US Bancorp 4Q15 Earnings Call Notes

U.S. Bancorp’s (USB) CEO Richard Davis on Q4 2015 Results

We’re not seeing what’s going on in the rest of the world affecting our customers

“we do primarily business in the domestic United States and we’re very much a consumer small business payments kind of a company, so just by what is going on in the backdrop around the world with the China re-evaluation and what’s happening in oil and some of those areas which we’re not immune to balances and process, we’re not seeing the majority of that on our books or by our customers.”

We’re actually seeing a continued slow but steady improvement every quarter

“So, we’re actually seeing a continued steady, I’ll say slow but steady improvement every quarter and our customers are reflecting that across the board from the large corporate customers, who are still doing robust M&A transactions to restructuring the portfolio, all the way down to the small businesses which continue to grow for us double-digits based on their interest and setting themselves up for our better consumer wide recovery and just general people who are using banks for their retail services.’

Our plan for this year is one more rate increase in June

“what kind of assumptions we would in our plan, and we actually expected to have two rate increases from the last time I talked to you. We hope for one in December, we expect a one in June. And that is really the amount of the risk we have placed into our plan this year’

2017 will be the earliest that we start to look for deals

“I’ve always said 2017 will be the first time we want to look at where our appetite for bringing on a risk into our company as we simply couldn’t do diligence for and couldn’t possibly imagine that at least elegantly have lined up with our current moment where we can’t do it anyway but we don’t want to anyway, and I wouldn’t be interested. The pricing doesn’t change you can’t get a good enough deals if you don’t know what you’re getting. And I could be wrong but I feel very strongly about that and have for a long time and I would say that as the moments clear let’s say a year or more from now”

It’s been so long since we focused on credit, we’re going to start watching it more closely

“we haven’t really focused on credit in many years and I’m putting it right back at the front runner because I want to start watching trends and we are going to watch competitors and we’re going to watch different buckets and tranches and we are going to learn a lot all of us by what’s about to happen if we start learning about these small moves now don’t look very big that they can be quite tell-tell of what is going to happen so you ask more questions like that because that’s going I think give us a chance to I’ll talk about risk profile and likely future losses”

Andy Cecere

Corporate loan demand has been strong. Consumer has also turned more positive

“I would corporate continues with the strong as you saw year-over-year growth about 9% and strong on a linked quarter basis I think what’s turned a little bit more positive is the consumer side of the equation our two fronts our mortgage activity on balance sheet that jumbles principally continues to be strong and home equity for the first time in a whiles we’re seeing growth in that category and as we dig into that a little bit further I understand what that’s about we are seeing consumers taking home equity and using it for home equity so using it to improve their homes, furnishings and things of that sort so those two categories are strengthening and finally card spend and card balances are also growing so I do think we see continued strength on wholesale with increasing strength on consumer.”

Auto growth should be similar in ’16 to what you saw in ’15

“I would expect the growth to be similar with what we saw off 2015, more focused on the lending side versus the leasing side and with it principally trying auto on the lending side. So, to stress this situation what might have been 110, 120 basis points is maybe down to 100 or right around that area, a lot of that’s because of the aggressive nature of the manufacturers. But I think on a growth prospect a very — prospects for ’16 are going to be very similar to what you saw in ’15.”

We saw a good holiday season in card spending growth

“I wouldn’t say that the energy subsidy is being spent into a large degree so we are seeing steady growth in our card growth as you saw is very good we had a very good Christmas season the holiday season if you compare our contrasted our master card numbers would show up from Black Friday through Christmas Eve would say of 7.9% growth that was just over 10% growth which is better than it was last year but it’s not substantially better so we are good and steady but we are not seeing all the dollars saved on the energy side moving to spend on the consumer side.”