US Bancorp at Goldman Sachs U.S. Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : So I thought I'll start off with your strategic priorities. And I think it's fair to say you've been very consistent and very clear around your strategic priorities over the course of the last eight months, which are focusing on expenses, organic growth, and payments transformation. Can you perhaps give us a scorecard on the progress you feel you have made on those priorities? And as you think about 2026, are those still the priorities that you're focused on?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So we're going to get into all of that. But I think it's a great place start. But before we do that, maybe you can talk a little bit about the state of the economy. Your payment business, I think, gives you some pretty unique and interesting insights into spend trend. So what have you been seeing over the fourth quarter? Is there anything that stands out to you? And maybe you can talk through what you're seeing from a balance sheet perspective across both consumers and corporates? And then just more broadly, how you're thinking about the trajectory of the economy heading into next year?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : And then just briefly, I guess it's -- what is it, eight months as well, Liberation Day? Any updated thoughts around the impact of tariffs at all in terms of Corporates and impact that's had?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So John, maybe turning to you, can you just give us some high-level thoughts on the quarter? Has anything changed from the guidance that you provided at Q3? That would be helpful just to get that out of the way. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 2:20PM, USB.N - US Bancorp at Goldman Sachs U.S. Financial Services Conference

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. And then the bias to the upside on NII. Is there anything specific that's driving that? Is that better loan growth, better deposit pricing, asset repricing? Is there anything --

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So maybe we can talk about fee income. Obviously, very, very important revenue line for you. You're obviously more skewed to fees than many of your peers. And I think, look, the good news is you really are on track for solid growth in the fee line this year. Maybe we can talk about the three pillars. So payments, trust, and capital markets and consumer fees, and how you're thinking about the trajectory of those line items adding into next year?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So let's talk about the Payment business because it's obviously a very, I think, important part of the investment. Fee is a very important business for you. You talked about maintaining margins in the business as well as accelerating growth. [Through] priorities, and I think it would be really helpful just to spend a little bit of time on each. So embedded payments, differentiated distribution, and industry prioritization, I think, are the priorities you've talked about. So maybe you can talk a little bit about those initiatives but also talk about whether or not we should expect to see an inflection point in the revenue growth momentum in the payment business for next year.

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : And then the inflection would be in out years, so '27 beyond is --

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. All right. That's great. So let's talk about net interest income and the balance sheet. Loan growth has been very, very healthy. I think you mentioned upfront, there's a strategic shift towards high-yielding loan categories. Maybe you can talk through what you're seeing in terms of loan demand in the fourth quarter, talk about pipelines heading into 2026. And are there any areas that you are expecting an inflection in terms of loan growth for next year.

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Just as a quick follow-on on loan growth. I mean, obviously, a lot of debate what's going to happen with interest rates in 2026. I mean, how much is -- how much of a driver could lower rates be to incremental demand in some of those categories like commercial real estate next year?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Just one other question on loan growth, which is the with OCC has rescinded the rules around levered lending. Does that, in any way, create additional opportunities for USB that you wouldn't have thought about previously. Does that --

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So let's talk about balance sheet repositioning. You talked about repositioning balance sheet so that you're better positioned for NII growth. So maybe you can talk through some of the measures that you've taken around that and maybe what's left to do. But that is a follow on, I think it would be just helpful to get an update on how you're thinking about the 3% net interest margin target by 2027. Is that still the right target just given all the different moving pieces? And then what sort of progress should we expect to see towards the 3% in 2026? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 2:20PM, USB.N - US Bancorp at Goldman Sachs U.S. Financial Services Conference

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So maybe let's stick with the balance sheet. Let's talk about the funding. So I'm really interested to get your updated thoughts on the competitive environment for deposits especially in the context of the fact that it does feel like there are a number of banks that are leaning into balance sheet growth heading into next year. So have you seen a change in the competitive environment for either consumer or commercial deposits? And look, what are your updated thoughts around deposit betas over the course of the rate cycle and around the upcoming rate cuts that the market is expecting for next year?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So you mentioned operating leverage as one of the initiatives and expenses. And I think, look, you've had, I think, it's eight quarters now of flattish expenses, even though the business has grown, and that's obviously driven quite considerable operating leverage. So a couple of questions. The first is, how are you thinking about the trade-off between driving operating leverage from here versus investment spend? Maybe you can talk a little bit about the efficiency agenda from here, what that looks like where you see the greatest opportunity? And then the third thing is you talked about the $2.5 billion level of investment spend, is that still the right number as you think about next year, just given some of the shifts in the competitive landscape?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So maybe we can segue and talk a little bit about cryptocurrency. Very popular theme at this conference. And I know, it's early days, but I do think you've been ahead of the curve in investing in this and actually talking about it. So I'm very curious to get some of your updated thoughts around client interest and adoption, how you're thinking about the longer-term opportunity set. And then the other thing I just kind of weave in there is look, tokenization seems to be coming up more and more. So the extent to which you think that is something that you're focused on. I'd be interested in hearing any thoughts you have on that as well.

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : I was just going to ask, on the use cases on the corporate side is one of the biggest use cases cross-border payments. Is that where you're seeing most of the interest?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So let's talk about credit. Is there anything that you've seen of note in terms of early delinquencies? Are there any portfolios you're monitoring more closely today? And then it would also be helpful just to get an update on how you're thinking about NDFI. Obviously, it's a huge focus a few months ago. Have you seen anything since then? And do you think what happened back in October is indicative of growing stress upstream and C&I portfolios?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So let's talk about capital. Your CET1 10.9%, you said [CAT 2], won't happen until 2027 at the earliest. Is 10% still the rate target? And what would it take for you to step up buybacks from the current levels?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : And then M&A, another very popular theme at the conference. Maybe you can just talk through about the potential for nonbank acquisitions or bolt-on deals that make -- that could make sense for you and how you're thinking about really redeploying the capital into nonorganic growth, if that is something that you're spending a lot of time on. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 2:20PM, USB.N - US Bancorp at Goldman Sachs U.S. Financial Services Conference

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So we've got a few minutes left. So two questions. The first is, maybe we can talk about your medium-term targets, high-teens ROTC efficiency ratio in the high 50s. You're operating within the ranges, what would it take for you to operate towards the higher end of those ranges?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : So to be clear, you think you can get to the higher end without any real change in terms of economic activity or the growth rate or the rate environment based on the initiatives that you currently have?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Okay. So a couple of minutes left. Eight months, as you said. I rounded it up to a year, but it is eight months. I know you've spent a lot of time with investors, which I think is greatly appreciated, by the way. I am very curious as to where you see the biggest disconnect. When you talk to investors about either the concerns they have or around the investment case for USB relative to what you now think eight months into the job. What do you think is most misunderstood?

Question: Richard Ramsden - Goldman Sachs Group Inc - Analyst : Yeah. I think that's a great place to end it on. So thanks so much for joining us. I very much hope you come back and join us next year.