U.S. Bancorp moves planned system conversion for MUFG Union Bank deal to 2023

Minneapolis, Minn.-based U.S. Bancorp shifted its planned system conversion for the pending acquisition of MUFG Union Bank NA to the first half of 2023.

The bank expects to close the deal late in the third quarter or early fourth quarter, CFO Terrance Dolan said on a call to discuss second-quarter earnings. The deal is still pending regulatory approval, and closing is still expected to be about 45 days after that, he added.

In May, U.S. Bancorp announced a five-year, $100 billion community benefits plan associated with the deal and moved the expected closing to the second half of the year. The community plan will focus on areas like access to homeownership, supplier diversity, environmental stewardship and commitment, philanthropy and community service, and community development lending and investment.

Addressing deposit betas, or the percentage of rate changes that banks pass on to consumers by paying them more for deposits, Dolan said for the next 125 basis points of rate hikes by the Federal Reserve, U.S. Bancorp expects deposit betas to be in the low-to-mid 30% range.

"Certainly, in terms of what we are experiencing, the deposit betas in the first rate hikes has been lower than what we had expected," Dolan said. "In terms of the industry and where we were starting from, the betas for us at least have been lower."

Additionally, while giving full-year guidance, CEO Andrew Cecere said U.S. Bancorp expects "higher rates to pressure mortgage application volumes more than previously anticipated, which will negatively impact our mortgage banking revenue."

The company expects total net revenue to increase 5.6%, compared with 2021. After revising interest rate assumptions, U.S. Bancorp expects low- to mid-teen growth in taxable equivalent net interest income, compared with the previous estimate of 8% to 11%.