Downey Savings & US Bank Downey Savings & US Bank
Downey Savings & US Bank Downey Savings & US Bank
Downey Savings & US Bank Downey Savings & US Bank
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The Future Looks Brighter with <strong>US</strong><br />
November 23, 2008<br />
<strong>Downey</strong> <strong>Savings</strong><br />
&<br />
U.S. <strong>Bank</strong><br />
Growing together in in<br />
California
The Future Looks Brighter with <strong>US</strong><br />
Welcome!<br />
Yes, the future looks<br />
brighter with us
The Future Looks Brighter with <strong>US</strong><br />
Today….<br />
�About U.S. <strong>Bank</strong><br />
�About You<br />
�About What’s Going to<br />
Happen Next
The Future Looks Brighter with <strong>US</strong><br />
About U.S. <strong>Bank</strong>
The Future Looks Brighter with <strong>US</strong><br />
U.S. Bancorp Businesses<br />
Regional<br />
Consumer and<br />
Business <strong>Bank</strong>ing<br />
Wealth Management<br />
National<br />
Wholesale<br />
<strong>Bank</strong>ing<br />
Trust Services<br />
Global<br />
Payments
The Future Looks Brighter with <strong>US</strong><br />
U.S. Bancorp Businesses<br />
3Q08 Dimensions<br />
• Asset Size $247 billion<br />
• Deposits $140 billion<br />
• Loans $170 billion<br />
• Customers 14.9 million<br />
• NYSE Traded <strong>US</strong>B<br />
• Market Capitalization * $39 billion<br />
• Founded 1863<br />
• <strong>Bank</strong> Branches 2,556<br />
• ATMs 4,903<br />
* Market Value as of November 21, 2008<br />
Regional<br />
Consumer and Business <strong>Bank</strong>ing<br />
Wealth Management<br />
National<br />
Wholesale <strong>Bank</strong>ing<br />
Trust Services<br />
Global<br />
Payments
The Future Looks Brighter with <strong>US</strong><br />
Total Assets and Market Value<br />
Assets Market Value<br />
U.S.<br />
Rank Company $Billions<br />
1 J.P. Morgan $2,251<br />
2 Citigroup 2,050<br />
3 <strong>Bank</strong> of America 1,831<br />
4 Wachovia 764<br />
5 Wells Fargo 622<br />
6 U.S. Bancorp 247<br />
7 SunTrust 175<br />
8 PNC 146<br />
9 National City 145<br />
10 Regions 144<br />
Peer <strong>Bank</strong>s (plus C & JPM)<br />
Source: company reports & FactSet<br />
Assets as of Sept 30, 2008<br />
Market Value as of Nov 21, 2008<br />
U.S.<br />
Rank Company $Billions<br />
1 J.P. Morgan $87<br />
2 Wells Fargo 84<br />
3 <strong>Bank</strong> of America 56<br />
4 U.S. Bancorp 39<br />
5 Citigroup 26<br />
6 PNC 16<br />
7 BB&T 13<br />
8 Wachovia 9<br />
9 SunTrust 9<br />
10 Regions 5
The Future Looks Brighter with <strong>US</strong><br />
Peer <strong>Bank</strong>s<br />
Washington Mutual<br />
Wells Fargo<br />
Comerica<br />
U.S. Bancorp<br />
KeyCorp<br />
Fifth Third<br />
<strong>Bank</strong> of America<br />
Regions<br />
National City<br />
PNC<br />
BBT<br />
SunTrust<br />
Wachovia
The Future Looks Brighter with <strong>US</strong><br />
Performance Metrics<br />
3Q08 YTD<br />
Peer <strong>US</strong>B<br />
<strong>US</strong>B Median Rank<br />
Return on Assets 1.45% 0.51% 1<br />
Return on Common Equity 16.6% 4.9% 1<br />
Efficiency Ratio 46.3% 62.1% 1<br />
Net Interest Margin 3.60% 3.30% 3<br />
Source: company reports<br />
Peer <strong>Bank</strong>s: BAC, BBT, CMA, FITB, KEY,<br />
NCC, PNC, RF, STI, <strong>US</strong>B, WB and WFC
The Future Looks Brighter with <strong>US</strong><br />
Profitability<br />
Revenue Mix<br />
By Business Line<br />
Wealth<br />
Mgmt<br />
13%<br />
Wholesale<br />
19%<br />
Payments<br />
27%<br />
Consumer<br />
41%<br />
3Q08 YTD<br />
Excluding securities gains (losses) net<br />
* Core fee income excludes $492 million VISA gain<br />
55.0%<br />
50.0%<br />
45.0%<br />
40.0%<br />
35.0%<br />
Fee Income / Total Revenue<br />
44.1%<br />
46.5%<br />
50.2%<br />
51.4%<br />
51.6%<br />
49.5%<br />
2004 2005 2006 2007 2008<br />
YTD<br />
Reported<br />
Core *
The Future Looks Brighter with <strong>US</strong><br />
Revenue Growth - Core<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
1,000<br />
0<br />
3.3%<br />
$3,562<br />
$ in millions; taxable-equivalent basis<br />
Core basis excludes the following significant items:<br />
4Q07: valuation losses (107)<br />
1Q08: Visa gain/stock sale 492, valuation losses (296)<br />
8.7%<br />
$3,681<br />
8.6%<br />
$3,678<br />
9.8%<br />
$3,877<br />
7.2% 13.3% 7.3% 4.6% (0.4%)<br />
0.7% 4.0% 9.8% 15.6% 16.7%<br />
3Q07 4Q07 1Q08 2Q08 3Q08<br />
Net Interest Income Noninterest Income<br />
7.7%<br />
$3,829<br />
3Q08 lease<br />
residual losses<br />
= $84 million
180<br />
160<br />
140<br />
120<br />
100<br />
The Future Looks Brighter with <strong>US</strong><br />
Loan and Deposit Growth<br />
$ in billions<br />
4.3%<br />
$147.5<br />
(0.7%)<br />
$119.1<br />
5.4%<br />
$151.5<br />
Average Balances<br />
Year-Over-Year Growth 12.9%<br />
3.7%<br />
$125.4<br />
7.3%<br />
$155.2<br />
8.4%<br />
$130.9<br />
12.0%<br />
$163.1<br />
3Q07 4Q07 1Q08 2Q08 3Q08 3Q08 End<br />
Loans Deposits<br />
14.1%<br />
$135.8<br />
$166.6<br />
12.1%<br />
$133.5<br />
14.0%<br />
$169.9<br />
13.7%<br />
$139.5
The Future Looks Brighter with <strong>US</strong><br />
Capital Ratios<br />
15.0%<br />
10.0%<br />
5.0%<br />
0.0%<br />
8.6%<br />
13.1%<br />
8.2%<br />
12.5%<br />
12.6%<br />
12.2%<br />
8.8% 8.3% 8.5%<br />
12.3%<br />
2004 2005 2006 2007 3Q08<br />
Source: SNL<br />
Peer <strong>Bank</strong>s: BAC, BBT, CMA, FITB, KEY,<br />
NCC, PNC, RF, STI, <strong>US</strong>B, WB and WFC<br />
Tier 1 Capital Ratio Total Risk-Based Capital Ratio<br />
Target = 12.0%<br />
Target = 8.5%<br />
Peer Median = 8.3%
The Future Looks Brighter with <strong>US</strong><br />
Credit Quality<br />
1.25%<br />
1.00%<br />
0.75%<br />
0.50%<br />
0.25%<br />
0.00%<br />
1.07%<br />
0.98%<br />
0.64%<br />
0.60%<br />
0.52%<br />
0.47%<br />
0.41%<br />
0.39%<br />
0.54%<br />
0.45%<br />
2003 2004 2005 2006 2007<br />
NCO Ratio = net charge-offs<br />
annualized as a % of average loans<br />
NPA Ratio = nonperforming assets to<br />
total loans and other real estate<br />
Annual 1.25%<br />
Quarterly<br />
1.00%<br />
0.75%<br />
0.50%<br />
0.25%<br />
0.00%<br />
0.54% 0.59%<br />
0.43%<br />
Net Charge-off Ratio NPA Ratio<br />
0.45%<br />
0.76%<br />
0.53%<br />
0.98%<br />
0.68%<br />
1.19%<br />
0.88%<br />
3Q07 4Q07 1Q08 2Q08 3Q08
800%<br />
600%<br />
400%<br />
200%<br />
The Future Looks Brighter with <strong>US</strong><br />
Credit Quality - Peer Comparison<br />
0%<br />
Growth in<br />
Net Charge-offs<br />
3Q08 vs 3Q07<br />
150%<br />
<strong>US</strong>B Peer <strong>Bank</strong>s<br />
Source: company reports<br />
Peer <strong>Bank</strong>s: BAC, BBT, CMA, FITB, KEY,<br />
NCC, PNC, RF, STI, <strong>US</strong>B, WB and WFC<br />
High<br />
Median<br />
Low<br />
636%<br />
234%<br />
124%<br />
400%<br />
300%<br />
200%<br />
100%<br />
0%<br />
Growth in<br />
Nonperforming Assets<br />
3Q08 vs 3Q07<br />
133%<br />
High<br />
Median<br />
Low<br />
383%<br />
196%<br />
98%<br />
<strong>US</strong>B Peer <strong>Bank</strong>s
The Future Looks Brighter with <strong>US</strong><br />
YTD Performance Summary<br />
� Industry-leading profitability<br />
� Diversified mix of fee-based businesses<br />
� Accelerating loan and deposit growth<br />
� Revenue growth driven by increases in both net<br />
interest income and fees<br />
� Solid growth in core operating income<br />
� Strong capital position
The Future Looks Brighter with <strong>US</strong><br />
Navigating the Current Environment<br />
<strong>US</strong>B is concentrating on:<br />
� Growth initiatives<br />
� High quality customer<br />
service<br />
� Employee engagement<br />
� Continued prudent risk<br />
management<br />
<strong>US</strong>B is not distracted by:<br />
� Downsizing or eliminating<br />
business segments<br />
� Expense reduction<br />
initiatives<br />
� Funding challenges
The Future Looks Brighter with <strong>US</strong><br />
U.S. <strong>Bank</strong> Investing for Growth<br />
�Employee Engagement<br />
�National Media Campaign<br />
�Customer Service<br />
�Branch Network
The Future Looks Brighter with <strong>US</strong><br />
Employee Engagement…<br />
It’s Important to <strong>US</strong>!
21<br />
National Media Campaign<br />
The Future Looks Brighter with <strong>US</strong>!<br />
� Multimedia advertising campaign<br />
focused on the core strength and<br />
stability of U.S. Bancorp<br />
� Campaign debuted August 1 with full<br />
page ad in The Wall Street Journal<br />
� Campaign expanded on September 1<br />
to national and local television, radio<br />
and print<br />
� Scheduled to run through December
22<br />
National Media Campaign
The Future Looks Brighter with <strong>US</strong><br />
Building Momentum in Customer Loyalty<br />
Retail Branch Customer Loyalty Scores By Quarter<br />
with Trend Line (Linear Regression)<br />
59.0% 60.0% 61.0% 62.0% 62.0% 62.0% 63.0% 64.0% 64.0% 64.0% 65.0% 65.7% 65.2% 64.6%<br />
2Q<br />
2004<br />
3Q<br />
2004<br />
4Q<br />
2004<br />
1Q<br />
2005<br />
2Q<br />
2005<br />
3Q<br />
2005<br />
4Q<br />
2005<br />
1Q<br />
2006<br />
2Q<br />
2006<br />
3Q<br />
2006<br />
4Q<br />
2006<br />
Q1<br />
2007<br />
Q2<br />
2007<br />
03<br />
2007<br />
67.3% 67.9% 68.5% 68.8%<br />
Q4<br />
2007<br />
Q1<br />
2008<br />
Loyal customers are those who give the bank a 9 or 10 score on all three questions:<br />
overall satisfaction, willingness to recommend and<br />
likely to continue doing business with U.S. <strong>Bank</strong><br />
Source: Monthly Customer Loyalty Tracking<br />
Q2<br />
2008<br />
Q3<br />
2008
The Future Looks Brighter with <strong>US</strong><br />
Branch Distribution Network<br />
189<br />
6.7%<br />
561<br />
19.8%<br />
185<br />
6.5%<br />
60<br />
2.1%<br />
25<br />
0.9%<br />
90<br />
3.2% 14<br />
0.5%<br />
75<br />
2.7%<br />
45<br />
1.6%<br />
150<br />
5.3%<br />
Source: SNL<br />
Number of Branches, % of <strong>US</strong>B Branches<br />
24<br />
0.8%<br />
18<br />
0.6%<br />
60<br />
2.1%<br />
30<br />
1.1%<br />
134<br />
4.2%<br />
105<br />
3.7%<br />
218<br />
7.7%<br />
46<br />
1.6%<br />
119<br />
4.3%<br />
124<br />
4.4%<br />
24<br />
332<br />
0.8%<br />
11.7%<br />
124 4.4%<br />
78 2.8%<br />
State Rank<br />
1st : OR, NE, IA,<br />
MO,<br />
2nd : MN, CO, ID,<br />
KY, WI<br />
3rd : WA, ND
25<br />
Expanding our Branch Network<br />
Source: SNL<br />
Weighted average<br />
Branch Count<br />
San Francisco<br />
<strong>Downey</strong> <strong>Downey</strong> PFF<br />
CA AZ CA AZ CA Total<br />
Traditional 216 18 81 4 38 357<br />
In-store 137 52 89 1 0 279<br />
Total 353 70 170 5 38 636<br />
San Jose<br />
Los Angeles<br />
San Diego<br />
CA<br />
Fresno<br />
Bakersfield<br />
Tempe<br />
PFFB Branches<br />
DSL Branches<br />
<strong>US</strong>B Branches<br />
AZ<br />
Phoenix<br />
Mes a<br />
Tucson
26<br />
U.S. Bancorp Foundation – Charitable Giving<br />
$19.9 million in charitable contributions in 2007<br />
� Funding Priorities:<br />
– Artistic and<br />
Cultural Enrichment<br />
– Economic Opportunity<br />
– Education<br />
– United Way/Human<br />
Services<br />
Matching<br />
Gifts<br />
7%<br />
Arts and<br />
Culture<br />
17%<br />
Misc.<br />
4%<br />
United<br />
Way/Human<br />
Services<br />
27%<br />
Economic<br />
Opportunity<br />
24%<br />
Education<br />
21%
27<br />
2007 Foundation Contributions<br />
� California: $2,559,250<br />
� Remaining U.S. <strong>Bank</strong><br />
Retail Markets:<br />
$17,347,502<br />
� Total Contributions:<br />
$19,906,752<br />
California 13%<br />
Remaining<br />
Markets 87%
28<br />
2007 Foundation Contributions – California<br />
� Bay Area: $630,000<br />
� Los Angeles: $458,000<br />
� Orange/Inland: $235,000<br />
� Sacramento: $400,000<br />
� San Diego: $380,000<br />
� Statewide: $180,000<br />
� Community Market: $230,000<br />
� Matching Gifts: $46,250<br />
Total Contributions: $2,559,250<br />
Statewide 7%<br />
San Diego<br />
15%<br />
Community<br />
Market 9%<br />
Sacramento<br />
16%<br />
Matching<br />
Gifts 2%<br />
Orange/Inland<br />
9%<br />
Bay Area 24%<br />
Los Angeles<br />
18%
The Future Looks Brighter with <strong>US</strong><br />
About YOU!
The Future Looks Brighter with <strong>US</strong>
The Future Looks Brighter with <strong>US</strong><br />
Questions about your employment with <strong>US</strong><br />
Q: Will my job change?<br />
A: For now it is business as usual<br />
– In the months ahead we will integrate<br />
systems, products and services, all of which<br />
may create some change.<br />
– Even with changes resulting from the<br />
integration, many jobs will remain<br />
essentially the same.
The Future Looks Brighter with <strong>US</strong><br />
Questions about your employment with <strong>US</strong><br />
– All jobs will be evaluated based on the<br />
needs of the business and decisions will<br />
be made and communicated during our<br />
staffing process.<br />
– Details on staffing process will be<br />
provided in the next few weeks.
The Future Looks Brighter with <strong>US</strong><br />
Questions about your employment with <strong>US</strong><br />
Q: Will employment changes occur at closing or at<br />
conversion ?<br />
A: Closing occurred this last Friday. Required changes<br />
are in process and largely related to financial<br />
operations. Timing of employment changes will be<br />
determined during the staffing process. Some will<br />
occur before conversion, however majority will be<br />
tied to conversion.
The Future Looks Brighter with <strong>US</strong><br />
Questions about your employment with <strong>US</strong><br />
Q: Will there be job eliminations and if so, how many?<br />
A: Decisions on job eliminations will be made during the<br />
staffing process that begins immediately and is<br />
anticipated to complete within 30 – 45 days.<br />
Communications of decisions occur during this<br />
period.<br />
Customer contact employees will have ongoing<br />
positions
The Future Looks Brighter with <strong>US</strong><br />
Questions about your employment with <strong>US</strong><br />
Q: How will my pay and incentive plan be<br />
affected?<br />
A: There will be no adverse changes to<br />
salaries. Over time, we will transition all<br />
employees to U.S. <strong>Bank</strong> incentive plans.
The Future Looks Brighter with <strong>US</strong><br />
Questions about your employment with <strong>US</strong><br />
Q: How are my benefits affected?<br />
A: Current Health and Welfare and 401k<br />
benefits will continue until we transition<br />
to the U.S. <strong>Bank</strong> plans.
The Future Looks Brighter with <strong>US</strong><br />
Questions about your employment with <strong>US</strong><br />
Q: What will happen to my vacation?<br />
A: Continue with your planned vacation for 2008<br />
(including manager approval). We are<br />
reviewing your vacation carryover policies<br />
and will be communicating decisions pending<br />
that review.<br />
For 2009 all employees will transition to the<br />
U.S. <strong>Bank</strong> vacation policies.
The Future Looks Brighter with <strong>US</strong><br />
Questions about your employment with <strong>US</strong><br />
Q: Will my years of service be recognized<br />
by U.S. <strong>Bank</strong>?<br />
A: Your years of service will carry over to<br />
U.S <strong>Bank</strong> for purposes of vacation and<br />
other health and welfare benefits.
The Future Looks Brighter with <strong>US</strong><br />
What Will<br />
Happen Next
The Future Looks Brighter with <strong>US</strong><br />
What’s Next…<br />
� Business as usual<br />
� Same process and procedures<br />
� Same offices, open same hours<br />
� Same products (unless otherwise noted)<br />
� Name Change coming…<br />
– Comprehensive and impactful<br />
– Plenty of advance notice
The Future Looks Brighter with <strong>US</strong><br />
You’ll be the first to<br />
know…<br />
Stay focused on your customers
The Future Looks Brighter with <strong>US</strong><br />
The Power<br />
of
The Future Looks Brighter with <strong>US</strong><br />
The Power<br />
of<br />
YOU is<br />
The Power<br />
of
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