U.S. Bancorp

Welcome to the U.S. Bancorp first quarter 2023 earnings conference call. Following a review of the results, there will be a formal question and answer session. If you'd like to ask a question, please press 1 then 0 on your phone. If you'd like to withdraw, please press 1 then 0 again. 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 conference call over to George Anderson, Senior Vice President and Director of Investor Relations for U.S. Bancorp.

Thank you, Brad, and good morning, everyone. With me today are Andy Cesari, our Chairman, President, and Chief Executive Officer, and Terry Dolan, our Vice Chair and Chief Financial Officer. During the prepared remarks, Andy and Terry will be referencing a slide presentation. A copy of the 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 can materially change our current forward-looking assumptions are described on page two of today's presentation, in our press release, our Form 10-K, and in subsequent reports on file with the SEC. Following their prepared remarks, Andy and Terry will take any questions that you have. I will now turn the call over to Andy.

Thanks, George. Good morning, everyone, and thank you for joining our call. I'll begin on slide three. In the first quarter, we reported earnings per share of $1.04, which includes 12 cents per share of charges related to the MUFG Union Bank acquisition. Excluding those notable items, earnings per share was $1.16. We achieved record net revenue of $7.2 billion for the quarter. Following our successful close of Union Bank acquisition in December of 2022, first quarter results reflected a full year's benefit of the acquired franchise, continued growth in earning assets, net interest margin expansion, and higher non-interest income led by stronger commercial product and mortgage banking fee revenues. Slide four details are reported and adjusted income statement results, as well as the end of period and average balances and other performance metrics. On the right, you'll see the credit quality remains strong, but is starting to normalize as expected. Our charge-off ratio of 30 basis points as adjusted is well below pre-COVID levels and reflective of our disciplined risk management culture. The CET1 ratio, our binding regulatory constraint, was 8.5% at the end of the quarter and is consistent with our target capital ratio. We expect to exceed 9.0% later this year as we accrete capital back quickly over the next few quarters and continue to focus on risk-weighted asset optimization initiatives. Slide 5 provides key performance metrics. Excluding notable items, our return on average asset was 1.15%, and our return on average common equity was 15.7%. Our return on tangible common equity was 24.3% on an adjusted basis. Slide six provides both a high-level timeline and general update on our planned conversion of Union Bank. Integration efforts have been progressing well, and we remain on track for a successful main systems conversion over the upcoming Memorial Day weekend. We anticipate a full transition of all accounts by the second half of the year. Turning to slide seven. The industry disruption early in March has reinforced the importance of maintaining a well-diversified business with an appropriate risk profile. We maintain a resilient and diversified deposit base. Over half of our deposits are insured, and 80% of the uninsured deposits are retail or operational in nature. Our diversified funding sources, ample liquidity levels, and strong credit quality supported by disciplined underwriting standards are all hallmarks of our approach to risk management. I'll turn the call over to Terry who can provide more detail on the balance sheet strength and the first quarter earnings results.