U.S. Bancorp

Welcome to the U.S. Bancorp first quarter 2024 earnings conference call. Following a review of the results, there will be a formal question and answer session. If you would like to ask a question, please press star then the number one on your phone. If you wish to withdraw your question, please press star then one again. This call will be recorded and available for replay beginning today at approximately 8 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, Rochelle, and good morning, everyone. Today, I'm joined by our Chairman, President, and Chief Executive Officer, Andy Cesari, our Vice Chair and Chief Administration Officer, Terry Dolan, and Senior Executive Vice President and Chief Financial Officer, John Stern. Together with some initial prepared remarks, Andy and John will be referencing a slide presentation. A copy of the presentation, our earnings release, and supplemental analyst schedules are on our website at usbank.com. Please note 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 2 of today's presentation, our press release, our Form 10-K, and in subsequent reports on file with the SEC. Following our prepared remarks, Andy, Terry, and John 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 78 cents, which included 12 cents per share of notable items. Excluding notables, earnings per share totaled 90 cents. Our balance sheet remains strong. We are maintaining our through-the-cycle underwriting discipline and seeing the benefits of our multi-year investments in digital, technology, and payments ecosystem in the form of strong fee growth across our business lines. Importantly, we continue to accrete capital this quarter. Our CET1 ratio ended the period at 10.0%, and our return on tangible common equity ratio was 17.4% on an adjusted basis. Slide four provides additional performance metrics on both a reported and adjusted basis. On slide five, I'll provide some additional high-level observations for the quarter. Starting with the balance sheet, credit quality metrics continue to develop in line with our expectations, and we achieved healthy growth in tangible book value per share on both the link quarter and year-over-year basis. Loan and deposit growth remains under pressure for the industry, and that dynamic impacted our net interest income this quarter. Our NII on a taxable equivalent basis of approximately $4 billion was within our guidance, albeit on the lower end of the range. We are seeing good opportunities for loan growth in targeted portfolios, and notably, we continue to see consumer deposit growth despite the impact of QT on industry deposit levels. Over the past few weeks, the outlook for potential rate cuts in 2024 has meaningfully changed as long-term rates have backed up. Client behavior across the industry is adjusting in response to the potential higher for longer interest rate environment that has impacted our deposit mix and pressure deposit costs. As a result, we now expect our NII for the full year to be lower than anticipated. However, we are taking a closer look at our expense base given these near-term NII headwinds and plan to take actions to mitigate the impact of lower than expected NII to our overall profitability. John will go into more details on these topics, but importantly, we believe this is a near-term phenomenon. Turning to slide six, we continue to feel good about the momentum across our differentiated fee businesses. Fee income represents about 40% of our total net revenue, which stands to position us well in a lower interest rate environment. Overall, we are encouraged by our current trends in our client growth and penetration rates as evidenced by the continued strength we have seen across many of our fee revenue businesses this quarter. Slide 7 provides an update on our differentiated payments ecosystem. Over the past few years, we have made good progress to both expand our business banking and payments relationships, and grow related revenue associated with these relationships. You may recall we discussed an opportunity to grow small business relationships by 15% to 20% and related revenue by 25% to 30% a few years ago. As you can see on this slide, we're making good progress and see even greater opportunity to further expand these relationships and related revenue in the medium term. Let me now turn it over to John, who will provide more detail on the quarter as well as provide forward-looking guidance. Thanks, Andy.