U.S. Bancorp

Welcome to the U.S. Bancorp's second quarter 2020 earnings conference call. Following a review of the results by Anderson Seri, Chairman, President, and Chief Executive Officer, and Terry Dolan, Vice Chair and Chief Financial Officer, there will be a formal question and answer session. If you would like to ask a question, please press star 1 on your telephone touch phone and press the pound key to withdraw. This call will be recorded and available for replay beginning today, at approximately 12 p.m. Eastern through Wednesday, July 22nd at 12 midnight Eastern. I would now like to turn the conference over to Jen Thompson, Director of Investor Relations and Economic Analysis for U.S. Bancorp.

Thank you, Amitra, and good morning, everyone. With me today are Andy Cesari, our Chairman, President, and CEO, and Terry Dolan, our Chief Financial Officer. Also joining us on the call today are our Chief Risk Officer, Jody Richards, and our Chief Credit Officer, Mark Runkle. During their prepared remarks, Andy and Terry will be referencing a slide presentation. 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 would 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 two 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.

Thanks, Jen, and good morning, everyone. Thank you for joining our call. Following our prepared remarks, Jerry, Jody, Mark, and I will take any questions you have. I'll begin on slide three. In the second quarter, we reported earnings per share of 41 cents. Consistent with the industry, our performance is being impacted by the current economic environment. Loan growth reflected the impact of defensive draws by corporations in March and early April, strong mortgage loan growth, and the impact of the Paycheck Protection Program, which supported small businesses impacted by the COVID-19 situation. Increased liquidity in the financial system and a flight to quality draw strong deposit growth in the quarter. Our healthy fee income growth this quarter is a testament to our diversified business model. Some fee lines, including our payments businesses, were negatively impacted by slower economic activity. However, we saw very strong growth in our mortgage and commercial products businesses. And while consumer spend activity remains pressured compared with a year ago, volume trends in each of our payments businesses have improved as some economies have started to reopen. Expenses were held relatively flat compared with the first quarter. We continue to manage our cost structure prudently and in line with the slower revenue growth environment. Credit quality metrics in the second quarter reflected increased economic stress offset by the beneficial impact of government stimulus and forbearance and deferral programs. During the quarter, we increased our allowance for loan losses in response to economic conditions. We believe our reserve level of June 30th is appropriate based on the information we have available. Changes in the allowance will be dependent on actual credit performance and changes in economic conditions. In the lower right quadrant of this slide, you can see that book value per share grew 2.8% compared with a year ago, and we remain well capitalized. Slide four provides key performance metrics. We delivered a 7.1% return on tangible common equity in the second quarter. impacted by lower earnings going to the current economic environment. Slide five shows our continually improving digital uptake trends. Shelter in place orders early in the quarter and temporary branch closures due to the COVID-19 have increased and increased in digital adoptions. Digital now accounts for more than three quarters of all service transactions and about 46% of all loan sales. We expect digital adoption by customers to stick even after the economy fully reopens. Now let me turn it over to Jerry who will provide more color on the quarter.