US Bancorp FY 1Q17 Earnings Call Notes

Andy Cecere – President and Chief Executive Officer

Us economy continues to improve

“The U.S. economy continues to improve. Interest rates are finally in an upward trajectory and consumer sentiment reflects optimism for potential actions by the new administration. So, there is a lot of change and potential opportunity on the macro front, much of which could be to the benefit of the banking industry. ”

Commercial loan growth sluggish but customers optimistic

” I believe we are well positioned for this next phase of the cycle. During the first quarter of 2017, commercial loan growth was sluggish across the industry. Our large corporate customers tell us that they are optimistic about the future, but are awaiting more clarity regarding potential changes in tax and regulatory reform, infrastructure spend and trade policies. Additionally, some of our clients are actively accessing the capital markets, which pulls some financing from the bank lending arena or result in reduced line utilization. However, we expect commercial loan growth to be better in the second quarter versus the first and we expect more robust commercial loan growth in the second half of the year.”

Second quarter should be stronger

“Sure. So first of all, our starting point is a little higher versus where we ended the fourth quarter. Secondly, our pipelines are stronger. As Terry mentioned, a lot of our corporate clients were accessing the Capital Markets, so that did put a bit of a damper on loan growth. But the seasonality on home equity, what we are seeing on auto and what’s going on with the corporate loan growth tells me that the second quarter is going to be stronger than the first quarter, but probably not as strong as what we achieved some quarters last year, but I do see acceleration here in quarter two.”