U.S. Bancorp (NYSE:USB) Q2 2019 Earnings Conference Call - Final Transcript

Jul 17, 2019 • 09:30 am ET


U.S. Bancorp (NYSE:USB) Q2 2019 Earnings Conference Call - Final Transcript


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Welcome to U.S. Bancorp's Second Quarter 2019 Earnings Conference Call. Following a review of the results by Andy Cecere, Chairman, President and Chief Executive Officer; and Terry Dolan, U.S. Bancorp's Vice Chairman and Chief Financial Officer. There will be a formal question-and-answer session. [Operator Instructions] This call will be recorded and available for replay beginning today at approximately noon, Eastern daylight time, through Wednesday, July 24th at 12 midnight Eastern daylight time.

I will now turn the conference over to Jen Thompson, Director of Investor Relations for U.S. Bancorp.

Jennifer Thompson

Thank you, Jack, and good morning to everyone who has joined our call. Andy Cecere and Terry Dolan are here with me today to review U.S. Bancorp's second quarter results and to answer your questions. Andy and Terry will be referencing a slide presentation during their prepared remarks. A copy of the slide presentation as well as our earnings release and supplemental analyst schedules are available on our website at usbank.com.

I'd like to remind you that any forward-looking statements made during today's call are subject to risk and uncertainty. Factors that could materially change our current forward-looking assumptions are described on Page 2 of today's presentation in our press release and in our Form 10-K and subsequent reports on file with the SEC.

I'll now turn the call over to Andy.

Andrew Cecere

Thanks, Jen, and good morning, everyone. Thank you for joining our call. Following our prepared remarks, Terry and I will take your questions.

I'll begin on Slide 3. In the second quarter, we reported earnings per share of $1.9, despite our more challenging interest rate environment for the banking industry that has seen in some time, we delivered strong financial results supported by top line revenue growth and positive operating leverage of 1%. Loan and deposit trends improved compared with the first quarter, and we saw broad based momentum across our fee businesses, driven by account and volume growth. Credit quality remains stable and we continue to prudently manage operating expense, while appropriately investing for the future.

Turning to capital management, our book value per share increased by 9.7% from a year ago. During the quarter, we returned 79% of our earnings to shareholders through dividends and share buybacks. In June, we received the results of our CCAR submission and the Federal Reserve did not object to our capital plan, which included a dividend increase of 13.5%.

Slide 4 provides key performance metrics. In the second quarter, we delivered a return on average common equity of 15% and a return on average assets of 1.55%. Our return on tangible common equity was 19.2%. Our efficiency ratio improved both on a linked quarter and year-over-year basis.

Now, let me turn the call over to Terry who will provide more detail on the quarter as well as forward-looking guidance.

Terrance R. Dolan

Thanks, Andy. If you turn to Slide 5, I'll start with the balance sheet review and follow-up with a discussion of the second quarter earnings trends. Average loans grew 1.1% on a linked