U.S. Bancorp

by Andy Ciceri, 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 01 on your touchtone phone. This call will be recorded and available for replay beginning today at approximately 11 o'clock a.m. Central Time. I will now turn the call over to Jen Thompson. Head of Corporate Finance and Investor Relations for U.S. Bank Corp. You may go ahead, Jen.

Thank you, Cheryl, and good morning, everyone. With me today are Andy Cesari, our Chairman, President, and CEO, and Terry Dolan, our Chief Financial Officer. 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'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 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. Good morning, everyone, and thank you for joining our call. Following our prepared remarks, Terry and I will take any questions you have. I'll begin on slide three. In the second quarter, we reported earnings per share of $0.99, which included $0.10 per share of merger and integration charges related to the planned acquisition of MUFG Union Bank. Excluding these notable items, we reported earnings per share of $1.09. We achieved record net revenue this quarter, totaling $6 billion. Second quarter results were highlighted by strong revenue growth, driven by robust net interest income and fee revenue, and stable credit quality. Revenue growth was driven by strong growth in earning assets and the benefit of rising rates, as well as good underlying business activity and customer acquisition trends across our fee businesses. Additionally, our multi-year investments in digital payments and technology are paying off in the form of strong top-line growth and enhanced efficiency. This quarter, we added $150 million to our loan loss reserve, reflecting strong loan growth and are consistent through the cycle approach to risk management. Our credit quality remains strong, and we are not seeing any trends in early-stage metrics that cause us concern. At June 30th, our CET1 capital ratio was 9.7%. Based on the results of the Federal Reserve's 2022 stress test that were published in June, we announced that we expect to be subject to a preliminary stress capital buffer of 2.5%, unchanged from the current level. We believe our industry-leading results demonstrate our ability to withstand a severe economic downturn, which is a testament to the strength, quality, and diversity of our balance sheet and our prudent approach to managing risk. Slide 4 provides key performance metrics. Excluding notable items, our return on average assets was 1.16%, and our return on average common equity was 15.3%. Our return on tangible common equity was 20.5% on a core basis. Slide 5 highlights digital trends in engagement. I'll now turn to slide six. We believe our digital capabilities and our complete payments ecosystem are competitive advantages that will drive meaningful profit and return differentiation for our company over the next several years. Our state-of-the-art digital capabilities have not only created a more effective and valuable experience for our customers, but they have allowed us to expand our distribution reach beyond our physical infrastructure while optimizing our existing branch network. On the left side, you will see that the success we are having with our State Farm Partnership, which is driving more customers, more loans, and more deposits to our platform in a cost-effective way. The chart in the middle highlights the strong trends, the uptake of our Taloc point-of-sale functionality, which allows small business customers to manage their banking and payments needs in a simple, easy-to-use format that we provide in the form of a dashboard. And on the right, you will see the momentum we are gaining in real-time payments transactions. which through the mid-year 2022 are 10 times higher than the total number of transactions we saw for the entirety of 2020. We are excited about the secular growth opportunities we see across all of our business lines, but one area I'd like to highlight on slide seven is our business banking initiative, which is really starting to gain traction. On the left chart, you'll see that the opportunity we have previously discussed to connect our banking customers with our payments, products, and services and our payments customers with our banking products and services. The chart on the right shows the progress we are making in growing accounts and expanding wallet share. Growth in relationships with both banking and payments products has meaningfully outpaced growth in total relationships over the past 12 months, and it's worth noting we are still in the early innings. Now let me turn the call over to Terry who will provide more detail on the quarter.