U.S. Bancorp Barclays 24th Annual Global Financial Services Conference

Glad to be here. Great.

Well, thank you, Jason. Very nice to be here. Thank you for recognizing the progress in our results. It feels really rewarding to see the bank start to deliver financials that are consistent with our potential. When I stepped into my role April last year, I did inherit a very attractive franchise. Largely, the mix of businesses is the fee-heavy businesses, is very differentiating, it's very distinctive. The products were good. We had invested a lot in digital, and the customer base was very strong, especially with the Union Bank acquisition in California. There was just a very attractive customer base to work on. The fundamentals were all in place. Our opportunity was just good, consistent execution. First year, we credit a lot of the inflection in the results to just urgency and pace.

The first thing we did was to focus our efforts on three sharp strategic priorities. That was expense management, organic growth, and payments transformation, and did some meaningful shifts in resource allocations to support those priorities. A lot of organizational changes. We elevated some revenue-facing roles in the structure of the company. There has been a very meaningful refresh of the talent. Almost a quarter of the top 200 roles are new to bank or new to roles. Higher aspirations, flatter corporate center processes, a more leveraged compensation plan. All of that collectively picked up more consistent financial results. That was the first year. We are now four quarters operating within our medium-term financial guidance, and the first year has closed the valuation gap with our peers. Of course, a lot more upside, but a good start in the first year.

What has not gone to plan or disappointing, the biggest would be the mortgage and auto businesses. They are almost 10% of our company, so very large businesses for us. Our base case was to see some moderation in rates and some pick-up in that activity, and the demand there is very muted. So those have probably underperformed the base case in the last year. For the rest, what has gone exceptionally well is expense management. We have taken almost 5-plus points out of our efficiency ratio in the last two years. Fee growth inflection. We are at double digits over the last quarters, and those two pillars have surprised on the positive and quite a lot of runway going forward. So going forward, they continue to be very strong parts of the agenda. What gets added on in year 2 and beyond, Jason, are two other areas.

The first is NII growth. We are very focused on our consumer and small business franchise. That improves our funding mix, our deposit mix, and we have seen some good results there. It will be another quarter of record consumer deposits. On the loan side, we have focused very much on C&I and credit card growth, so that improves the loan mix. Collectively, they create both NII growth and NIM improvement. So that is an important part of the priority this year and beyond. The second, broadly, is making sure we get full leverage out of the twin technology shocks of AI and stablecoins. Those are transformative levers for the industry, and we want to be very front-footed and ahead in terms of creating enduring success.

Then I think all of the organizational health things that we started in the first year, you know, these things take time, and they build a real high-performance culture. As I think about my second year and beyond, keep the momentum with expenses and fees, really inflect NII, just get very front-footed with AI and stablecoin, and just create a really high-performing bank.

First, I am most excited that it is a fee complex, and it is a very marquee fee complex. We have four fee categories. Payments that we are known for, the trust and investments, which is very good for us. Capital markets, and then the consumer fees, which is very traditionally seen in most banks. These are attractive, these are differentiated, and very difficult to replicate, either through organic growth or through acquisitions. We think it will be a differentiating feature for a long time. The beauty of these, the fee complex, is that they do stabilize your earnings because there is a diversification benefit to them. The underlying growth trends are faster than GDP or population growth, which is really what the banking side gets anchored around. They also create very sticky relationships.

Really that is a strategic focus for us, is to keep the diversification of the complex and inch up even beyond the 44% that we see. The big two areas, though, is capital markets and payments. Capital markets, just because we are about 7, 8% of revenue. We should be 10, 11%. BTIG was a very strong start, and we expect to grow into the balance sheet we are already deploying. This is not more use of balance sheet that could inflect it even more. But right now, we are just trying to get fair share of the balance sheet that is being deployed. The second is payments. That was one of my first priorities, even in my president's role. And we are beginning to see the results inflect up every quarter. The growth rates are inching up. It is a long game, though.

You have to wait for contracts to come to you. Even on the credit card side, you have to wait for your marketing offers to sort of deplete out of the upfront cost. We are very pleased with those, and those two will create sort of the fee engines going forward. Other categories too, but they tend to be more ballast-like and steady.