10.7						10.6						10.5						10.4
Total risk-based capital ratio			12.8						12.6						12.6						12.6						12.5
Leverage ratio			9.2						9.0						9.0						8.9						8.8
Basel III Advanced Approaches
Common equity tier 1 capital ratio			12.0						11.8						11.8						11.6						11.5
Tangible common equity to tangible assets (a)			7.9						7.8						7.7						7.8						7.7
Tangible common equity to risk-weighted assets (a)			9.5						9.4						9.3						9.3						9.3
(a)  See Non-GAAP Financial Measures reconciliation on page 16

Total U.S. Bancorp shareholders’ equity was $52.1 billion at March 31, 2019, compared with $51.0 billion at December 31, 2018, and $49.2 billion at March 31, 2018. During the first quarter, the Company returned 77 percent of earnings to shareholders through dividends and share buybacks.

All regulatory ratios continue to be in excess of “well-capitalized” requirements. The common equity tier 1 capital to risk-weighted assets ratio using the Basel III standardized approach was 9.3 percent at March 31, 2019, compared with 9.1 percent at December 31, 2018, and 9.0 percent at March 31, 2018. The common equity tier 1 capital to risk-weighted assets ratio using the Basel III advanced approaches method was 12.0 percent at March 31, 2019, compared with 11.8 percent at December 31, 2018, and 11.5 percent at March 31, 2018.

 

 

        11

		U.S. Bancorp First Quarter 2019 Results

 

Investor Conference Call

On Wednesday, April 17, 2019, at 8:00 a.m. CDT, Andy Cecere, chairman, president and chief executive officer, and Terry Dolan, vice chairman and chief financial officer, will host a conference call to review the financial results. The conference call will be available online or by telephone. To access the webcast and presentation, visit U.S. Bancorp’s website at usbank.com and click on “About US”, “Investor Relations” and “Webcasts & Presentations.” To access the conference call from locations within the United States and Canada, please dial 866-316-1409. Participants calling from outside the United States and Canada, please dial 706-634-9086. The conference ID number for all participants is 8793888. For those unable to participate during the live call, a recording will be available at approximately 11:00 a.m. CDT on Wednesday, April 17 and will be accessible until Wednesday, April 24 at 11:00 p.m. CDT. To access the recorded message within the United States and Canada, please dial 855-859-2056. If calling from outside the United States and Canada, please dial 404-537-3406 to access the recording. The conference ID is 8793888.

 

About U.S. Bancorp

U.S. Bancorp, with 74,000 employees and $476 billion in assets as of March 31, 2019, is the parent company of U.S. Bank, the fifth-largest commercial bank in the United States. The Minneapolis-based bank blends its relationship teams, branches and ATM network with mobile and online tools that allow customers to bank how, when and where they prefer. U.S. Bank is committed to serving its millions of retail, business, wealth management, payment, commercial and corporate, and investment services customers across the country and around the world as a trusted financial partner, a commitment recognized by the Ethisphere Institute naming the bank a 2019 World’s Most Ethical Company. Visit U.S. Bank at www.usbank.com or follow on social media to stay up to date with company news.

 

Forward-looking Statements

The following information appears in accordance with the Private Securities Litigation Reform Act of 1995:

This press release 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 hereof. 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. Deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect U.S. Bancorp’s revenues and the values of its assets and liabilities, reduce the availability of funding to certain financial institutions, lead to a tightening of credit, and increase stock price volatility. Stress in the commercial real estate markets, as well as a downturn in the residential real estate markets, could cause credit losses and deterioration in asset values. In addition, changes to statutes, regulations, or regulatory policies or practices could affect U.S. Bancorp in substantial and unpredictable ways. U.S. Bancorp’s results could also be adversely affected by 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 its investment securities; legal and regulatory developments; litigation; increased competition from both banks and non-banks; changes in the level of tariffs and other trade policies of the United States and its global trading partners; changes in customer behavior and preferences; breaches in data security; failures to safeguard personal information; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputational 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, 2018, on file with the Securities and Exchange Commission, including the sections entitled “Corporate Risk Profile” and “Risk Factors” 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. In addition, factors other than these risks also could adversely affect U.S. Bancorp’s results, and the reader should not consider these risks to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.

 

 

        12

		U.S. Bancorp First Quarter 2019 Results

 

Non-GAAP Financial Measures

In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:

 

•

Tangible common equity to tangible assets

•

Tangible common equity to risk-weighted assets

•

Return on tangible common equity

These capital measures are viewed by management as useful additional methods of evaluating the Company’s utilization of its capital held and the level of capital available to withstand unexpected negative market or economic conditions. Additionally, presentation of these measures allows investors, analysts and banking regulators to assess the Company’s capital position relative to other financial services companies. These capital measures are not defined in generally accepted accounting principles (“GAAP”), or are not defined in banking regulations. As a result, these capital measures disclosed by the Company may be considered non-GAAP financial measures. In addition, certain capital measures related to prior periods are presented on the same basis as those capital measures in the current period. The effective capital ratios defined by banking regulations for these periods were subject to certain transitional provisions. Management believes this information helps investors assess trends in the Company’s capital adequacy.

The Company also discloses net interest income and related ratios and analysis on a taxable-equivalent basis, which may also be considered non-GAAP financial measures. The Company believes this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison of net interest income arising from taxable and tax-exempt sources. In addition, certain performance measures, including the efficiency ratio and net interest margin utilize net interest income on a taxable-equivalent basis.

There may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider the consolidated financial statements and other financial information contained in this press release in their entirety, and not to rely on any single financial measure. A table follows that shows the Company’s calculation of these non-GAAP financial measures

 

 

        13

 

CONSOLIDATED STATEMENT OF INCOME
(Dollars and Shares in Millions, Except Per Share Data)  (Unaudited)		Three Months Ended       March 31,
		2019				2018
Interest Income
Loans			$3,540				$3,095
Loans held for sale			25				33
Investment securities			705				613
Other interest income			81				50
Total interest income			4,351				3,791
Interest Expense
Deposits			695				345
Short-term borrowings			93				75
Long-term debt			304				203
Total interest expense			1,092				623
Net interest income			3,259				3,168
Provision for credit losses			377				341
Net interest income after provision for credit losses			2,882				2,827
Noninterest Income
Credit and debit card revenue			304				324
Corporate payment products revenue			162				154
Merchant processing services			378				363
Trust and investment management fees			399				398
Deposit service charges			217				261
Treasury management fees			146				150
Commercial products revenue			219				220
Mortgage banking revenue			169				184
Investment products fees			45				46
Securities gains (losses), net			5				5
Other			247				167
Total noninterest income			2,291				2,272
Noninterest Expense
Compensation			1,559				1,523
Employee benefits			333				330
Net occupancy and equipment			277				265
Professional services			95				83
Marketing and business development			89				97
Technology and communications			257				235
Postage, printing and supplies			72				80
Other intangibles			40				39
Other			365				403
Total noninterest expense			3,087				3,055
Income before income taxes			2,086				2,044
Applicable income taxes			378				362
Net income			1,708				1,682
Net (income) loss attributable to noncontrolling interests			(9	)			(7	)
Net income attributable to U.S. Bancorp			$1,699				$1,675
Net income applicable to U.S. Bancorp common shareholders			$1,613				$1,597
Earnings per common share			$1.01				$.97
Diluted earnings per common share			$1.00				$.96
Dividends declared per common share			$.37				$.30
Average common shares outstanding			1,602				1,652
Average diluted common shares outstanding			1,605				1,657

 

 

        14

 

CONSOLIDATED ENDING BALANCE SHEET
(Dollars in Millions)		March 31, 2019				December 31, 2018				March 31, 2018
Assets			(Unaudited	)							(Unaudited	)
Cash and due from banks			$18,115				$21,453				$19,246
Investment securities
Held-to-maturity			46,285				46,050				44,612
Available-for-sale			68,113				66,115				67,125
Loans held for sale			2,725				2,056				4,777
Loans
Commercial			103,069				102,444				98,097
Commercial real estate			39,421				39,539				40,140
Residential mortgages			66,243				65,034				60,477
Credit card			22,268				23,363				20,901
Other retail			56,698				56,430				55,317
Covered loans			--				--				2,979
Total loans			287,699				286,810				277,911
Less allowance for loan losses			(3,990	)			(3,973	)			(3,918	)
Net loans			283,709				282,837				273,993
Premises and equipment			3,686				2,457				2,441
Goodwill			9,547				9,369				9,440
Other intangible assets			3,341				3,392				3,388
Other assets			40,254				33,645				35,097
Total assets			$475,775				$467,374				$460,119
Liabilities and Shareholders’ Equity
Deposits
Noninterest-bearing			$74,587				$81,811				$82,211
Interest-bearing			273,500				263,664				262,315
Total deposits			348,087				345,475				344,526
Short-term borrowings			15,396				14,139				17,703
Long-term debt			40,680				41,340				33,201
Other liabilities			18,926				14,763				14,877
Total liabilities			423,089				415,717				410,307
Shareholders’ equity
Preferred stock			5,984				5,984				5,419
Common stock			21				21				21
Capital surplus			8,432				8,469				8,438
Retained earnings			60,092				59,065				55,549
Less treasury stock			(20,699	)			(20,188	)			(18,047	)
Accumulated other comprehensive income (loss)			(1,773	)			(2,322	)			(2,193	)
Total U.S. Bancorp shareholders’ equity			52,057				51,029				49,187
Noncontrolling interests			629				628				625
Total equity			52,686				51,657				49,812
Total liabilities and equity			$475,775				$467,374				$460,119

 

 

        15