UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 22, 2014
U.S. BANCORP
(Exact name of registrant as specified in its charter)
1-6880
(Commission File Number)
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DELAWARE |
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41-0255900 |
(State or other jurisdiction |
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(I.R.S. Employer Identification |
of incorporation) |
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Number) |
800 Nicollet Mall
Minneapolis, Minnesota 55402
(Address of principal executive offices and zip code)
(651) 466-3000
(Registrants telephone number, including area code)
(not applicable)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
¨ |
Written communications pursuant to Rule 425 Under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 22, 2014 , U.S. Bancorp (the Company) issued a press release reporting quarter ended September 30, 2014 results,
and posted on its website its 3Q14 Earnings Conference Call Presentation, which contains certain additional historical and forward-looking information relating to the Company. The press release is included as Exhibit 99.1 hereto and is incorporated
herein by reference. The information included in the press release is considered to be filed under the Securities Exchange Act of 1934. The 3Q14 Earnings Conference Call Presentation is included as Exhibit 99.2 hereto and is incorporated
herein by reference. The information included in the 3Q14 Earnings Conference Call Presentation is considered to be furnished under the Securities Exchange Act of 1934. The press release and 3Q14 Earnings Conference Call Presentation
contain forward-looking statements regarding the Company and each includes a cautionary statement identifying important factors that could cause actual results to differ materially from those anticipated.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
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99.1 |
Press Release issued by U.S. Bancorp on October 22, 2014 , deemed filed under the Securities Exchange Act of 1934. |
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99.2 |
3Q14 Earnings Conference Call Presentation, deemed furnished under the Securities Exchange Act of 1934. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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U.S. BANCORP |
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By /s/ Craig E. Gifford |
Craig E. Gifford |
Executive Vice President and Controller |
DATE: October 22, 2014
Exhibit 99.1
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News Release |
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Contacts: |
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Dana Ripley |
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Sean OConnor |
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Media |
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Investors/Analysts |
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(612) 303-3167 |
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(612) 303-0778 |
U.S. BANCORP REPORTS $1.5 BILLION OF NET INCOME FOR THE THIRD QUARTER 2014
Return on Average Assets of 1.51 percent and Return on Average Common Equity of 14.5 percent
Year-over-Year Positive Operating Leverage
Returned 78 percent of Third Quarter Earnings to Shareholders
MINNEAPOLIS,
October 22, 2014 U.S. Bancorp (NYSE: USB) today reported net income of $1,471 million for the third quarter of 2014, or $.78 per diluted common share, compared with $1,468 million, or $.76 per diluted common share, in the third
quarter of 2013. Highlights for the third quarter of 2014 included:
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Growth in average total loans of 6.3 percent over the third quarter of 2013 (5.9 percent excluding the Charter One franchise acquisition in late
June 2014 and 7.7 percent excluding covered loans) and 1.4 percent on a linked quarter basis (1.1 percent excluding the Charter One acquisition and 1.7 percent excluding covered loans) |
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Growth in average total commercial loans of 13.6 percent over the third quarter of 2013 and 3.1 percent over the second quarter of 2014
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Growth in average total commercial real estate loans of 6.1 percent over the third quarter of 2013 and .8 percent over the second quarter of
2014 |
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Growth in average commercial and commercial real estate commitments of 12.9 percent year-over-year and 3.2 percent over the prior quarter
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Strong new lending activity of $56.0 billion during the third quarter, including: |
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$36.1 billion of new and renewed commercial and commercial real estate commitments |
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$2.9 billion of lines related to new credit card accounts |
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$17.0 billion of mortgage and other retail loan originations |
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Net interest income growth over the third quarter of 2013 and second quarter 2014 |
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Average earning assets growth of 10.0 percent year-over-year and 3.1 percent linked quarter |
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Continued strong growth in lower cost core deposit funding on a year-over-year and linked quarter basis |
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
2
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Net interest margin of 3.16 percent for the third quarter of 2014, compared with 3.27 percent for the second quarter of 2014, and 3.43 for the
third quarter of 2013 |
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Decline in net charge-offs of 3.7 percent on a linked quarter basis. Provision for credit losses was $25 million less than net charge-offs
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Allowance for credit losses to period-end loans was 1.80 percent at September 30, 2014 |
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Annualized net charge-offs to average total loans ratio was .55 percent |
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Decrease in nonperforming assets on both a linked quarter and year-over-year basis |
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Nonperforming assets (excluding covered assets) declined 6.2 percent from the third quarter of 2013 |
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Growth in average total deposits of 7.4 percent over the third quarter of 2013 (5.5 percent excluding the Charter One acquisition) and 3.3
percent on a linked quarter basis (1.7 percent excluding the Charter One acquisition) |
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Average low cost deposits, including noninterest-bearing and total savings deposits, grew by 12.2 percent year-over-year and 4.2 percent on a
linked quarter basis |
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Industry-leading performance ratios, including: |
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Return on average assets of 1.51 percent |
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Return on average common equity of 14.5 percent |
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Efficiency ratio of 52.4 percent |
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Capital generation continued to reinforce capital position and returns. Ratios at September 30, 2014, were: |
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Basel III transitional standardized approach: |
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Common equity tier 1 capital ratio of 9.7 percent |
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Tier 1 capital ratio of 11.3 percent |
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Total risk-based capital ratio of 13.6 percent |
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Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach of 9.0 percent and for
the Basel III fully implemented advanced approaches of 11.8 percent |
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Returned 78 percent of third quarter earnings to shareholders through dividends and the buyback of 16 million common shares
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(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
3
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EARNINGS SUMMARY |
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Table 1 |
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($ in millions, except per-share data) |
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3Q 2014 |
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2Q 2014 |
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3Q 2013 |
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Percent Change 3Q14 vs 2Q14 |
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Percent Change 3Q14 vs 3Q13 |
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YTD 2014 |
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YTD 2013 |
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Percent Change |
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Net income attributable to U.S. Bancorp |
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$ |
1,471 |
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$ |
1,495 |
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$ |
1,468 |
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(1.6 |
) |
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.2 |
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$ |
4,363 |
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$ |
4,380 |
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(.4 |
) |
Diluted earnings per common share |
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$ |
.78 |
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$ |
.78 |
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$ |
.76 |
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2.6 |
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$ |
2.29 |
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$ |
2.25 |
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1.8 |
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Return on average assets (%) |
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1.51 |
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1.60 |
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1.65 |
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1.56 |
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1.67 |
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Return on average common equity (%) |
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14.5 |
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15.1 |
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15.8 |
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14.7 |
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16.0 |
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Net interest margin (%) |
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3.16 |
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3.27 |
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3.43 |
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3.26 |
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3.45 |
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Efficiency ratio (%) (a) |
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52.4 |
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53.1 |
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52.4 |
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52.8 |
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51.6 |
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Tangible efficiency ratio (%) (b) |
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51.3 |
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52.1 |
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51.3 |
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51.8 |
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50.5 |
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Dividends declared per common share |
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$ |
.245 |
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$ |
.245 |
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$ |
.230 |
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6.5 |
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$ |
.720 |
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$ |
.655 |
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9.9 |
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Book value per common share (period-end) |
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$ |
21.38 |
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$ |
20.98 |
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$ |
19.31 |
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1.9 |
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10.7 |
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(a) |
Efficiency ratio excluding notable items of 51.3% for 2Q 2014 is computed as noninterest expense of $2,753 million less FHA DOJ settlement of $200 million divided by
total net revenue of $5,188 million less Visa, Inc. Class B common stock sale of $214 million. |
(b) |
Computed as noninterest expense divided by the sum of net interest income on a taxable-equivalent basis and noninterest income excluding net securities gains (losses)
and intangible amortization. |
Net income attributable to U.S. Bancorp was $1,471 million for the third quarter
of 2014, .2 percent higher than the $1,468 million for the third quarter of 2013, and 1.6 percent lower than the $1,495 million for the second quarter of 2014. Diluted earnings per common share of $.78 in the third quarter of 2014 were $.02 higher
than the third quarter of 2013 and equal to the previous quarter. Return on average assets and return on average common equity were 1.51 percent and 14.5 percent, respectively, for the third quarter of 2014, compared with 1.65 percent and 15.8
percent, respectively, for the third quarter of 2013. The provision for credit losses was lower than net charge-offs by $25 million in the third quarter of 2014 and in the second quarter of 2014, and $30 million lower than net charge-offs in the
third quarter of 2013.
U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis said, U.S. Bank
delivered another solid performance in the third quarter with $1.5 billion of net income, or $.78 per diluted common share. Our ability to provide customers and clients with a diverse array of banking products and services while addressing their
distinct financial objectives, in any economic environment, allows us to continue generating an industry-leading financial performance. Our return on average common equity, return on average assets, and efficiency ratio metrics remain among the
strongest in the industry. Our consistently solid financial performance is a result of our adhering closely to the core fundamentals of
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
4
controlling expenses, managing capital prudently, selectively investing in initiatives that generate steady long-term growth, and expanding existing customer relationships. That was certainly the
case in the third quarter as our disciplined approach returned positive operating leverage and the diversification of our business profile allowed us to maintain our momentum as the economy slowly rebounds.
Value creation for our customers and shareholders is our highest priority. One way we create value for our customers is by
preserving and leveraging our industry-leading financial strength to help them more efficiently reach their financial goals and objectives. For example, our average deposits grew 7.4 percent over the prior year to $271 billion. In a challenging
macro-economic environment, retail and institutional customers gravitate toward the strength and security of U.S. Bank. Likewise, we returned 78 percent of third quarter earnings to shareholders through dividends and share buybacks. Both examples
demonstrate our commitment to value creation. The better we are at addressing and meeting our customers financial goals and objectives, the stronger our financial performance will be.
As we head into the final quarter of the year, we remain diligently focused on executing our plan, even with the ongoing economic
headwinds, with an emphasis on providing our customers with the trusted products and services to help them build more secure financial futures, backed by the financial strength of U.S. Bank.
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INCOME STATEMENT HIGHLIGHTS |
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Table 2 |
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(Taxable-equivalent basis, $ in millions, except per-share data) |
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3Q 2014 |
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2Q 2014 |
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3Q 2013 |
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Percent Change 3Q14 vs 2Q14 |
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Percent Change 3Q14 vs 3Q13 |
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YTD 2014 |
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YTD 2013 |
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Percent Change |
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Net interest income |
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$ |
2,748 |
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$ |
2,744 |
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$ |
2,714 |
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.1 |
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1.3 |
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$ |
8,198 |
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$ |
8,095 |
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1.3 |
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Noninterest income |
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2,242 |
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2,444 |
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2,177 |
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(8.3 |
) |
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3.0 |
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6,794 |
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6,618 |
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2.7 |
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Total net revenue |
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4,990 |
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5,188 |
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4,891 |
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(3.8 |
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2.0 |
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14,992 |
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14,713 |
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1.9 |
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Noninterest expense |
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2,614 |
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2,753 |
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2,565 |
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(5.0 |
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1.9 |
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7,911 |
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7,592 |
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4.2 |
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Income before provision and taxes |
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2,376 |
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2,435 |
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2,326 |
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(2.4 |
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2.1 |
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7,081 |
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7,121 |
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(.6 |
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Provision for credit losses |
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311 |
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324 |
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298 |
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(4.0 |
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4.4 |
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941 |
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1,063 |
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(11.5 |
) |
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Income before taxes |
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2,065 |
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2,111 |
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2,028 |
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(2.2 |
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1.8 |
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6,140 |
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6,058 |
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1.4 |
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Taxable-equivalent adjustment |
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56 |
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55 |
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56 |
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1.8 |
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167 |
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168 |
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(.6 |
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Applicable income taxes |
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523 |
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547 |
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542 |
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(4.4 |
) |
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(3.5 |
) |
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1,566 |
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1,629 |
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(3.9 |
) |
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Net income |
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1,486 |
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1,509 |
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1,430 |
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(1.5 |
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3.9 |
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4,407 |
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4,261 |
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3.4 |
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Net (income) loss attributable to noncontrolling interests |
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(15 |
) |
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(14 |
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38 |
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(7.1 |
) |
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nm |
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(44 |
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119 |
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nm |
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Net income attributable to U.S. Bancorp |
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$ |
1,471 |
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$ |
1,495 |
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$ |
1,468 |
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(1.6 |
) |
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.2 |
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$ |
4,363 |
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$ |
4,380 |
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(.4 |
) |
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Net income applicable to U.S. Bancorp common shareholders |
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$ |
1,405 |
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$ |
1,427 |
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$ |
1,400 |
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(1.5 |
) |
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|
.4 |
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$ |
4,163 |
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$ |
4,163 |
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Diluted earnings per common share |
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$ |
.78 |
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$ |
.78 |
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$ |
.76 |
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2.6 |
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$ |
2.29 |
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$ |
2.25 |
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1.8 |
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(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
5
Net income attributable to U.S. Bancorp for the third quarter of 2014 was $3 million (.2
percent) higher than the third quarter of 2013, and $24 million (1.6 percent) lower than the second quarter of 2014. The increase in net income year-over-year was principally due to an increase in total net revenue, driven by increases in both net
interest income and fee-based revenue. The decrease in net income on a linked quarter basis was principally due to increased noninterest expense driven by merger integration, mortgage servicing- related expenses, and seasonal tax-advantaged projects
costs, partially offset by a decrease in the provision for credit losses. The second quarter of 2014 included two previously disclosed notable items impacting other noninterest income and other noninterest expense that, together, had no impact to
diluted earnings per common share.
Total net revenue on a taxable-equivalent basis for the third quarter of 2014 was $4,990
million which was $99 million (2.0 percent) higher than the third quarter of 2013, reflecting a 3.0 percent increase in noninterest income and a 1.3 percent increase in net interest income. Noninterest income increased year-over-year due to higher
revenue in most fee businesses, partially offset by lower mortgage banking revenue. The increase in net interest income year-over-year was the result of an increase in average earning assets and continued growth in lower cost core deposit funding,
offset by lower loan fees. Total net revenue on a taxable-equivalent basis was $198 million (3.8 percent) lower on a linked quarter basis due to an 8.3 percent decrease in noninterest income as a result of the sale of Visa, Inc. Class B common stock
in the second quarter of 2014 and lower mortgage banking revenue, partially offset by a $4 million increase in net interest income, the result of an increase in average earning assets and growth in lower cost deposits, offset by lower loan fees.
Total noninterest expense in the third quarter of 2014 was $2,614 million which was $49 million (1.9 percent) higher than the
third quarter of 2013 and $139 million (5.0 percent) lower than the second quarter of 2014. The increase in total noninterest expense year-over-year was primarily due to an increase in compensation expense, reflecting the impact of merit increases,
acquisitions, and higher staffing for risk and compliance activities. The decrease in total noninterest expense on a linked quarter basis was due to the second quarter settlement with the U.S. Department of Justice to resolve an investigation
relating to the endorsement of mortgage loans under the Federal Housing Administrations insurance program (FHA DOJ settlement), partially offset by Charter One merger integration costs and higher mortgage servicing-related costs.
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
6
The Companys provision for credit losses for the third quarter of 2014 was $311
million, $13 million (4.0 percent) lower than the prior quarter and $13 million (4.4 percent) higher than the third quarter of 2013. The provision for credit losses was lower than net charge-offs by $25 million in the third quarter of 2014 and in
the second quarter of 2014, and $30 million lower than net charge-offs in the third quarter of 2013. Net charge-offs in the third quarter of 2014 were $336 million, compared with $349 million in the second quarter of 2014, and $328 million in the
third quarter of 2013. Given current economic conditions, the Company expects the level of net charge-offs to remain relatively stable in the fourth quarter of 2014.
Nonperforming assets include assets originated or acquired by the Company, as well as loans and other real estate acquired under FDIC loss sharing agreements that substantially reduce the risk of credit
losses to the Company (covered assets). Excluding covered assets, nonperforming assets were $1,763 million at September 30, 2014, compared with $1,766 million at June 30, 2014, and $1,880 million at September 30, 2013. The
decrease in nonperforming assets, excluding covered assets, compared with a year ago was driven primarily by reductions in the commercial mortgage portfolio, as well as by improvement in construction and development and credit card loans. Covered
nonperforming assets were $160 million at September 30, 2014, compared with $177 million at June 30, 2014, and $332 million at September 30, 2013. The loss sharing agreement for the majority of the nonperforming covered assets expires
in the fourth quarter of 2014. The ratio of the allowance for credit losses to period-end loans was 1.80 percent at September 30, 2014, compared with 1.82 percent at June 30, 2014, and 1.98 percent at September 30, 2013. The Company
expects total nonperforming assets to remain relatively stable in the fourth quarter of 2014.
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME |
|
|
Table 3 |
|
(Taxable-equivalent basis; $ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q 2014 |
|
|
2Q 2014 |
|
|
3Q 2013 |
|
|
Change 3Q14 vs 2Q14 |
|
|
Change 3Q14 vs 3Q13 |
|
|
YTD 2014 |
|
|
YTD 2013 |
|
|
Change |
|
Components of net interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income on earning assets |
|
$ |
3,114 |
|
|
$ |
3,104 |
|
|
$ |
3,125 |
|
|
$ |
10 |
|
|
$ |
(11 |
) |
|
$ |
9,296 |
|
|
$ |
9,388 |
|
|
$ |
(92 |
) |
Expense on interest-bearing liabilities |
|
|
366 |
|
|
|
360 |
|
|
|
411 |
|
|
|
6 |
|
|
|
(45 |
) |
|
|
1,098 |
|
|
|
1,293 |
|
|
|
(195 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
2,748 |
|
|
$ |
2,744 |
|
|
$ |
2,714 |
|
|
$ |
4 |
|
|
$ |
34 |
|
|
$ |
8,198 |
|
|
$ |
8,095 |
|
|
$ |
103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average yields and rates paid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earning assets yield |
|
|
3.58 |
% |
|
|
3.70 |
% |
|
|
3.95 |
% |
|
|
(.12 |
)% |
|
|
(.37 |
)% |
|
|
3.69 |
% |
|
|
4.00 |
% |
|
|
(.31 |
)% |
Rate paid on interest-bearing liabilities |
|
|
.57 |
|
|
|
.58 |
|
|
|
.71 |
|
|
|
(.01 |
) |
|
|
(.14 |
) |
|
|
.60 |
|
|
|
.75 |
|
|
|
(.15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross interest margin |
|
|
3.01 |
% |
|
|
3.12 |
% |
|
|
3.24 |
% |
|
|
(.11 |
)% |
|
|
(.23 |
)% |
|
|
3.09 |
% |
|
|
3.25 |
% |
|
|
(.16 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin |
|
|
3.16 |
% |
|
|
3.27 |
% |
|
|
3.43 |
% |
|
|
(.11 |
)% |
|
|
(.27 |
)% |
|
|
3.26 |
% |
|
|
3.45 |
% |
|
|
(.19 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities (a) |
|
$ |
93,141 |
|
|
$ |
87,583 |
|
|
$ |
74,988 |
|
|
$ |
5,558 |
|
|
$ |
18,153 |
|
|
$ |
87,687 |
|
|
$ |
74,303 |
|
|
$ |
13,384 |
|
Loans |
|
|
243,867 |
|
|
|
240,480 |
|
|
|
229,362 |
|
|
|
3,387 |
|
|
|
14,505 |
|
|
|
240,098 |
|
|
|
225,682 |
|
|
|
14,416 |
|
Earning assets |
|
|
346,422 |
|
|
|
335,992 |
|
|
|
315,060 |
|
|
|
10,430 |
|
|
|
31,362 |
|
|
|
336,287 |
|
|
|
313,663 |
|
|
|
22,624 |
|
Interest-bearing liabilities |
|
|
254,501 |
|
|
|
246,886 |
|
|
|
230,825 |
|
|
|
7,615 |
|
|
|
23,676 |
|
|
|
246,614 |
|
|
|
230,805 |
|
|
|
15,809 |
|
(a) |
Excludes unrealized gain (loss) |
Net
Interest Income
Net interest income on a taxable-equivalent basis in the third quarter of 2014 was $2,748 million, an
increase of $34 million (1.3 percent) from the third quarter of 2013. The increase was the result of growth in average earning assets and growth in lower cost core deposit funding, partially offset by lower rates on new loans and securities and
lower loan fees. Average earning assets were $31.4 billion (10.0 percent) higher than the third quarter of 2013, driven by increases of $14.5 billion (6.3 percent) in average total loans and $18.2 billion (24.2 percent) in average investment
securities, partially offset by a decrease of $1.4 billion (28.5 percent) in average loans held for sale. Net interest income increased $4 million on a linked quarter basis, due to higher average earning assets, partially offset by lower loan fees
and lower loan and investment securities rates. The net interest margin in the third quarter of 2014 was 3.16 percent, compared with 3.43 percent in the third quarter of 2013, and 3.27 percent in the second quarter of 2014. The decline in the net
interest margin on a year-over-year basis primarily reflected lower reinvestment rates on investment securities, as well as growth in the investment portfolio at lower average rates, lower loan fees due to the previously communicated wind down of
the short-term, small-dollar deposit advance product, Checking
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
8
Account Advance (CAA), and lower rates on new loans, partially offset by lower funding costs. On a linked quarter basis, the reduction in net interest margin was principally due to
growth in lower rate investment securities and lower loan fees due to the CAA product wind down.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE LOANS |
|
Table 4 |
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q 2014 |
|
|
2Q 2014 |
|
|
3Q 2013 |
|
|
Percent Change 3Q14 vs 2Q14 |
|
|
Percent Change 3Q14 vs 3Q13 |
|
|
YTD 2014 |
|
|
YTD 2013 |
|
|
Percent Change |
|
Commercial |
|
$ |
72,190 |
|
|
$ |
69,920 |
|
|
$ |
62,856 |
|
|
|
3.2 |
|
|
|
14.8 |
|
|
$ |
69,276 |
|
|
$ |
61,439 |
|
|
|
12.8 |
|
Lease financing |
|
|
5,155 |
|
|
|
5,100 |
|
|
|
5,208 |
|
|
|
1.1 |
|
|
|
(1.0 |
) |
|
|
5,148 |
|
|
|
5,280 |
|
|
|
(2.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial |
|
|
77,345 |
|
|
|
75,020 |
|
|
|
68,064 |
|
|
|
3.1 |
|
|
|
13.6 |
|
|
|
74,424 |
|
|
|
66,719 |
|
|
|
11.5 |
|
Commercial mortgages |
|
|
31,965 |
|
|
|
32,001 |
|
|
|
31,546 |
|
|
|
(.1 |
) |
|
|
1.3 |
|
|
|
32,005 |
|
|
|
31,311 |
|
|
|
2.2 |
|
Construction and development |
|
|
8,874 |
|
|
|
8,496 |
|
|
|
6,955 |
|
|
|
4.4 |
|
|
|
27.6 |
|
|
|
8,460 |
|
|
|
6,561 |
|
|
|
28.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate |
|
|
40,839 |
|
|
|
40,497 |
|
|
|
38,501 |
|
|
|
.8 |
|
|
|
6.1 |
|
|
|
40,465 |
|
|
|
37,872 |
|
|
|
6.8 |
|
Residential mortgages |
|
|
51,994 |
|
|
|
51,815 |
|
|
|
49,139 |
|
|
|
.3 |
|
|
|
5.8 |
|
|
|
51,799 |
|
|
|
47,055 |
|
|
|
10.1 |
|
Credit card |
|
|
17,753 |
|
|
|
17,384 |
|
|
|
16,931 |
|
|
|
2.1 |
|
|
|
4.9 |
|
|
|
17,516 |
|
|
|
16,627 |
|
|
|
5.3 |
|
Retail leasing |
|
|
5,991 |
|
|
|
6,014 |
|
|
|
5,664 |
|
|
|
(.4 |
) |
|
|
5.8 |
|
|
|
5,995 |
|
|
|
5,589 |
|
|
|
7.3 |
|
Home equity and second mortgages |
|
|
15,704 |
|
|
|
15,327 |
|
|
|
15,648 |
|
|
|
2.5 |
|
|
|
.4 |
|
|
|
15,467 |
|
|
|
16,021 |
|
|
|
(3.5 |
) |
Other |
|
|
27,003 |
|
|
|
26,587 |
|
|
|
25,682 |
|
|
|
1.6 |
|
|
|
5.1 |
|
|
|
26,636 |
|
|
|
25,424 |
|
|
|
4.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other retail |
|
|
48,698 |
|
|
|
47,928 |
|
|
|
46,994 |
|
|
|
1.6 |
|
|
|
3.6 |
|
|
|
48,098 |
|
|
|
47,034 |
|
|
|
2.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, excluding covered loans |
|
|
236,629 |
|
|
|
232,644 |
|
|
|
219,629 |
|
|
|
1.7 |
|
|
|
7.7 |
|
|
|
232,302 |
|
|
|
215,307 |
|
|
|
7.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covered loans |
|
|
7,238 |
|
|
|
7,836 |
|
|
|
9,733 |
|
|
|
(7.6 |
) |
|
|
(25.6 |
) |
|
|
7,796 |
|
|
|
10,375 |
|
|
|
(24.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
|
$ |
243,867 |
|
|
$ |
240,480 |
|
|
$ |
229,362 |
|
|
|
1.4 |
|
|
|
6.3 |
|
|
$ |
240,098 |
|
|
$ |
225,682 |
|
|
|
6.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average total loans were $14.5 billion (6.3 percent) higher in the third quarter of 2014 than the third
quarter of 2013, driven by growth in total commercial loans (13.6 percent), total commercial real estate (6.1 percent), residential mortgages (5.8 percent), credit card (4.9 percent), and total other retail loans (3.6 percent). These increases were
partially offset by a decline in covered loans (25.6 percent). Average total loans, excluding covered loans, were higher by 7.7 percent year-over-year. Average total loans were $3.4 billion (1.4 percent) higher in the third quarter of 2014 than the
second quarter of 2014, driven by growth in total commercial loans (3.1 percent), credit card (2.1 percent), total other retail loans (1.6 percent), total commercial real estate (.8 percent), and residential mortgages (.3 percent). These increases
were partially offset by a decline in covered loans (7.6 percent). Average total loans, excluding covered loans, were higher by 1.7 percent on a linked quarter basis.
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
9
Average investment securities in the third quarter of 2014 were $18.2 billion (24.2
percent) higher year-over-year and $5.6 billion (6.3 percent) higher than the prior quarter. The increases were primarily due to purchases of U.S. government agency-backed securities, net of prepayments and maturities, in anticipation of final
liquidity coverage ratio regulatory requirements.
|
|
|
|
|
AVERAGE DEPOSITS |
|
|
Table 5 |
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent |
|
|
Percent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
3Q |
|
|
2Q |
|
|
3Q |
|
|
3Q14 vs |
|
|
3Q14 vs |
|
|
YTD |
|
|
YTD |
|
|
Percent |
|
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2Q14 |
|
|
3Q13 |
|
|
2014 |
|
|
2013 |
|
|
Change |
|
Noninterest-bearing deposits |
|
$ |
74,126 |
|
|
$ |
71,837 |
|
|
$ |
68,264 |
|
|
|
3.2 |
|
|
|
8.6 |
|
|
$ |
72,274 |
|
|
$ |
67,183 |
|
|
|
7.6 |
|
Interest-bearing savings deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest checking |
|
|
54,454 |
|
|
|
52,989 |
|
|
|
48,235 |
|
|
|
2.8 |
|
|
|
12.9 |
|
|
|
52,928 |
|
|
|
48,347 |
|
|
|
9.5 |
|
Money market savings |
|
|
66,250 |
|
|
|
61,370 |
|
|
|
55,982 |
|
|
|
8.0 |
|
|
|
18.3 |
|
|
|
62,314 |
|
|
|
54,826 |
|
|
|
13.7 |
|
Savings accounts |
|
|
34,615 |
|
|
|
33,991 |
|
|
|
32,083 |
|
|
|
1.8 |
|
|
|
7.9 |
|
|
|
33,940 |
|
|
|
31,809 |
|
|
|
6.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total of savings deposits |
|
|
155,319 |
|
|
|
148,350 |
|
|
|
136,300 |
|
|
|
4.7 |
|
|
|
14.0 |
|
|
|
149,182 |
|
|
|
134,982 |
|
|
|
10.5 |
|
Time deposits less than $100,000 |
|
|
11,045 |
|
|
|
10,971 |
|
|
|
12,495 |
|
|
|
.7 |
|
|
|
(11.6 |
) |
|
|
11,151 |
|
|
|
13,082 |
|
|
|
(14.8 |
) |
Time deposits greater than $100,000 |
|
|
30,518 |
|
|
|
31,193 |
|
|
|
35,309 |
|
|
|
(2.2 |
) |
|
|
(13.6 |
) |
|
|
31,055 |
|
|
|
33,037 |
|
|
|
(6.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing deposits |
|
|
196,882 |
|
|
|
190,514 |
|
|
|
184,104 |
|
|
|
3.3 |
|
|
|
6.9 |
|
|
|
191,388 |
|
|
|
181,101 |
|
|
|
5.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
|
$ |
271,008 |
|
|
$ |
262,351 |
|
|
$ |
252,368 |
|
|
|
3.3 |
|
|
|
7.4 |
|
|
$ |
263,662 |
|
|
$ |
248,284 |
|
|
|
6.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average total deposits for the third quarter of 2014 were $18.6 billion (7.4 percent) higher than the
third quarter of 2013. Average noninterest-bearing deposits increased $5.9 billion (8.6 percent) year-over-year, mainly in Consumer and Small Business Banking, including the $.4 billion impact of the Charter One acquisition, corporate trust, and
commercial banking balances. Average total savings deposits were $19.0 billion (14.0 percent) higher year-over-year, the result of growth in Consumer and Small Business Banking, including the $3.4 billion impact of the Charter One acquisition,
corporate trust, broker-dealer, and government banking related balances. Time deposits less than $100,000 were $1.5 billion (11.6 percent) lower due to maturities, while time deposits greater than $100,000 decreased $4.8 billion (13.6 percent),
primarily due to a decline in broker-dealer and Consumer and Small Business Banking balances. Time deposits greater than $100,000 are managed as an alternative to other funding sources, such as wholesale borrowing, based largely on relative pricing.
Average total deposits increased $8.7 billion (3.3 percent) over the second quarter of 2014. Average noninterest-bearing
deposits increased $2.3 billion (3.2 percent) on a linked quarter basis, due to higher balances in Consumer and Small Business Banking, including the impact of the Charter One acquisition, and Wholesale Banking and Commercial Real Estate, partially
offset by lower corporate trust balances. Average
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
10
total savings deposits increased $7.0 billion (4.7 percent), reflecting increases in Consumer and Small Business Banking, including the impact of the Charter One acquisition, corporate trust, and
broker-dealer balances, partially offset by a decrease in government banking related balances. Compared with the second quarter of 2014, average time deposits less than $100,000 increased $74 million (.7 percent) due to an increase in Consumer and
Small Business Banking driven by the impact of the Charter One acquisition. Average time deposits greater than $100,000 decreased $675 million (2.2 percent) on a linked quarter basis, principally due to declines in Wholesale Banking and Commercial
Real Estate and corporate trust balances.
|
|
|
NONINTEREST INCOME |
|
Table 6 |
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent |
|
|
Percent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
3Q |
|
|
2Q |
|
|
3Q |
|
|
3Q14 vs |
|
|
3Q14 vs |
|
|
YTD |
|
|
YTD |
|
|
Percent |
|
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2Q14 |
|
|
3Q13 |
|
|
2014 |
|
|
2013 |
|
|
Change |
|
Credit and debit card revenue |
|
$ |
251 |
|
|
$ |
259 |
|
|
$ |
244 |
|
|
|
(3.1 |
) |
|
|
2.9 |
|
|
$ |
749 |
|
|
$ |
702 |
|
|
|
6.7 |
|
Corporate payment products revenue |
|
|
195 |
|
|
|
182 |
|
|
|
192 |
|
|
|
7.1 |
|
|
|
1.6 |
|
|
|
550 |
|
|
|
540 |
|
|
|
1.9 |
|
Merchant processing services |
|
|
387 |
|
|
|
384 |
|
|
|
371 |
|
|
|
.8 |
|
|
|
4.3 |
|
|
|
1,127 |
|
|
|
1,091 |
|
|
|
3.3 |
|
ATM processing services |
|
|
81 |
|
|
|
82 |
|
|
|
83 |
|
|
|
(1.2 |
) |
|
|
(2.4 |
) |
|
|
241 |
|
|
|
248 |
|
|
|
(2.8 |
) |
Trust and investment management fees |
|
|
315 |
|
|
|
311 |
|
|
|
280 |
|
|
|
1.3 |
|
|
|
12.5 |
|
|
|
930 |
|
|
|
842 |
|
|
|
10.5 |
|
Deposit service charges |
|
|
185 |
|
|
|
171 |
|
|
|
180 |
|
|
|
8.2 |
|
|
|
2.8 |
|
|
|
513 |
|
|
|
493 |
|
|
|
4.1 |
|
Treasury management fees |
|
|
136 |
|
|
|
140 |
|
|
|
134 |
|
|
|
(2.9 |
) |
|
|
1.5 |
|
|
|
409 |
|
|
|
408 |
|
|
|
.2 |
|
Commercial products revenue |
|
|
209 |
|
|
|
221 |
|
|
|
207 |
|
|
|
(5.4 |
) |
|
|
1.0 |
|
|
|
635 |
|
|
|
616 |
|
|
|
3.1 |
|
Mortgage banking revenue |
|
|
260 |
|
|
|
278 |
|
|
|
328 |
|
|
|
(6.5 |
) |
|
|
(20.7 |
) |
|
|
774 |
|
|
|
1,125 |
|
|
|
(31.2 |
) |
Investment products fees |
|
|
49 |
|
|
|
47 |
|
|
|
46 |
|
|
|
4.3 |
|
|
|
6.5 |
|
|
|
142 |
|
|
|
133 |
|
|
|
6.8 |
|
Securities gains (losses), net |
|
|
(3 |
) |
|
|
|
|
|
|
(3 |
) |
|
|
nm |
|
|
|
|
|
|
|
2 |
|
|
|
8 |
|
|
|
(75.0 |
) |
Other |
|
|
177 |
|
|
|
369 |
|
|
|
115 |
|
|
|
(52.0 |
) |
|
|
53.9 |
|
|
|
722 |
|
|
|
412 |
|
|
|
75.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest income |
|
$ |
2,242 |
|
|
$ |
2,444 |
|
|
$ |
2,177 |
|
|
|
(8.3 |
) |
|
|
3.0 |
|
|
$ |
6,794 |
|
|
$ |
6,618 |
|
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income
Third quarter noninterest income was $2,242 million which was $65 million (3.0 percent) higher than the third quarter of 2013 and $202 million (8.3 percent) lower than the second quarter of 2014. The
year-over-year increase in noninterest income was due to increases in a majority of fee revenue categories, partially offset by a $68 million (20.7 percent) reduction in mortgage banking revenue, principally due to a $59 million unfavorable change
in the valuation of mortgage servicing rights (MSRs), net of hedging activities, compared with the prior year. Trust and investment management fees increased $35 million (12.5 percent) year-over-year, reflecting account growth, improved
market conditions and business expansion. Merchant processing services revenue was $16 million (4.3 percent) higher as a result of an increase in
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
11
product fees and higher volumes, partially offset by lower rates. Credit and debit card revenue increased $7 million (2.9 percent) over the third quarter of 2013 primarily due to higher
transaction volumes. Deposit services charges were $5 million (2.8 percent) higher than a year ago due to account growth, the Charter One acquisition and pricing changes. The increase in other income was primarily due to gains on sales of other
equity investments and an increase in retail leasing revenue.
Noninterest income was $202 million (8.3 percent) lower in the
third quarter of 2014 than the second quarter of 2014, primarily due to the second quarter Visa, Inc. Class B common stock sale, lower mortgage banking revenue, and lower commercial products revenue. Mortgage banking revenue decreased $18 million
(6.5 percent), principally due to a $44 million unfavorable change in the valuation of MSRs, net of hedging activities, partially offset by an increase in origination and sales revenue. Commercial products revenue decreased $12 million (5.4 percent)
due to lower wholesale transaction activity, including standby letters of credit, loan and bond underwriting fees, and syndication fees. Credit and debit card revenue decreased $8 million (3.1 percent) primarily due to higher rewards. Partially
offsetting these decreases was an increase in deposit service charges of $14 million (8.2 percent), mainly due to higher transaction volumes. Additionally, corporate payment products revenue increased $13 million (7.1 percent) on a linked quarter
basis, principally due to seasonally higher transaction volumes, and trust and investment management fees were $4 million (1.3 percent) higher than the prior quarter due to improved market conditions and account growth, including business expansion.
|
|
|
NONINTEREST EXPENSE |
|
Table 7 |
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent |
|
|
Percent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
3Q |
|
|
2Q |
|
|
3Q |
|
|
3Q14 vs |
|
|
3Q14 vs |
|
|
YTD |
|
|
YTD |
|
|
Percent |
|
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2Q14 |
|
|
3Q13 |
|
|
2014 |
|
|
2013 |
|
|
Change |
|
Compensation |
|
$ |
1,132 |
|
|
$ |
1,125 |
|
|
$ |
1,088 |
|
|
|
.6 |
|
|
|
4.0 |
|
|
$ |
3,372 |
|
|
$ |
3,268 |
|
|
|
3.2 |
|
Employee benefits |
|
|
250 |
|
|
|
257 |
|
|
|
278 |
|
|
|
(2.7 |
) |
|
|
(10.1 |
) |
|
|
796 |
|
|
|
865 |
|
|
|
(8.0 |
) |
Net occupancy and equipment |
|
|
249 |
|
|
|
241 |
|
|
|
240 |
|
|
|
3.3 |
|
|
|
3.8 |
|
|
|
739 |
|
|
|
709 |
|
|
|
4.2 |
|
Professional services |
|
|
102 |
|
|
|
97 |
|
|
|
94 |
|
|
|
5.2 |
|
|
|
8.5 |
|
|
|
282 |
|
|
|
263 |
|
|
|
7.2 |
|
Marketing and business development |
|
|
78 |
|
|
|
96 |
|
|
|
85 |
|
|
|
(18.8 |
) |
|
|
(8.2 |
) |
|
|
253 |
|
|
|
254 |
|
|
|
(.4 |
) |
Technology and communications |
|
|
219 |
|
|
|
214 |
|
|
|
214 |
|
|
|
2.3 |
|
|
|
2.3 |
|
|
|
644 |
|
|
|
639 |
|
|
|
.8 |
|
Postage, printing and supplies |
|
|
81 |
|
|
|
80 |
|
|
|
76 |
|
|
|
1.3 |
|
|
|
6.6 |
|
|
|
242 |
|
|
|
230 |
|
|
|
5.2 |
|
Other intangibles |
|
|
51 |
|
|
|
48 |
|
|
|
55 |
|
|
|
6.3 |
|
|
|
(7.3 |
) |
|
|
148 |
|
|
|
167 |
|
|
|
(11.4 |
) |
Other |
|
|
452 |
|
|
|
595 |
|
|
|
435 |
|
|
|
(24.0 |
) |
|
|
3.9 |
|
|
|
1,435 |
|
|
|
1,197 |
|
|
|
19.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense |
|
$ |
2,614 |
|
|
$ |
2,753 |
|
|
$ |
2,565 |
|
|
|
(5.0 |
) |
|
|
1.9 |
|
|
$ |
7,911 |
|
|
$ |
7,592 |
|
|
|
4.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
12
Noninterest Expense
Noninterest expense in the third quarter of 2014 totaled $2,614 million, an increase of $49 million (1.9 percent) over the third quarter of 2013, and a $139 million (5.0 percent) decrease from the second
quarter of 2014. The increase in total noninterest expense year-over-year was the result of higher compensation expense, reflecting the impact of merit increases, acquisitions, and higher staffing for risk and compliance activities. Net occupancy
and equipment expense increased $9 million (3.8 percent) year-over-year due to business initiatives and maintenance costs. Professional services expense increased $8 million (8.5 percent) due mainly to mortgage servicing-related project costs. The
$17 million (3.9 percent) increase in other expense primarily reflected the Charter One merger integration and mortgage servicing-related expenses, partially offset by lower costs for investments in tax-advantaged projects related to a change in
first quarter 2014 in accounting for affordable housing investments. Offsetting these increases was a $28 million (10.1 percent) reduction in employee benefits expense driven by lower pension costs.
Noninterest expense decreased $139 million (5.0 percent) on a linked quarter basis, primarily driven by the second quarter FHA DOJ
settlement in other expense, partially offset by mortgage servicing-related expenses, the Charter One merger integration costs, and seasonally higher costs related to investments in tax-advantaged projects. Marketing and business development expense
decreased $18 million (18.8 percent) due to charitable contributions in the second quarter of 2014 and the timing of marketing programs in Payment Services. Additionally, employee benefits expense decreased $7 million (2.7 percent) primarily
resulting from lower payroll tax expense. Partially offsetting these decreases was a $7 million (.6 percent) increase in compensation expense reflecting the impact of merit increases, and additional employees related to the Charter One acquisition
and for risk and compliance activities. Professional services expense was $5 million (5.2 percent) higher, mainly due to higher mortgage servicing-related project costs.
Provision for Income Taxes
The provision for income taxes for the third
quarter of 2014 resulted in a tax rate on a taxable-equivalent basis of 28.0 percent (effective tax rate of 26.0 percent), compared with 29.5 percent (effective tax rate of 27.5 percent) in the third quarter of 2013, and 28.5 percent (effective tax
rate of 26.6 percent) in the second quarter of 2014.
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
13
|
|
|
|
|
ALLOWANCE FOR CREDIT LOSSES |
|
|
Table 8 |
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q 2014 |
|
|
% (b) |
|
|
2Q 2014 |
|
|
% (b) |
|
|
1Q 2014 |
|
|
% (b) |
|
|
4Q 2013 |
|
|
% (b) |
|
|
3Q 2013 |
|
|
% (b) |
|
Balance, beginning of period |
|
$ |
4,449 |
|
|
|
|
|
|
$ |
4,497 |
|
|
|
|
|
|
$ |
4,537 |
|
|
|
|
|
|
$ |
4,578 |
|
|
|
|
|
|
$ |
4,612 |
|
|
|
|
|
Net charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
52 |
|
|
|
.29 |
|
|
|
52 |
|
|
|
.30 |
|
|
|
34 |
|
|
|
.21 |
|
|
|
33 |
|
|
|
.21 |
|
|
|
18 |
|
|
|
.11 |
|
Lease financing |
|
|
6 |
|
|
|
.46 |
|
|
|
3 |
|
|
|
.24 |
|
|
|
2 |
|
|
|
.16 |
|
|
|
3 |
|
|
|
.23 |
|
|
|
(7 |
) |
|
|
(.53 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial |
|
|
58 |
|
|
|
.30 |
|
|
|
55 |
|
|
|
.29 |
|
|
|
36 |
|
|
|
.21 |
|
|
|
36 |
|
|
|
.21 |
|
|
|
11 |
|
|
|
.06 |
|
Commercial mortgages |
|
|
1 |
|
|
|
.01 |
|
|
|
(6 |
) |
|
|
(.08 |
) |
|
|
(1 |
) |
|
|
(.01 |
) |
|
|
1 |
|
|
|
.01 |
|
|
|
2 |
|
|
|
.03 |
|
Construction and development |
|
|
3 |
|
|
|
.13 |
|
|
|
2 |
|
|
|
.09 |
|
|
|
(2 |
) |
|
|
(.10 |
) |
|
|
(30 |
) |
|
|
(1.58 |
) |
|
|
(8 |
) |
|
|
(.46 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate |
|
|
4 |
|
|
|
.04 |
|
|
|
(4 |
) |
|
|
(.04 |
) |
|
|
(3 |
) |
|
|
(.03 |
) |
|
|
(29 |
) |
|
|
(.29 |
) |
|
|
(6 |
) |
|
|
(.06 |
) |
Residential mortgages |
|
|
42 |
|
|
|
.32 |
|
|
|
57 |
|
|
|
.44 |
|
|
|
57 |
|
|
|
.45 |
|
|
|
49 |
|
|
|
.38 |
|
|
|
57 |
|
|
|
.46 |
|
Credit card |
|
|
158 |
|
|
|
3.53 |
|
|
|
170 |
|
|
|
3.92 |
|
|
|
170 |
|
|
|
3.96 |
|
|
|
163 |
|
|
|
3.72 |
|
|
|
160 |
|
|
|
3.75 |
|
Retail leasing |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
.07 |
|
Home equity and second mortgages |
|
|
24 |
|
|
|
.61 |
|
|
|
23 |
|
|
|
.60 |
|
|
|
31 |
|
|
|
.82 |
|
|
|
37 |
|
|
|
.95 |
|
|
|
43 |
|
|
|
1.09 |
|
Other |
|
|
49 |
|
|
|
.72 |
|
|
|
45 |
|
|
|
.68 |
|
|
|
45 |
|
|
|
.69 |
|
|
|
52 |
|
|
|
.79 |
|
|
|
54 |
|
|
|
.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other retail |
|
|
73 |
|
|
|
.59 |
|
|
|
69 |
|
|
|
.58 |
|
|
|
76 |
|
|
|
.65 |
|
|
|
89 |
|
|
|
.75 |
|
|
|
98 |
|
|
|
.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net charge-offs, excluding covered loans |
|
|
335 |
|
|
|
.56 |
|
|
|
347 |
|
|
|
.60 |
|
|
|
336 |
|
|
|
.60 |
|
|
|
308 |
|
|
|
.55 |
|
|
|
320 |
|
|
|
.58 |
|
Covered loans |
|
|
1 |
|
|
|
.05 |
|
|
|
2 |
|
|
|
.10 |
|
|
|
5 |
|
|
|
.24 |
|
|
|
4 |
|
|
|
.18 |
|
|
|
8 |
|
|
|
.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net charge-offs |
|
|
336 |
|
|
|
.55 |
|
|
|
349 |
|
|
|
.58 |
|
|
|
341 |
|
|
|
.59 |
|
|
|
312 |
|
|
|
.53 |
|
|
|
328 |
|
|
|
.57 |
|
Provision for credit losses |
|
|
311 |
|
|
|
|
|
|
|
324 |
|
|
|
|
|
|
|
306 |
|
|
|
|
|
|
|
277 |
|
|
|
|
|
|
|
298 |
|
|
|
|
|
Other changes (a) |
|
|
(10 |
) |
|
|
|
|
|
|
(23 |
) |
|
|
|
|
|
|
(5 |
) |
|
|
|
|
|
|
(6 |
) |
|
|
|
|
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
4,414 |
|
|
|
|
|
|
$ |
4,449 |
|
|
|
|
|
|
$ |
4,497 |
|
|
|
|
|
|
$ |
4,537 |
|
|
|
|
|
|
$ |
4,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
|
$ |
4,065 |
|
|
|
|
|
|
$ |
4,132 |
|
|
|
|
|
|
$ |
4,189 |
|
|
|
|
|
|
$ |
4,250 |
|
|
|
|
|
|
$ |
4,258 |
|
|
|
|
|
Liability for unfunded credit commitments |
|
|
349 |
|
|
|
|
|
|
|
317 |
|
|
|
|
|
|
|
308 |
|
|
|
|
|
|
|
287 |
|
|
|
|
|
|
|
320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total allowance for credit losses |
|
$ |
4,414 |
|
|
|
|
|
|
$ |
4,449 |
|
|
|
|
|
|
$ |
4,497 |
|
|
|
|
|
|
$ |
4,537 |
|
|
|
|
|
|
$ |
4,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross charge-offs |
|
$ |
410 |
|
|
|
|
|
|
$ |
432 |
|
|
|
|
|
|
$ |
422 |
|
|
|
|
|
|
$ |
429 |
|
|
|
|
|
|
$ |
450 |
|
|
|
|
|
Gross recoveries |
|
$ |
74 |
|
|
|
|
|
|
$ |
83 |
|
|
|
|
|
|
$ |
81 |
|
|
|
|
|
|
$ |
117 |
|
|
|
|
|
|
$ |
122 |
|
|
|
|
|
Allowance for credit losses as a percentage of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end loans, excluding covered loans |
|
|
1.81 |
|
|
|
|
|
|
|
1.83 |
|
|
|
|
|
|
|
1.90 |
|
|
|
|
|
|
|
1.94 |
|
|
|
|
|
|
|
1.99 |
|
|
|
|
|
Nonperforming loans, excluding covered loans |
|
|
291 |
|
|
|
|
|
|
|
294 |
|
|
|
|
|
|
|
293 |
|
|
|
|
|
|
|
297 |
|
|
|
|
|
|
|
294 |
|
|
|
|
|
Nonperforming assets, excluding covered assets |
|
|
245 |
|
|
|
|
|
|
|
246 |
|
|
|
|
|
|
|
243 |
|
|
|
|
|
|
|
242 |
|
|
|
|
|
|
|
235 |
|
|
|
|
|
Period-end loans |
|
|
1.80 |
|
|
|
|
|
|
|
1.82 |
|
|
|
|
|
|
|
1.89 |
|
|
|
|
|
|
|
1.93 |
|
|
|
|
|
|
|
1.98 |
|
|
|
|
|
Nonperforming loans |
|
|
282 |
|
|
|
|
|
|
|
279 |
|
|
|
|
|
|
|
278 |
|
|
|
|
|
|
|
283 |
|
|
|
|
|
|
|
276 |
|
|
|
|
|
Nonperforming assets |
|
|
230 |
|
|
|
|
|
|
|
229 |
|
|
|
|
|
|
|
225 |
|
|
|
|
|
|
|
223 |
|
|
|
|
|
|
|
207 |
|
|
|
|
|
(a) |
Includes net changes in credit losses to be reimbursed by the FDIC and reductions in the allowance for covered loans where the reversal of a previously recorded
allowance was offset by an associated decrease in the indemnification asset, and the impact of any loan sales. |
(b) |
Annualized and calculated on average loan balances |
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
14
Credit Quality
The allowance for credit losses was $4,414 million at September 30, 2014, compared with $4,449 million at June 30, 2014, and $4,578 million at September 30, 2013. Nonperforming assets
declined on a linked quarter and year-over-year basis as economic conditions continued to slowly improve. Total net charge-offs in the third quarter of 2014 were $336 million, compared with $349 million in the second quarter of 2014, and $328
million in the third quarter of 2013. The $13 million (3.7 percent) decrease in net charge-offs on a linked quarter basis was due to improvements in the residential mortgage and credit card portfolios, while the $8 million (2.4 percent) increase in
net charge-offs on a year-over-year basis reflected higher commercial loan charge-offs and lower recoveries in commercial real estate, partially offset by improvements in residential mortgages and home equity and second mortgages. The Company
recorded $311 million of provision for credit losses in the current quarter, which was $25 million less than net charge-offs.
Commercial and commercial real estate loan net charge-offs were $62 million (.21 percent of average loans outstanding) in the third
quarter of 2014, compared with $51 million (.18 percent of average loans outstanding) in the second quarter of 2014, and $5 million (.02 percent of average loans outstanding) in the third quarter of 2013.
Residential mortgage loan net charge-offs were $42 million (.32 percent of average loans outstanding) in the third quarter of 2014,
compared with $57 million (.44 percent of average loans outstanding) in the second quarter of 2014, and $57 million (.46 percent of average loans outstanding) in the third quarter of 2013. Credit card loan net charge-offs were $158 million (3.53
percent of average loans outstanding) in the third quarter of 2014, compared with $170 million (3.92 percent of average loans outstanding) in the second quarter of 2014, and $160 million (3.75 percent of average loans outstanding) in the third
quarter of 2013. Total other retail loan net charge-offs were $73 million (.59 percent of average loans outstanding) in the third quarter of 2014, compared with $69 million (.58 percent of average loans outstanding) in the second quarter of 2014,
and $98 million (.83 percent of average loans outstanding) in the third quarter of 2013.
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
15
The ratio of the allowance for credit losses to period-end loans was 1.80 percent (1.81
percent excluding covered loans) at September 30, 2014, compared with 1.82 percent (1.83 percent excluding covered loans) at June 30, 2014, and 1.98 percent (1.99 percent excluding covered loans) at September 30, 2013. The ratio of
the allowance for credit losses to nonperforming loans was 282 percent (291 percent excluding covered loans) at September 30, 2014, compared with 279 percent (294 percent excluding covered loans) at June 30, 2014, and 276 percent (294
percent excluding covered loans) at September 30, 2013.
|
|
|
|
|
DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES |
|
|
Table 9 |
|
(Percent) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sep 30 |
|
|
Jun 30 |
|
|
Mar 31 |
|
|
Dec 31 |
|
|
Sep 30 |
|
|
|
2014 |
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2013 |
|
Delinquent loan ratios90 days or more past due excluding nonperforming loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
.05 |
|
|
|
.06 |
|
|
|
.06 |
|
|
|
.08 |
|
|
|
.07 |
|
Commercial real estate |
|
|
.03 |
|
|
|
.06 |
|
|
|
.06 |
|
|
|
.07 |
|
|
|
.02 |
|
Residential mortgages |
|
|
.41 |
|
|
|
.49 |
|
|
|
.64 |
|
|
|
.65 |
|
|
|
.53 |
|
Credit card |
|
|
1.10 |
|
|
|
1.06 |
|
|
|
1.21 |
|
|
|
1.17 |
|
|
|
1.11 |
|
Other retail |
|
|
.16 |
|
|
|
.15 |
|
|
|
.18 |
|
|
|
.18 |
|
|
|
.16 |
|
Total loans, excluding covered loans |
|
|
.22 |
|
|
|
.25 |
|
|
|
.30 |
|
|
|
.31 |
|
|
|
.27 |
|
Covered loans |
|
|
6.10 |
|
|
|
6.14 |
|
|
|
5.83 |
|
|
|
5.63 |
|
|
|
5.47 |
|
Total loans |
|
|
.39 |
|
|
|
.43 |
|
|
|
.49 |
|
|
|
.51 |
|
|
|
.48 |
|
Delinquent loan ratios90 days or more past due including nonperforming loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
.27 |
|
|
|
.30 |
|
|
|
.32 |
|
|
|
.27 |
|
|
|
.24 |
|
Commercial real estate |
|
|
.62 |
|
|
|
.62 |
|
|
|
.73 |
|
|
|
.83 |
|
|
|
.94 |
|
Residential mortgages |
|
|
2.02 |
|
|
|
2.06 |
|
|
|
2.14 |
|
|
|
2.16 |
|
|
|
1.99 |
|
Credit card |
|
|
1.32 |
|
|
|
1.35 |
|
|
|
1.59 |
|
|
|
1.60 |
|
|
|
1.66 |
|
Other retail |
|
|
.53 |
|
|
|
.54 |
|
|
|
.58 |
|
|
|
.58 |
|
|
|
.60 |
|
Total loans, excluding covered loans |
|
|
.84 |
|
|
|
.87 |
|
|
|
.95 |
|
|
|
.97 |
|
|
|
.94 |
|
Covered loans |
|
|
7.34 |
|
|
|
7.73 |
|
|
|
7.46 |
|
|
|
7.13 |
|
|
|
7.13 |
|
Total loans |
|
|
1.03 |
|
|
|
1.08 |
|
|
|
1.17 |
|
|
|
1.19 |
|
|
|
1.20 |
|
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
16
|
|
|
|
|
ASSET QUALITY |
|
|
Table 10 |
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sep 30 |
|
|
Jun 30 |
|
|
Mar 31 |
|
|
Dec 31 |
|
|
Sep 30 |
|
|
|
2014 |
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2013 |
|
Nonperforming loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
161 |
|
|
$ |
174 |
|
|
$ |
174 |
|
|
$ |
122 |
|
|
$ |
104 |
|
Lease financing |
|
|
12 |
|
|
|
16 |
|
|
|
14 |
|
|
|
12 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial |
|
|
173 |
|
|
|
190 |
|
|
|
188 |
|
|
|
134 |
|
|
|
116 |
|
Commercial mortgages |
|
|
147 |
|
|
|
121 |
|
|
|
156 |
|
|
|
182 |
|
|
|
210 |
|
Construction and development |
|
|
94 |
|
|
|
105 |
|
|
|
113 |
|
|
|
121 |
|
|
|
146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate |
|
|
241 |
|
|
|
226 |
|
|
|
269 |
|
|
|
303 |
|
|
|
356 |
|
Residential mortgages |
|
|
841 |
|
|
|
818 |
|
|
|
777 |
|
|
|
770 |
|
|
|
732 |
|
Credit card |
|
|
40 |
|
|
|
52 |
|
|
|
65 |
|
|
|
78 |
|
|
|
94 |
|
Other retail |
|
|
184 |
|
|
|
191 |
|
|
|
188 |
|
|
|
191 |
|
|
|
206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming loans, excluding covered loans |
|
|
1,479 |
|
|
|
1,477 |
|
|
|
1,487 |
|
|
|
1,476 |
|
|
|
1,504 |
|
Covered loans |
|
|
88 |
|
|
|
119 |
|
|
|
132 |
|
|
|
127 |
|
|
|
156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming loans |
|
|
1,567 |
|
|
|
1,596 |
|
|
|
1,619 |
|
|
|
1,603 |
|
|
|
1,660 |
|
Other real estate (a) |
|
|
275 |
|
|
|
279 |
|
|
|
296 |
|
|
|
327 |
|
|
|
366 |
|
Covered other real estate (a) |
|
|
72 |
|
|
|
58 |
|
|
|
73 |
|
|
|
97 |
|
|
|
176 |
|
Other nonperforming assets |
|
|
9 |
|
|
|
10 |
|
|
|
11 |
|
|
|
10 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming assets (b) |
|
$ |
1,923 |
|
|
$ |
1,943 |
|
|
$ |
1,999 |
|
|
$ |
2,037 |
|
|
$ |
2,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming assets, excluding covered assets |
|
$ |
1,763 |
|
|
$ |
1,766 |
|
|
$ |
1,794 |
|
|
$ |
1,813 |
|
|
$ |
1,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruing loans 90 days or more past due, excluding covered loans |
|
$ |
532 |
|
|
$ |
581 |
|
|
$ |
695 |
|
|
$ |
713 |
|
|
$ |
591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruing loans 90 days or more past due |
|
$ |
962 |
|
|
$ |
1,038 |
|
|
$ |
1,167 |
|
|
$ |
1,189 |
|
|
$ |
1,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performing restructured loans, excluding GNMA and covered loans |
|
$ |
2,818 |
|
|
$ |
2,911 |
|
|
$ |
3,006 |
|
|
$ |
3,067 |
|
|
$ |
3,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performing restructured GNMA and covered loans |
|
$ |
2,685 |
|
|
$ |
3,072 |
|
|
$ |
3,003 |
|
|
$ |
2,932 |
|
|
$ |
2,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets to loans plus ORE, excluding covered assets (%) |
|
|
.74 |
|
|
|
.75 |
|
|
|
.78 |
|
|
|
.80 |
|
|
|
.85 |
|
Nonperforming assets to loans plus ORE (%) |
|
|
.78 |
|
|
|
.80 |
|
|
|
.84 |
|
|
|
.86 |
|
|
|
.95 |
|
(a) |
Includes equity investments in entities whose principal assets are other real estate owned. |
(b) |
Does not include accruing loans 90 days or more past due. |
Nonperforming assets at September 30, 2014, totaled $1,923 million, compared with $1,943 million at June 30, 2014, and $2,212 million at September 30, 2013. Total nonperforming assets at
September 30, 2014, included $160 million of covered assets. The ratio of nonperforming assets to loans and other real estate was .78 percent (.74 percent excluding covered assets) at September 30, 2014, compared with .80 percent (.75
percent excluding covered assets) at June 30, 2014, and .95 percent (.85 percent excluding covered assets) at September 30, 2013. Total commercial nonperforming loans were $17 million (8.9
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
17
percent) lower on a linked quarter basis and $57 million (49.1 percent) higher year-over-year. Commercial real estate nonperforming loans increased by $15 million (6.6 percent) on a linked
quarter basis and decreased $115 million (32.3 percent) year-over-year. Residential mortgage nonperforming loans increased $23 million (2.8 percent) on a linked quarter basis and $109 million (14.9 percent) year-over-year. Credit card nonperforming
loans were $12 million (23.1 percent) lower on a linked quarter basis and $54 million (57.4 percent) lower year-over-year. Other retail nonperforming loans decreased $7 million (3.7 percent) on a linked quarter basis and $22 million (10.7 percent)
year-over-year.
Accruing loans 90 days or more past due were $962 million ($532 million excluding covered loans) at
September 30, 2014, compared with $1,038 million ($581 million excluding covered loans) at June 30, 2014, and $1,105 million ($591 million excluding covered loans) at September 30, 2013.
|
|
|
|
|
COMMON SHARES |
|
|
Table 11 |
|
(Millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q 2014 |
|
|
2Q 2014 |
|
|
1Q 2014 |
|
|
4Q 2013 |
|
|
3Q 2013 |
|
Beginning shares outstanding |
|
|
1,809 |
|
|
|
1,821 |
|
|
|
1,825 |
|
|
|
1,832 |
|
|
|
1,844 |
|
Shares issued for stock option and stock purchase plans, acquisitions and other corporate purposes |
|
|
2 |
|
|
|
3 |
|
|
|
8 |
|
|
|
6 |
|
|
|
5 |
|
Shares repurchased |
|
|
(16 |
) |
|
|
(15 |
) |
|
|
(12 |
) |
|
|
(13 |
) |
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending shares outstanding |
|
|
1,795 |
|
|
|
1,809 |
|
|
|
1,821 |
|
|
|
1,825 |
|
|
|
1,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. Bancorp shareholders equity was $43.1 billion at September 30, 2014, compared with
$42.7 billion at June 30, 2014, and $40.1 billion at September 30, 2013. During the third quarter, the Company returned 78 percent of third quarter earnings to shareholders, including $441 million in common stock dividends and $654 million
of repurchased common stock.
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
18
|
|
|
|
|
CAPITAL POSITION |
|
|
Table 12 |
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sep 30 2014 |
|
|
Jun 30 2014 |
|
|
Mar 31 2014 |
|
|
Dec 31 2013 |
|
|
Sep 30 2013 |
|
Total U.S. Bancorp shareholders equity |
|
$ |
43,141 |
|
|
$ |
42,700 |
|
|
$ |
42,054 |
|
|
$ |
41,113 |
|
|
$ |
40,132 |
|
Standardized Approach |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III transitional standardized approach/Basel I (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital |
|
$ |
30,213 |
|
|
$ |
29,760 |
|
|
$ |
29,463 |
|
|
$ |
27,942 |
|
|
$ |
27,265 |
|
Tier 1 capital |
|
|
35,377 |
|
|
|
34,924 |
|
|
|
34,627 |
|
|
|
33,386 |
|
|
|
32,707 |
|
Total risk-based capital |
|
|
42,509 |
|
|
|
41,034 |
|
|
|
40,741 |
|
|
|
39,340 |
|
|
|
38,873 |
|
Common equity tier 1 capital ratio |
|
|
9.7 |
% |
|
|
9.6 |
% |
|
|
9.7 |
% |
|
|
9.4 |
% |
|
|
9.3 |
% |
Tier 1 capital ratio |
|
|
11.3 |
|
|
|
11.3 |
|
|
|
11.4 |
|
|
|
11.2 |
|
|
|
11.2 |
|
Total risk-based capital ratio |
|
|
13.6 |
|
|
|
13.2 |
|
|
|
13.5 |
|
|
|
13.2 |
|
|
|
13.3 |
|
Leverage ratio |
|
|
9.4 |
|
|
|
9.6 |
|
|
|
9.7 |
|
|
|
9.6 |
|
|
|
9.6 |
|
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized
approach |
|
|
9.0 |
|
|
|
8.9 |
|
|
|
9.0 |
|
|
|
8.8 |
|
|
|
8.6 |
|
Advanced Approaches |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital to risk-weighted assets for the Basel III transitional advanced approaches |
|
|
12.4 |
|
|
|
12.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced
approaches |
|
|
11.8 |
|
|
|
11.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets |
|
|
7.6 |
|
|
|
7.5 |
|
|
|
7.8 |
|
|
|
7.7 |
|
|
|
7.4 |
|
Tangible common equity to risk-weighted assets |
|
|
9.3 |
|
|
|
9.2 |
|
|
|
9.3 |
|
|
|
9.1 |
|
|
|
8.9 |
|
(a) |
2014 amounts and ratios calculated under the Basel III transitional standardized approach; all prior periods under Basel I |
Prior to 2014, the regulatory capital requirements effective for the Company followed Basel I. Beginning January 1, 2014, the
regulatory capital requirements effective for the Company follow Basel III, subject to certain transition provisions from Basel I over the next four years to full implementation by January 1, 2018. In addition, beginning the second quarter of
2014, the advanced approaches portion of Basel III became effective for the Company. Under the Basel III transitional standardized approach, the common equity tier 1 capital ratio was 9.7 percent at September 30, 2014, compared with 9.6 percent
at June 30, 2014. The tier 1 capital ratio was 11.3 percent at September 30, 2014, and at June 30, 2014, compared with 11.2 percent at September 30, 2013. Under the Basel III transitional advanced approaches, the common equity
tier 1 capital to risk-weighted assets ratio was 12.4 percent at September 30, 2014, compared with 12.3 percent at June 30, 2014. All regulatory ratios continue to be in excess of well-capitalized requirements. In addition, the
common equity tier 1 capital to risk-weighted assets ratio estimated for the
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
19
Basel III standardized approach as if fully implemented was 9.0 percent at September 30, 2014, compared with 8.9 percent at June 30, 2014, and 8.6 percent at September 30, 2013,
and the common equity tier 1 capital to risk-weighted assets ratio estimated for the Basel III advanced approaches as if fully implemented was 11.8 percent at September 30, 2014, compared with 11.7 percent at June 30, 2014. The tangible
common equity to tangible assets ratio was 7.6 percent at September 30, 2014, compared with 7.5 percent at June 30, 2014, and 7.4 percent at September 30, 2013.
|
|
|
|
|
LINE OF BUSINESS FINANCIAL PERFORMANCE (a) |
|
|
Table 13 |
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to U.S. Bancorp |
|
|
Percent Change |
|
|
Net Income Attributable to U.S. Bancorp |
|
|
|
|
|
|
|
Business Line |
|
3Q 2014 |
|
|
2Q 2014 |
|
|
3Q 2013 |
|
|
3Q14 vs 2Q14 |
|
|
3Q14 vs 3Q13 |
|
|
YTD 2014 |
|
|
YTD 2013 |
|
|
Percent Change |
|
|
3Q
2014 Earnings Composition |
|
Wholesale Banking and Commercial Real Estate |
|
$ |
267 |
|
|
$ |
279 |
|
|
$ |
324 |
|
|
|
(4.3 |
) |
|
|
(17.6 |
) |
|
$ |
827 |
|
|
$ |
959 |
|
|
|
(13.8 |
) |
|
|
18 |
% |
Consumer and Small Business Banking |
|
|
307 |
|
|
|
316 |
|
|
|
373 |
|
|
|
(2.8 |
) |
|
|
(17.7 |
) |
|
|
907 |
|
|
|
1,110 |
|
|
|
(18.3 |
) |
|
|
21 |
|
Wealth Management and Securities Services |
|
|
63 |
|
|
|
57 |
|
|
|
36 |
|
|
|
10.5 |
|
|
|
75.0 |
|
|
|
173 |
|
|
|
121 |
|
|
|
43.0 |
|
|
|
4 |
|
Payment Services |
|
|
298 |
|
|
|
279 |
|
|
|
266 |
|
|
|
6.8 |
|
|
|
12.0 |
|
|
|
809 |
|
|
|
743 |
|
|
|
8.9 |
|
|
|
20 |
|
Treasury and Corporate Support |
|
|
536 |
|
|
|
564 |
|
|
|
469 |
|
|
|
(5.0 |
) |
|
|
14.3 |
|
|
|
1,647 |
|
|
|
1,447 |
|
|
|
13.8 |
|
|
|
37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Company |
|
$ |
1,471 |
|
|
$ |
1,495 |
|
|
$ |
1,468 |
|
|
|
(1.6 |
) |
|
|
.2 |
|
|
$ |
4,363 |
|
|
$ |
4,380 |
|
|
|
(.4 |
) |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lines of Business
The Companys major lines of business are Wholesale Banking and Commercial Real Estate, Consumer and Small Business
Banking, Wealth Management and Securities Services, Payment Services, and Treasury and Corporate Support. These operating segments are components of the Company about which financial information is prepared and is evaluated regularly by management
in deciding how to allocate resources and assess performance. Noninterest expenses incurred by centrally managed operations or business lines that directly support another business lines operations are charged to the applicable business line
based on its utilization of those services, primarily measured by the volume of customer activities, number of employees or other relevant factors. These allocated expenses are reported as net shared services expense within noninterest expense.
Designations, assignments and allocations change from time to time as management systems are enhanced, methods of evaluating performance or product lines change or business segments are
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
20
realigned to better respond to the Companys diverse customer base. During 2014, certain organization and methodology changes were made and, accordingly, prior period results were restated
and presented on a comparable basis.
Wholesale Banking and Commercial Real Estate offers lending, equipment finance
and small-ticket leasing, depository services, treasury management, capital markets, international trade services and other financial services to middle market, large corporate, commercial real estate, financial institution, non-profit and public
sector clients. Wholesale Banking and Commercial Real Estate contributed $267 million of the Companys net income in the third quarter of 2014, compared with $324 million in the third quarter of 2013 and $279 million in the second quarter of
2014. Wholesale Banking and Commercial Real Estates net income decreased $57 million (17.6 percent) from the same quarter of 2013 due to a higher provision for credit losses and a decrease in total net revenue. Total net revenue declined by
$18 million (2.3 percent), due to an 11.3 percent decrease in total noninterest income, partially offset by a 2.4 percent increase in net interest income. Net interest income increased $12 million (2.4 percent) year-over-year, primarily due to an
increase in average total loans and deposits, partially offset by lower rates and fees on loans. Total noninterest income decreased by $30 million (11.3 percent), driven by lower wholesale transaction activity and loan-related fees, partially offset
by increases in commercial leasing revenue and equity and bond underwriting fees. Total noninterest expense was relatively flat compared with a year ago, as an increase in the FDIC insurance assessment allocation based on the level of commitments,
was offset by lower professional services expense and net shared services expense. The provision for credit losses was $70 million higher year-over-year due to an increase in net charge-offs and an unfavorable change in the reserve allocation.
Wholesale Banking and Commercial Real Estates contribution to net income in the third quarter of 2014 was $12 million
(4.3 percent) lower than the second quarter of 2014, due to a decrease in total net revenue and an increase in the provision for credit losses, partially offset by a decrease in total noninterest expense. Total net revenue decreased by $17 million
(2.2 percent) compared with the prior quarter. Total noninterest income decreased by $22 million (8.5 percent), driven by lower wholesale transaction activity, in part due to seasonally higher transaction volumes in the prior quarter, and lower
equity investment revenue. Net interest income increased by $5 million (1.0 percent) on a linked quarter basis, primarily due to higher average loans and an additional day in the current quarter relative to the prior quarter, partially offset by
lower loan rates. Total noninterest expense decreased by $13 million (4.1 percent) due to lower
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
21
compensation and employee benefits expense and seasonally lower net shared services expense. The provision for credit losses increased by $14 million (93.3 percent) due to higher net charge-offs.
Consumer and Small Business Banking delivers products and services through banking offices, telephone servicing and
sales, on-line services, direct mail, ATM processing and mobile devices, such as mobile phones and tablet computers. It encompasses community banking, metropolitan banking, in-store banking, small business banking, consumer lending, mortgage
banking, workplace banking, student banking and 24-hour banking. Consumer and Small Business Banking contributed $307 million of the Companys net income in the third quarter of 2014, a $66 million (17.7 percent) decrease from the third quarter
of 2013 and a $9 million (2.8 percent) decrease from the prior quarter. Within Consumer and Small Business Banking, the retail banking division reported a 22.0 percent decrease in its contribution from the same quarter of last year, principally due
to lower total net revenue and an increase in total noninterest expense. Retail bankings total net revenue was 3.6 percent lower than the third quarter of 2013. Net interest income decreased 7.2 percent, primarily as a result of lower fees due
to the wind down of the CAA product, lower rates on loans, and the impact of lower rates on the margin benefit from deposits, partially offset by higher average loan and deposit balances. Total noninterest income for the retail banking division
increased 5.3 percent over a year ago, principally due to an increase in retail lease revenue and deposit service charges. Total noninterest expense for the retail banking division in the third quarter of 2014 increased 5.2 percent over the same
quarter of the prior year, primarily due to merger integration and higher compensation and employee benefits expense, partially offset by lower FDIC insurance assessments. The provision for credit losses for the retail banking division decreased
19.1 percent on a year-over-year basis, due to lower net charge-offs, partially offset by an unfavorable change in the reserve allocation. The contribution of the mortgage banking division was lower by 11.6 percent than the third quarter of 2013,
reflecting a decrease in total net revenue, partially offset by a reduction in the provision for credit losses. The divisions 15.7 percent decrease in total net revenue was due to a 21.3 percent decrease in total noninterest income,
principally due to an unfavorable change in the valuation of MSRs, net of hedging activities, as well as a 4.8 percent decrease in net interest income, primarily the result of lower average loans held for sale. Total noninterest expense was 6.6
percent higher than the prior year, primarily due to mortgage servicing-related expenses, partially offset by lower incentive compensation. The $62 million favorable change in the provision for credit losses for the mortgage banking division was due
to lower net charge-offs and a favorable change in the reserve allocation.
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
22
Consumer and Small Business Bankings contribution in the third quarter of 2014 was
$9 million (2.8 percent) lower than the second quarter of 2014, primarily due to an increase in total noninterest expense. Within Consumer and Small Business Banking, the retail banking divisions contribution decreased 6.6 percent, mainly due
to an increase in total noninterest expense, partially offset by a decrease in the provision for credit losses. Total net revenue for the retail banking division decreased .9 percent compared with the previous quarter. Net interest income was 2.0
percent lower, primarily due to lower loan fees due to the wind down of the CAA product, partially offset by higher average loan and deposit balances and one additional day in the current quarter relative to the prior quarter. Total noninterest
income was 1.7 percent higher on a linked quarter basis, driven by higher deposit service charges. Total noninterest expense increased 3.4 percent on a linked quarter basis due to merger integration expense. The provision for credit losses decreased
22.5 percent on a linked quarter basis due to lower net charge-offs and a favorable change in the reserve allocation in the current quarter. The contribution of the mortgage banking division increased 2.2 percent over the second quarter of 2014
primarily due to a lower provision for credit losses, partially offset by higher total noninterest expense. Total net revenue was relatively flat due to an 11.3 percent increase in net interest income, due to higher average loans held for sale,
higher average loan balances, and an additional day in the quarter, offset by a 6.6 percent decrease in total noninterest income, due to an unfavorable change in the valuation of MSRs, net of hedging activities. Total noninterest expense increased
3.9 percent, primarily reflecting higher mortgage servicing-related expenses and higher compensation and employee benefits expense. The provision for credit losses for the mortgage banking division decreased $14 million on a linked quarter basis due
to a decrease in net charge-offs and a favorable change in the reserve allocation.
Wealth Management and Securities
Services provides private banking, financial advisory services, investment management, retail brokerage services, insurance, trust, custody and fund servicing through five businesses: Wealth Management, Corporate Trust Services, U.S. Bancorp
Asset Management, Institutional Trust & Custody and Fund Services. Wealth Management and Securities Services contributed $63 million of the Companys net income in the third quarter of 2014, compared with $36 million in the third
quarter of 2013 and $57 million in the second quarter of 2014. The business lines contribution was $27 million (75.0 percent) higher than the same quarter of 2013, as an increase in total net revenue was partially offset by higher total
noninterest expense. Total net revenue increased by $52 million (13.1 percent) year-over-year, driven by a $38 million (12.1 percent) increase in total noninterest income, reflecting the impact of account growth, improved market conditions, and
business expansion. In addition, net interest income increased by
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
23
$14 million (17.1 percent), principally due to higher average loan and deposit balances and an increase in the margin benefit of corporate trust deposits. Total noninterest expense increased
by $10 million (3.0 percent) primarily as a result of higher compensation and employee benefits expense, including the impact of business expansion, partially offset by lower net shared services expense. The provision for credit losses remained flat
compared to the prior year quarter, as lower net charge-offs were offset by an unfavorable change in the reserve allocation.
The business lines contribution in the third quarter of 2014 was $6 million (10.5 percent) higher than the prior quarter. Total net revenue increased on a linked quarter basis, reflecting an
increase in net interest income (5.5 percent), principally due to higher average deposit balances and the impact of higher rates on the margin benefit from corporate trust deposits. In addition, an increase in total noninterest income (1.4 percent)
was due to higher trust and investment management fees, resulting from improved market conditions and account growth, including business expansion. Total noninterest expense was relatively flat compared with the prior quarter, as higher compensation
and professional services expenses were offset by lower employee benefits expense. The provision for credit losses remained flat on a linked quarter basis, as lower net charge-offs were offset by an unfavorable change in the reserve allocation.
Payment Services includes consumer and business credit cards, stored-value cards, debit cards, corporate and
purchasing card services, consumer lines of credit and merchant processing. Payment Services contributed $298 million of the Companys net income in the third quarter of 2014, compared with $266 million in the third quarter of 2013 and $279
million in the second quarter of 2014. The $32 million (12.0 percent) increase in the business lines contribution from the prior year was due to an increase in total net revenue, partially offset by an increase in total noninterest expense and
a higher provision for credit losses. Total net revenue increased by $69 million (5.7 percent) year-over-year. Net interest income increased by $49 million (12.5 percent), primarily due to higher average loan balances and fees and improved loan
rates. Total noninterest income was $20 million (2.4 percent) higher year-over-year, due to higher merchant processing services revenue due to increased product fees and transaction volumes, partially offset by lower rates, and an increase in credit
and debit card revenue on higher transaction volumes. Total noninterest expense increased by $3 million (.5 percent) over the third quarter of 2013, primarily due to higher compensation and employee benefits expense, including the impact of business
initiatives, partially offset by reductions in technology and communications expense and other intangibles expense. The provision for credit losses increased by $18 million (10.5 percent) due to an unfavorable change in the reserve allocation,
partially offset by lower net charge-offs.
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
24
Payment Services contribution in the third quarter of 2014 increased $19 million
(6.8 percent) over the second quarter of 2014. Total net revenue increased $37 million (3.0 percent) on a linked quarter basis driven by higher net interest income and higher total noninterest income. Net interest income increased by $27 million
(6.5 percent) over the second quarter mainly due to improved loan rates. Total noninterest income increased by $10 million (1.2 percent), primarily reflecting an increase in corporate payment products revenue on seasonally higher volumes, partially
offset by a reduction in credit and debit card revenue due to higher rewards expense. Total noninterest expense was flat on a linked quarter basis as increased marketing expenses were offset by lower net shared services expense. The provision for
credit losses was $8 million (4.4 percent) higher on a linked quarter basis due to an unfavorable change in the reserve allocation, partially offset by lower net charge-offs.
Treasury and Corporate Support includes the Companys investment portfolios, most covered commercial and commercial real estate loans and related other real estate owned, funding, capital
management, interest rate risk management, the net effect of transfer pricing related to average balances, income taxes not allocated to business lines, including most investments in tax-advantaged projects, and the residual aggregate of those
expenses associated with corporate activities that are managed on a consolidated basis. Treasury and Corporate Support recorded net income of $536 million in the third quarter of 2014, compared with $469 million in the third quarter of 2013 and $564
million in the second quarter of 2014. Net interest income increased by $38 million (6.6 percent) over the third quarter of 2013, principally due to an increase in average balances in the investment securities portfolio and lower rates on short-term
borrowings, partially offset by lower income from the run-off of acquired assets. Total noninterest income increased by $85 million over the third quarter of last year, mainly due to gains on sales of equity investments and higher commercial
products revenue. Total noninterest expense decreased by $26 million (13.1 percent), principally due to a decrease in employee benefits expense resulting from lower pension costs and lower costs for investments in tax-advantaged projects related to
a change in accounting for affordable housing investments in the first quarter of 2014, partially offset by increased compensation expense. The provision for credit losses was $9 million higher year-over-year, due to an unfavorable change in the
reserve allocation and higher net charge-offs.
Net income in the third quarter of 2014 was $28 million (5.0 percent) lower on
a linked quarter basis, driven by lower total net revenue, partially offset by lower total noninterest expense. Total net revenue was $214 million (21.9 percent) lower than the prior quarter, driven by a second quarter sale of Visa, Inc. Class B
common stock. A $167 million (49.1 percent) decrease in total noninterest expense was primarily due to the
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
25
FHA DOJ settlement and charitable contributions in the second quarter, partially offset by Charter One merger integration costs and seasonally higher costs related to investments in
tax-advantaged projects. The provision for credit losses was $6 million higher compared with the second quarter of 2014 due to higher net charge-offs and an unfavorable change in the reserve allocation.
Additional schedules containing more detailed information about the Companys business line results are available on the web at
usbank.com or by calling Investor Relations at 612-303-4328.
On Wednesday, October 22, 2014, at 8:00 a.m. (CDT) Richard K. Davis,
chairman, president and chief executive officer, and Andrew Cecere, vice chairman and chief financial officer, will host a conference call to review the financial results. The conference call will be available by telephone or on the Internet. A
presentation will be used during the call and will be available on the Companys website at www.usbank.com. To access the conference call from locations within the United States and Canada, please dial 866-316-1409. Participants calling from
outside the United States and Canada, please dial 706-634-9086. The conference ID number for all participants is 97474478. For those unable to participate during the live call, a recording of the call will be available approximately two hours after
the conference call ends on Wednesday, October 22nd, and will run through Wednesday, October 29th, at 11:00 p.m. (CDT). To access the recorded message within the United States and Canada, dial 855-859-2056. If calling from outside the
United States and Canada, please dial 404-537-3406 to access the recording. The conference ID is 97474478. To access the webcast and presentation go to www.usbank.com and click on About U.S. Bank. The Webcasts &
Presentations link can be found under the Investor/Shareholder information heading, which is at the left side of the bottom of the page.
Minneapolis-based U.S. Bancorp (USB), with $391 billion in assets as of September 30, 2014, is the parent company of U.S. Bank National Association, the 5th largest commercial bank in the
United States. The Company operates 3,177 banking offices in 25 states and 5,026 ATMs and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and
institutions. Visit U.S. Bancorp on the web at usbank.com.
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
26
Forward-Looking Statements
The following information appears in accordance with the Private Securities Litigation Reform Act of 1995:
This press release contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking
statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future
plans and prospects of U.S. Bancorp. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. A reversal or slowing of the current moderate
economic recovery or another severe contraction could adversely affect U.S. Bancorps revenues and the values of its assets and liabilities. Global financial markets could experience a recurrence of significant turbulence, which could reduce
the availability of funding to certain financial institutions and lead to a tightening of credit, a reduction of business activity, and increased market volatility. Continued stress in the commercial real estate markets, as well as a delay or
failure of recovery in the residential real estate markets could cause additional credit losses and deterioration in asset values. In addition, U.S. Bancorps business and financial performance is likely to be negatively impacted by recently
enacted and future legislation and regulation. U.S. Bancorps results could also be adversely affected by deterioration in general business and economic conditions; changes in interest rates; deterioration in the credit quality of its loan
portfolios or in the value of the collateral securing those loans; deterioration in the value of securities held in its investment securities portfolio; legal and regulatory developments; increased competition from both banks and non-banks; changes
in customer behavior and preferences; breaches in data security; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and managements ability to effectively manage credit risk,
residual value risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputational risk.
For discussion of these and other risks that may cause actual results to differ from expectations, refer to U.S. Bancorps Annual Report on Form
10-K for the year ended December 31, 2013, on file with the Securities and Exchange Commission, including the sections entitled Risk Factors and Corporate Risk Profile contained in Exhibit 13, and all subsequent filings
with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. However, factors other than these also could adversely affect U.S. Bancorps results, and the reader should not
consider these factors to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.
(MORE)
U.S. Bancorp Reports Third Quarter 2014 Results
October 22, 2014
Page
27
Non-GAAP Financial Measures
In addition to capital ratios defined by banking regulators, the Company considers various other measures when evaluating capital utilization and adequacy, including:
|
|
|
Tangible common equity to tangible assets, |
|
|
|
Tangible common equity to risk-weighted assets, |
|
|
|
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach, |
|
|
|
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced approaches, and for additional information,
|
|
|
|
Tier 1 common equity to risk-weighted assets using Basel I definition. |
These measures are viewed by management as useful additional methods of reflecting the level of capital available to withstand unexpected market or economic conditions. Additionally, presentation of these
measures allows investors, analysts and banking regulators to assess the Companys capital position relative to other financial services companies. These measures differ from currently effective capital ratios defined by banking regulations
principally in that the numerator includes unrealized gains and losses related to available-for-sale securities and excludes preferred securities, including preferred stock, the nature and extent of which varies among different financial services
companies. These measures are not defined in generally accepted accounting principles (GAAP), or are not currently effective or defined in federal banking regulations. As a result, these measures disclosed by the Company may be
considered non-GAAP financial measures.
There may be limits in the usefulness of these measures to investors. As a result, the Company
encourages readers to consider the consolidated financial statements and other financial information contained in this press release in their entirety, and not to rely on any single financial measure. A table follows that shows the Companys
calculation of these non-GAAP financial measures.
###
(MORE)
U.S. Bancorp
Consolidated Statement of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
(Dollars and Shares in Millions, Except Per Share Data) |
|
September 30, |
|
|
September 30, |
|
(Unaudited) |
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Interest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
2,518 |
|
|
$ |
2,568 |
|
|
$ |
7,572 |
|
|
$ |
7,682 |
|
Loans held for sale |
|
|
36 |
|
|
|
46 |
|
|
|
87 |
|
|
|
172 |
|
Investment securities |
|
|
476 |
|
|
|
420 |
|
|
|
1,378 |
|
|
|
1,222 |
|
Other interest income |
|
|
27 |
|
|
|
34 |
|
|
|
89 |
|
|
|
141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
|
3,057 |
|
|
|
3,068 |
|
|
|
9,126 |
|
|
|
9,217 |
|
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
115 |
|
|
|
134 |
|
|
|
348 |
|
|
|
433 |
|
Short-term borrowings |
|
|
72 |
|
|
|
98 |
|
|
|
204 |
|
|
|
270 |
|
Long-term debt |
|
|
178 |
|
|
|
178 |
|
|
|
543 |
|
|
|
587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
365 |
|
|
|
410 |
|
|
|
1,095 |
|
|
|
1,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
2,692 |
|
|
|
2,658 |
|
|
|
8,031 |
|
|
|
7,927 |
|
Provision for credit losses |
|
|
311 |
|
|
|
298 |
|
|
|
941 |
|
|
|
1,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for credit losses |
|
|
2,381 |
|
|
|
2,360 |
|
|
|
7,090 |
|
|
|
6,864 |
|
Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit and debit card revenue |
|
|
251 |
|
|
|
244 |
|
|
|
749 |
|
|
|
702 |
|
Corporate payment products revenue |
|
|
195 |
|
|
|
192 |
|
|
|
550 |
|
|
|
540 |
|
Merchant processing services |
|
|
387 |
|
|
|
371 |
|
|
|
1,127 |
|
|
|
1,091 |
|
ATM processing services |
|
|
81 |
|
|
|
83 |
|
|
|
241 |
|
|
|
248 |
|
Trust and investment management fees |
|
|
315 |
|
|
|
280 |
|
|
|
930 |
|
|
|
842 |
|
Deposit service charges |
|
|
185 |
|
|
|
180 |
|
|
|
513 |
|
|
|
493 |
|
Treasury management fees |
|
|
136 |
|
|
|
134 |
|
|
|
409 |
|
|
|
408 |
|
Commercial products revenue |
|
|
209 |
|
|
|
207 |
|
|
|
635 |
|
|
|
616 |
|
Mortgage banking revenue |
|
|
260 |
|
|
|
328 |
|
|
|
774 |
|
|
|
1,125 |
|
Investment products fees |
|
|
49 |
|
|
|
46 |
|
|
|
142 |
|
|
|
133 |
|
Securities gains (losses), net |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
2 |
|
|
|
8 |
|
Other |
|
|
177 |
|
|
|
115 |
|
|
|
722 |
|
|
|
412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest income |
|
|
2,242 |
|
|
|
2,177 |
|
|
|
6,794 |
|
|
|
6,618 |
|
Noninterest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
|
1,132 |
|
|
|
1,088 |
|
|
|
3,372 |
|
|
|
3,268 |
|
Employee benefits |
|
|
250 |
|
|
|
278 |
|
|
|
796 |
|
|
|
865 |
|
Net occupancy and equipment |
|
|
249 |
|
|
|
240 |
|
|
|
739 |
|
|
|
709 |
|
Professional services |
|
|
102 |
|
|
|
94 |
|
|
|
282 |
|
|
|
263 |
|
Marketing and business development |
|
|
78 |
|
|
|
85 |
|
|
|
253 |
|
|
|
254 |
|
Technology and communications |
|
|
219 |
|
|
|
214 |
|
|
|
644 |
|
|
|
639 |
|
Postage, printing and supplies |
|
|
81 |
|
|
|
76 |
|
|
|
242 |
|
|
|
230 |
|
Other intangibles |
|
|
51 |
|
|
|
55 |
|
|
|
148 |
|
|
|
167 |
|
Other |
|
|
452 |
|
|
|
435 |
|
|
|
1,435 |
|
|
|
1,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense |
|
|
2,614 |
|
|
|
2,565 |
|
|
|
7,911 |
|
|
|
7,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
2,009 |
|
|
|
1,972 |
|
|
|
5,973 |
|
|
|
5,890 |
|
Applicable income taxes |
|
|
523 |
|
|
|
542 |
|
|
|
1,566 |
|
|
|
1,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
1,486 |
|
|
|
1,430 |
|
|
|
4,407 |
|
|
|
4,261 |
|
Net (income) loss attributable to noncontrolling interests |
|
|
(15 |
) |
|
|
38 |
|
|
|
(44 |
) |
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to U.S. Bancorp |
|
$ |
1,471 |
|
|
$ |
1,468 |
|
|
$ |
4,363 |
|
|
$ |
4,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income applicable to U.S. Bancorp common shareholders |
|
$ |
1,405 |
|
|
$ |
1,400 |
|
|
$ |
4,163 |
|
|
$ |
4,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
$ |
.78 |
|
|
$ |
.76 |
|
|
$ |
2.30 |
|
|
$ |
2.26 |
|
Diluted earnings per common share |
|
$ |
.78 |
|
|
$ |
.76 |
|
|
$ |
2.29 |
|
|
$ |
2.25 |
|
Dividends declared per common share |
|
$ |
.245 |
|
|
$ |
.230 |
|
|
$ |
.720 |
|
|
$ |
.655 |
|
Average common shares outstanding |
|
|
1,798 |
|
|
|
1,832 |
|
|
|
1,809 |
|
|
|
1,844 |
|
Average diluted common shares outstanding |
|
|
1,807 |
|
|
|
1,843 |
|
|
|
1,819 |
|
|
|
1,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 28
U.S. Bancorp
Consolidated Ending Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
(Dollars in Millions) |
|
2014 |
|
|
2013 |
|
|
2013 |
|
|
|
(Unaudited) |
|
|
|
|
|
(Unaudited) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
6,183 |
|
|
$ |
8,477 |
|
|
$ |
11,615 |
|
Investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity |
|
|
44,231 |
|
|
|
38,920 |
|
|
|
36,904 |
|
Available-for-sale |
|
|
52,674 |
|
|
|
40,935 |
|
|
|
39,307 |
|
Loans held for sale |
|
|
3,939 |
|
|
|
3,268 |
|
|
|
3,858 |
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
78,878 |
|
|
|
70,033 |
|
|
|
68,958 |
|
Commercial real estate |
|
|
40,909 |
|
|
|
39,885 |
|
|
|
38,678 |
|
Residential mortgages |
|
|
51,957 |
|
|
|
51,156 |
|
|
|
50,170 |
|
Credit card |
|
|
17,858 |
|
|
|
18,021 |
|
|
|
17,063 |
|
Other retail |
|
|
48,935 |
|
|
|
47,678 |
|
|
|
47,114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, excluding covered loans |
|
|
238,537 |
|
|
|
226,773 |
|
|
|
221,983 |
|
Covered loans |
|
|
7,054 |
|
|
|
8,462 |
|
|
|
9,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
|
|
245,591 |
|
|
|
235,235 |
|
|
|
231,379 |
|
Less allowance for loan losses |
|
|
(4,065 |
) |
|
|
(4,250 |
) |
|
|
(4,258 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loans |
|
|
241,526 |
|
|
|
230,985 |
|
|
|
227,121 |
|
Premises and equipment |
|
|
2,608 |
|
|
|
2,606 |
|
|
|
2,608 |
|
Goodwill |
|
|
9,401 |
|
|
|
9,205 |
|
|
|
9,173 |
|
Other intangible assets |
|
|
3,338 |
|
|
|
3,529 |
|
|
|
3,455 |
|
Other assets |
|
|
27,384 |
|
|
|
26,096 |
|
|
|
26,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
391,284 |
|
|
$ |
364,021 |
|
|
$ |
360,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing |
|
$ |
78,641 |
|
|
$ |
76,941 |
|
|
$ |
72,333 |
|
Interest-bearing |
|
|
165,070 |
|
|
|
156,165 |
|
|
|
152,861 |
|
Time deposits greater than $100,000 |
|
|
29,386 |
|
|
|
29,017 |
|
|
|
36,522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
|
|
273,097 |
|
|
|
262,123 |
|
|
|
261,716 |
|
Short-term borrowings |
|
|
30,045 |
|
|
|
27,608 |
|
|
|
26,128 |
|
Long-term debt |
|
|
30,768 |
|
|
|
20,049 |
|
|
|
18,750 |
|
Other liabilities |
|
|
13,545 |
|
|
|
12,434 |
|
|
|
12,535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
347,455 |
|
|
|
322,214 |
|
|
|
319,129 |
|
Shareholders equity |
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
|
4,756 |
|
|
|
4,756 |
|
|
|
4,756 |
|
Common stock |
|
|
21 |
|
|
|
21 |
|
|
|
21 |
|
Capital surplus |
|
|
8,293 |
|
|
|
8,216 |
|
|
|
8,188 |
|
Retained earnings |
|
|
41,543 |
|
|
|
38,667 |
|
|
|
37,692 |
|
Less treasury stock |
|
|
(10,836 |
) |
|
|
(9,476 |
) |
|
|
(9,174 |
) |
Accumulated other comprehensive income (loss) |
|
|
(636 |
) |
|
|
(1,071 |
) |
|
|
(1,351 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. Bancorp shareholders equity |
|
|
43,141 |
|
|
|
41,113 |
|
|
|
40,132 |
|
Noncontrolling interests |
|
|
688 |
|
|
|
694 |
|
|
|
1,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
43,829 |
|
|
|
41,807 |
|
|
|
41,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
391,284 |
|
|
$ |
364,021 |
|
|
$ |
360,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 29
U.S. Bancorp
Non-GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
(Dollars in Millions, Unaudited) |
|
2014 |
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2013 |
|
Total equity |
|
$ |
43,829 |
|
|
$ |
43,386 |
|
|
$ |
42,743 |
|
|
$ |
41,807 |
|
|
$ |
41,552 |
|
Preferred stock |
|
|
(4,756 |
) |
|
|
(4,756 |
) |
|
|
(4,756 |
) |
|
|
(4,756 |
) |
|
|
(4,756 |
) |
Noncontrolling interests |
|
|
(688 |
) |
|
|
(686 |
) |
|
|
(689 |
) |
|
|
(694 |
) |
|
|
(1,420 |
) |
Goodwill (net of deferred tax liability) (1) |
|
|
(8,503 |
) |
|
|
(8,548 |
) |
|
|
(8,352 |
) |
|
|
(8,343 |
) |
|
|
(8,319 |
) |
Intangible assets, other than mortgage servicing rights |
|
|
(877 |
) |
|
|
(925 |
) |
|
|
(804 |
) |
|
|
(849 |
) |
|
|
(878 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (a) |
|
|
29,005 |
|
|
|
28,471 |
|
|
|
28,142 |
|
|
|
27,165 |
|
|
|
26,179 |
|
Tangible common equity (as calculated above) |
|
|
29,005 |
|
|
|
28,471 |
|
|
|
28,142 |
|
|
|
27,165 |
|
|
|
26,179 |
|
Adjustments (2) |
|
|
187 |
|
|
|
224 |
|
|
|
239 |
|
|
|
224 |
|
|
|
258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital estimated for the Basel III fully implemented standardized and advanced approaches
(b) |
|
|
29,192 |
|
|
|
28,695 |
|
|
|
28,381 |
|
|
|
27,389 |
|
|
|
26,437 |
|
Tier 1 capital, determined in accordance with prescribed regulatory requirements using Basel I definition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,386 |
|
|
|
32,707 |
|
Preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,756 |
) |
|
|
(4,756 |
) |
Noncontrolling interests, less preferred stock not eligible for Tier 1 capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(688 |
) |
|
|
(686 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 common equity using Basel I definition (c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,942 |
|
|
|
27,265 |
|
Total assets |
|
|
391,284 |
|
|
|
389,065 |
|
|
|
371,289 |
|
|
|
364,021 |
|
|
|
360,681 |
|
Goodwill (net of deferred tax liability) (1) |
|
|
(8,503 |
) |
|
|
(8,548 |
) |
|
|
(8,352 |
) |
|
|
(8,343 |
) |
|
|
(8,319 |
) |
Intangible assets, other than mortgage servicing rights |
|
|
(877 |
) |
|
|
(925 |
) |
|
|
(804 |
) |
|
|
(849 |
) |
|
|
(878 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible assets (d) |
|
|
381,904 |
|
|
|
379,592 |
|
|
|
362,133 |
|
|
|
354,829 |
|
|
|
351,484 |
|
Risk-weighted assets, determined in accordance with prescribed regulatory requirements (3) (e) |
|
|
311,914 |
* |
|
|
309,929 |
|
|
|
302,841 |
|
|
|
297,919 |
|
|
|
293,155 |
|
Adjustments (4) |
|
|
12,837 |
* |
|
|
12,753 |
|
|
|
13,238 |
|
|
|
13,712 |
|
|
|
13,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-weighted assets estimated for the Basel III fully implemented standardized approach (f) |
|
|
324,751 |
* |
|
|
322,682 |
|
|
|
316,079 |
|
|
|
311,631 |
|
|
|
306,628 |
|
Risk-weighted assets, determined in accordance with prescribed transitional advanced approaches regulatory
requirements |
|
|
243,905 |
* |
|
|
241,929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments (5) |
|
|
3,443 |
* |
|
|
3,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-weighted assets estimated for the Basel III fully implemented advanced approaches (g) |
|
|
247,348 |
* |
|
|
245,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets (a)/(d) |
|
|
7.6 |
% |
|
|
7.5 |
% |
|
|
7.8 |
% |
|
|
7.7 |
% |
|
|
7.4 |
% |
Tangible common equity to risk-weighted assets (a)/(e) |
|
|
9.3 |
|
|
|
9.2 |
|
|
|
9.3 |
|
|
|
9.1 |
|
|
|
8.9 |
|
Tier 1 common equity to risk-weighted assets using Basel I definition (c)/(e) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.4 |
|
|
|
9.3 |
|
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach
(b)/(f) |
|
|
9.0 |
|
|
|
8.9 |
|
|
|
9.0 |
|
|
|
8.8 |
|
|
|
8.6 |
|
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced approaches
(b)/(g) |
|
|
11.8 |
|
|
|
11.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Preliminary data. Subject to change prior to filings with applicable regulatory agencies. |
(1) |
Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements beginning March 31, 2014.
|
(2) |
Includes net losses on cash flow hedges included in accumulated other comprehensive income and other adjustments. |
(3) |
Beginning March 31, 2014, calculated under the Basel III transitional standardized approach; all other periods calculated under Basel I. |
(4) |
Includes higher risk-weighting for unfunded loan commitments, investment securities, residential mortgages, mortgage servicing rights and other adjustments.
|
(5) |
Primarily reflects higher risk-weighting for mortgage servicing rights. |
Page 30
|
Richard K. Davis
Chairman, President and CEO
Andy Cecere
Vice Chairman and CFO
U.S. Bancorp
3Q14 Earnings
Conference Call
U.S. Bancorp
3Q14 Earnings
Conference Call
October 22, 2014
Exhibit 99.2 |
|
Forward-looking Statements and Additional Information
The
following
information
appears
in
accordance
with
the
Private
Securities
Litigation
Reform
Act
of
1995:
This
presentation
contains
forward-looking
statements
about
U.S.
Bancorp.
Statements
that
are
not
historical
or
current
facts,
including
statements
about
beliefs
and
expectations,
are
forward-looking
statements
and
are
based
on
the
information
available
to,
and
assumptions
and
estimates
made
by,
management
as
of
the
date
made.
These
forward-looking
statements
cover,
among
other
things,
anticipated
future
revenue
and
expenses
and
the
future
plans
and
prospects
of
U.S.
Bancorp.
Forward-looking
statements
involve
inherent
risks
and
uncertainties,
and
important
factors
could
cause
actual
results
to
differ
materially
from
those
anticipated.
A
reversal
or
slowing
of
the
current
moderate
economic
recovery
or
another
severe
contraction
could
adversely
affect
U.S.
Bancorps
revenues
and
the
values
of
its
assets
and
liabilities.
Global
financial
markets
could
experience
a
recurrence
of
significant
turbulence,
which
could
reduce
the
availability
of
funding
to
certain
financial
institutions
and
lead
to
a
tightening
of
credit,
a
reduction
of
business
activity,
and
increased
market
volatility.
Continued
stress
in
the
commercial
real
estate
markets,
as
well
as
a
delay
or
failure
of
recovery
in
the
residential
real
estate
markets,
could
cause
additional
credit
losses
and
deterioration
in
asset
values.
In
addition,
U.S.
Bancorps
business
and
financial
performance
is
likely
to
be
negatively
impacted
by
recently
enacted
and
future
legislation
and
regulation.
U.S.
Bancorps
results
could
also
be
adversely
affected
by
deterioration
in
general
business
and
economic
conditions;
changes
in
interest
rates;
deterioration
in
the
credit
quality
of
its
loan
portfolios
or
in
the
value
of
the
collateral
securing
those
loans;
deterioration
in
the
value
of
securities
held
in
its
investment
securities
portfolio;
legal
and
regulatory
developments;
increased
competition
from
both
banks
and
non-banks;
changes
in
customer
behavior
and
preferences;
breaches
in
data
security;
effects
of
mergers
and
acquisitions
and
related
integration;
effects
of
critical
accounting
policies
and
judgments;
and
managements
ability
to
effectively
manage
credit
risk,
residual
value
risk,
market
risk,
operational
risk,
interest
rate
risk
and
liquidity
risk.
For
discussion
of
these
and
other
risks
that
may
cause
actual
results
to
differ
from
expectations,
refer
to
U.S.
Bancorps
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2013,
on
file
with
the
Securities
and
Exchange
Commission,
including
the
sections
entitled
Risk
Factors
and
Corporate
Risk
Profile
contained
in
Exhibit
13,
and
all
subsequent
filings
with
the
Securities
and
Exchange
Commission
under
Sections
13(a),
13(c),
14
or
15(d)
of
the
Securities
Exchange
Act
of
1934.
Forward-looking
statements
speak
only
as
of
the
date
they
are
made,
and
U.S.
Bancorp
undertakes
no
obligation
to
update
them
in
light
of
new
information
or
future
events.
This
presentation
includes
non-GAAP
financial
measures
to
describe
U.S.
Bancorps
performance.
The
calculations
of
these
measures
are
provided
within
or
in
the
appendix
of
the
presentation.
These
disclosures
should
not
be
viewed
as
a
substitute
for
operating
results
determined
in
accordance
with
GAAP,
nor
are
they
necessarily
comparable
to
non-GAAP
performance
measures
that
may
be
presented
by
other
companies. |
|
3
3Q14 Earnings
Conference Call
3Q14 Highlights
Net income of $1.5 billion; $0.78 per diluted common share
Positive operating leverage on a year-over-year basis
Average loan growth of 6.3% vs. 3Q13 (5.9% excluding Charter One
acquisition)
and 1.4% vs. 2Q14 (1.1% excluding Charter One acquisition)
Average deposit growth of 7.4% vs. 3Q13 (5.5% excluding Charter One
acquisition) and 3.3% vs. 2Q14 (1.7% excluding Charter One acquisition)
Net charge-offs declined 3.7% vs. 2Q14
Nonperforming assets decreased 6.2% vs. 3Q13 (excluding covered assets)
Capital generation continues to reinforce capital position
Common equity tier 1 capital ratio of 9.0% estimated for the Basel III fully
implemented standardized approach
Common equity tier 1 capital ratio of 9.7%; Tier 1 capital ratio
of 11.3%
Returned 78% of earnings to shareholders in 3Q14
Repurchased 16 million shares of common stock during the quarter
|
|
4
3Q14 Earnings
Conference Call
Performance Ratios
Return on Average Common Equity
and Return on Average Assets
Efficiency Ratio and
Net Interest Margin
Return on Avg Common Equity
Return on Avg Assets
Efficiency Ratio
Net Interest Margin
*
Excluding
$214
million
gain
on
Visa
Inc.
Class
B
common
stock
sale
and
$200
million
FHA
DOJ
settlement
Efficiency
ratio
computed
as
noninterest
expense
divided
by
the
sum
of
net
interest
income
on
a
taxable-equivalent
basis
and
noninterest
income
excluding
securities
gains
(losses)
net
4 |
|
5
3Q14 Earnings
Conference Call
* Gain on Visa Inc. Class B common stock sale
Taxable-equivalent basis
Revenue Growth
Year-Over-Year Change
(5.6%)
(4.4%)
(1.2%)
4.9%
2.0%
$ in millions
5
3Q14 Earnings
Conference Call |
|
3Q14 Earnings
Conference Call
Loan and Deposit Growth
Year-Over-Year Growth
Average Balances
$ in billions
3Q14 Acquisition Adjusted
Loan Growth = 5.9%
Deposit Growth = 5.5%
190.0
210.0
230.0
250.0
270.0
3Q13
4Q13
1Q14
2Q14
3Q14
6.8%
$240.5
6.3%
$243.9
5.7%
$229.4
5.7%
$232.8
6.0%
$235.9
6.0%
$262.4
7.4%
$271.0
5.5%
$252.4
5.4%
$256.9
5.1%
$257.5
Loans
Deposits
6 |
|
7
3Q14 Earnings
Conference Call
Credit Quality
* Excluding Covered Assets (assets subject to loss sharing agreements with
FDIC) Net Charge-offs
Nonperforming Assets*
$ in millions
Net Charge-offs (Left Scale)
NCOs to Avg Loans (Right Scale)
Nonperforming Assets (Left Scale)
NPAs to Loans plus ORE (Right Scale)
7
3Q14 Earnings
Conference Call |
|
8
3Q14 Earnings
Conference Call
Earnings Summary
$ in millions, except per-share data
Taxable-equivalent basis
YTD
YTD
3Q14
2Q14
3Q13
vs 2Q14
vs 3Q13
2014
2013
% B/(W)
Net Interest Income
2,748
$
2,744
$
2,714
$
0.1
1.3
8,198
$
8,095
$
1.3
Noninterest Income
2,242
2,444
2,177
(8.3)
3.0
6,794
6,618
2.7
Total Revenue
4,990
5,188
4,891
(3.8)
2.0
14,992
14,713
1.9
Noninterest Expense
2,614
2,753
2,565
5.0
(1.9)
7,911
7,592
(4.2)
Operating Income
2,376
2,435
2,326
(2.4)
2.1
7,081
7,121
(0.6)
Net Charge-offs
336
349
328
3.7
(2.4)
1,026
1,153
11.0
Excess Provision
(25)
(25)
(30)
-
(16.7)
(85)
(90)
(5.6)
Income before Taxes
2,065
2,111
2,028
(2.2)
1.8
6,140
6,058
1.4
Applicable Income Taxes
579
602
598
3.8
3.2
1,733
1,797
3.6
Noncontrolling Interests
(15)
(14)
38
(7.1)
nm
(44)
119
nm
Net Income
1,471
1,495
1,468
(1.6)
0.2
4,363
4,380
(0.4)
Preferred Dividends/Other
66
68
68
2.9
2.9
200
217
7.8
NI to Common
1,405
$
1,427
$
1,400
$
(1.5)
0.4
4,163
$
4,163
$
-
Diluted EPS
0.78
$
0.78
$
0.76
$
-
2.6
2.29
$
2.25
$
1.8
Average Diluted Shares
1,807
1,821
1,843
0.8
2.0
1,819
1,854
1.9
% B/(W) |
|
9
3Q14 Earnings
Conference Call
3Q14 Results -
Key Drivers
vs. 3Q13
Net Revenue increase of 2.0%
Net interest income increase of 1.3%; net interest margin of 3.16% vs. 3.43% in
3Q13
Noninterest income increase of 3.0%
Noninterest expense increase of 1.9%
Provision for credit losses higher by $13 million
Net charge-offs higher by $8 million, or 2.4%
Provision lower than NCOs by $25 million vs. $30 million in 3Q13
vs. 2Q14
Net Revenue decrease of 3.8% (0.3% increase excluding notable items)
Net interest income increase of 0.1%; net interest margin of 3.16%
vs. 3.27% in 2Q14
Noninterest income decrease of 8.3% (0.5% increase excluding
notable items)
Noninterest expense decrease of 5.0% (2.4% increase
excluding notable items)
Provision for credit losses lower by $13 million
Net charge-offs decreased by $13 million, or 3.7%
Provision lower than NCOs by $25 million vs. $25 million in 2Q14
|
|
10
3Q14 Earnings
Conference Call
Capital Position
$ in billions; RWA = risk-weighted assets
(a) 2014 amounts and ratios calculated under the Basel III transitional
standardized approach; all prior periods under Basel I 3Q14
2Q14
1Q14
4Q13
3Q13
Total U.S. Bancorp shareholders' equity
43.1
$
42.7
$
42.1
$
41.1
$
40.1
$
Standardized Approach
Basel III transitional standardized approach/Basel I (a)
Common equity tier 1 capital
30.2
29.8
29.5
27.9
27.3
Tier 1 capital
35.4
34.9
34.6
33.4
32.7
Total risk-based capital
42.5
41.0
40.7
39.3
38.9
Common equity tier 1 capital ratio
9.7%
9.6%
9.7%
9.4%
9.3%
Tier 1 capital ratio
11.3%
11.3%
11.4%
11.2%
11.2%
Total risk-based capital ratio
13.6%
13.2%
13.5%
13.2%
13.3%
Leverage ratio
9.4%
9.6%
9.7%
9.6%
9.6%
Common equity tier 1 capital to RWA estimated for the
Basel III fully implemented standardized approach
9.0%
8.9%
9.0%
8.8%
8.6%
Advanced Approaches
Common equity tier 1 capital to RWA for the Basel III
transitional advanced approaches
12.4%
12.3%
Common equity tier 1 capital to RWA estimated for the
Basel III fully implemented advanced approaches
11.8%
11.7%
Tangible common equity ratio
7.6%
7.5%
7.8%
7.7%
7.4%
Tangible common equity as a % of RWA
9.3%
9.2%
9.3%
9.1%
8.9% |
|
11
3Q14 Earnings
Conference Call |
|
12
3Q14 Earnings
Conference Call
Appendix |
|
13
3Q14 Earnings
Conference Call
Average Loans
Key Points
$ in billions
vs. 3Q13
Average total loans grew by $14.5 billion, or 6.3%
(5.9% excluding Charter One acquisition)
Average total loans, excluding covered loans,
were higher by 7.7%
Average total commercial loans increased $9.3
billion, or 13.6%; average commercial real estate
loans increased $2.3 billion, or 6.1%
vs. 2Q14
Average total loans grew by $3.4 billion, or 1.4%
(1.1% excluding Charter One acquisition)
Average total loans, excluding covered loans,
were higher by 1.7%
Average total commercial loans increased $2.3
billion, or 3.1%; average commercial real estate
loans increased $0.3 billion, or 0.8%
Year-Over-Year Growth
5.7%
5.7%
6.0%
6.8%
6.3%
Covered
Commercial
CRE
Res Mtg
Retail
Credit Card
$229.4
$232.8
$235.9
$240.5
$243.9
Average Loans
13
3Q14 Earnings
Conference Call |
|
14
3Q14 Earnings
Conference Call
Average Deposits
Average Deposits
Key Points
$ in billions
vs. 3Q13
Average total deposits increased by $18.6
billion, or 7.4% (5.5% excluding Charter One
acquisition)
Average low-cost deposits (NIB, interest
checking, money market and savings)
increased by $24.9 billion, or 12.2%
vs. 2Q14
Average total deposits increased by $8.7
billion, or 3.3% (1.7% excluding Charter One
acquisition)
Average low-cost deposits increased by $9.2
billion, or 4.2%
Year-Over-Year Growth
5.5%
5.4%
5.1%
6.0%
7.4%
Time
Money Market
Checking and Savings
Noninterest-bearing
$252.4
$256.9
$257.5
$262.4
$271.0
14
3Q14 Earnings
Conference Call |
|
15
3Q14 Earnings
Conference Call
Net Interest Income
Net Interest Income
Key Points
$ in millions
Taxable-equivalent basis
vs. 3Q13
Average earning assets grew by $31.4 billion,
or 10.0%
Net interest margin lower by 27 bps (3.16%
vs. 3.43%) driven by:
Lower reinvestment rates on investment securities,
as well as growth in the investment portfolio at
lower average rates, lower loan fees, and lower
rates on new loans
Partially offset by lower funding costs
vs. 2Q14
Average earning assets grew by $10.4 billion,
or 3.1%
Net interest margin lower by 11 bps (3.16%
vs. 3.27%) driven by:
Growth in lower rate investment securities and
lower loan fees
Year-Over-Year Change
(2.5%)
(1.8%)
(0.1%)
2.7%
1.3%
15
3Q14 Earnings
Conference Call |
|
16
3Q14 Earnings
Conference Call
Noninterest Income
Noninterest Income
Key Points
$ in millions
Payments = credit and debit card revenue, corporate payment products revenue and
merchant processing; Service charges = deposit service charges,
treasury management fees and ATM processing services vs. 3Q13
Noninterest income increased by $65 million, or
3.0%, driven by:
Higher credit and debit card revenues (2.9% increase) due to
higher transaction volumes; higher merchant processing
revenue (4.3% increase) due to an increase in product fees and
higher volumes, partially offset by lower rates
Higher trust and investment management revenue (12.5%
increase) due to account growth, improved market conditions
and business expansion
Higher deposit service charges (2.8% increase) due to account
growth, the Charter One acquisition and pricing changes
Higher other income due primarily to gains on sales of other
equity investments and an increase in retail leasing revenue
Mortgage banking revenue decline of $68 million
vs. 2Q14
Noninterest income decreased by $202 million, or
8.3%, driven by:
Lower other income primarily due to the second quarter
Visa sale
Higher corporate payments (7.1% increase) due to seasonally
higher transaction volumes
Higher deposit service charges (8.2% increase) due to higher
transaction volumes
Lower commercial products revenue (5.4% decrease) due to
lower wholesale transaction activity
Mortgage banking revenue decline of $18 million
Year-Over-Year Change
(9.1%)
(7.4%)
(2.6%)
7.4%
3.0%
$2,177
$2,156
$2,108
$2,444
$2,242
All Other
Mortgage
Service Charges
Trust and Inv Mgmt
Payments
3Q13
4Q13
1Q14
2Q14
3Q14
Visa Gain
-
$
-
$
-
$
214
$
-
$
Total
-
$
-
$
-
$
214
$
-
$
Notable Noninterest Income Items
16
3Q14 Earnings
Conference Call |
|
17
3Q14 Earnings
Conference Call
Noninterest Expense
Noninterest Expense
Key Points
$ in millions
vs. 3Q13
Noninterest expense was higher by $49 million, or
1.9%, driven by:
Higher compensation expense (4.0% increase) reflecting the
impact of merit increases, acquisitions, and higher staffing for
risk and compliance activities
Higher net occupancy and equipment expense (3.8% increase)
due to business initiatives and maintenance costs
Higher professional services expense (8.5% increase) due
mainly to mortgage servicing-related project costs
Higher other expense primarily due to Charter One merger
integration and mortgage servicing-related expenses, partially
offset by lower costs for investments in tax-advantaged projects
related to a change in 1Q14 in accounting for affordable housing
investments
Lower employee benefit expense (decrease of 10.1%) driven by
lower pension costs
vs. 2Q14
Noninterest expense was lower by $139 million, or
5.0%, driven by:
Lower other expense due to the 2Q FHA DOJ settlement,
partially offset by mortgage servicing-related expenses, the
Charter One merger integration costs, and seasonally higher
costs related to investments in tax-advantaged projects
Lower marketing and business development (18.8% decrease)
due to 2Q charitable contributions and the timing of various
marketing programs
Higher professional services expense (5.2% increase) primarily
due to higher mortgage servicing-related project costs
Year-Over-Year Change
(1.7%)
(0.1%)
3.0%
7.7%
1.9%
$2,565
$2,682
$2,544
$2,753
$2,614
All Other
Tech and Communications
Prof Svcs, Marketing and PPS
Occupancy and Equipment
Compensation and Benefits
3Q13
4Q13
1Q14
2Q14
3Q14
FHA DOJ settlement
-
$
-
$
-
$
200
$
-
$
Total
-
$
-
$
-
$
200
$
-
$
Notable Noninterest Expense Items
17
3Q14 Earnings
Conference Call |
|
18
3Q14 Earnings
Conference Call
Credit Quality
-
Commercial Loans
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Continued new client growth led to 3.2% linked quarter loan growth and 14.8%
year-over-year growth; utilization rates improved modestly
Net charge-offs below historic norms and were largely unchanged
Nonperforming loans and delinquencies continued at historically low levels
3Q13
2Q14
3Q14
Average Loans
$62,856
$69,920
$72,190
30-89 Delinquencies
0.28%
0.23%
0.23%
90+ Delinquencies
0.08%
0.06%
0.05%
Nonperforming Loans
0.16%
0.24%
0.22%
$ in millions
18
3Q14 Earnings
Conference Call |
|
Credit Quality
-
Commercial Leases
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Commercial lease balances increased slightly
Net charge-offs increased in the quarter but remain at low historic
levels Nonperforming loans and delinquencies continued at modest levels
3Q13
2Q14
3Q14
Average Loans
$5,208
$5,100
$5,155
30-89 Delinquencies
0.76%
0.75%
0.83%
90+ Delinquencies
0.00%
0.00%
0.00%
Nonperforming Loans
0.23%
0.31%
0.23%
$ in millions
19
3Q14 Earnings
Conference Call |
|
Credit Quality
-
Commercial Real Estate
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Average loans increased 0.8% on a linked quarter basis and 6.1%
year-over-year Credit quality is stable at low levels; net
charge-offs ratio of 0.04% Delinquencies continued a downward trend
3Q13
2Q14
3Q14
Average Loans
$38,501
$40,497
$40,839
30-89 Delinquencies
0.16%
0.14%
0.12%
90+ Delinquencies
0.02%
0.06%
0.03%
Nonperforming Loans
0.92%
0.55%
0.59%
Performing TDRs*
$365
$330
$284
$ in millions
Investor
$20,552
Owner
Occupied
$11,413
Multi-family
$2,927
Retail
$670
Residential
Construction
$1,810
A&D
Construction
$631
Office
$897
Other
$1,939
* TDR = troubled debt restructuring
20
3Q14 Earnings
Conference Call |
|
Credit Quality
-
Residential Mortgage
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Modest growth in high-quality originations (weighted average FICO 757, weighted
average LTV 71%), as average loans increased 0.3% over 2Q14
81% of the balances have been originated since the beginning of 2009; the
origination quality metrics and performance to date have significantly
outperformed prior vintages with similar seasoning
3Q13
2Q14
3Q14
Average Loans
$49,139
$51,815
$51,994
30-89 Delinquencies
0.70%
0.48%
0.46%
90+ Delinquencies
0.53%
0.49%
0.41%
Nonperforming Loans
1.46%
1.57%
1.62%
$ in millions
** Excludes GNMA loans, whose repayments are insured by the FHA or guaranteed by
the Department of VA ($2,478 million 3Q14) 21
3Q14 Earnings
Conference Call |
|
22
3Q14 Earnings
Conference Call
3Q13
2Q14
3Q14
Average Loans
$16,931
$17,384
$17,753
30-89 Delinquencies
1.25%
1.13%
1.23%
90+ Delinquencies
1.11%
1.06%
1.10%
Nonperforming Loans
0.55%
0.29%
0.22%
Credit Quality -
Credit Card
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Average loans increased 2.1% on a linked quarter basis; up 4.9%
year-over-year Delinquencies and losses have stabilized near
historically low levels with some seasonal impacts on delinquencies
Nonperforming loans continued to decline
$ in millions
22
3Q14 Earnings
Conference Call |
|
23
3Q14 Earnings
Conference Call
Credit Quality -
Home Equity
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
High-quality
originations
(weighted
average
FICO
on
commitments
was
767,
weighted
average
CLTV
71%)
originated
primarily
through
the
retail
branch
network
to
existing
bank
customers
on
their
primary
residence
Net
charge-offs
ratio
declined
on
a
year-over-year
basis
3Q13
2Q14
3Q14
Average Loans
$15,648
$15,327
$15,704
30-89 Delinquencies
0.65%
0.50%
0.51%
90+ Delinquencies
0.25%
0.26%
0.26%
Nonperforming Loans
1.15%
1.11%
1.05%
Subprime: 2%
Wtd Avg LTV**: 90%
NCO: 6.22%
$ in millions
Prime: 95%
Wtd Avg LTV**: 72%
NCO: 0.50%
** LTV at origination
Other: 3%
Wtd Avg LTV**: 72%
NCO: 0.79%
23
3Q14 Earnings
Conference Call |
|
24
3Q14 Earnings
Conference Call
Credit Quality -
Retail Leasing
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Year-over-year
growth
(5.8%)
driven
by
high-quality
originations
(weighted
average
FICO
780)
Delinquencies
remained
relatively
stable
at
very
low
levels
Strong
used
auto
values
continued
to
contribute
to
historically
low
net
charge-offs
3Q13
2Q14
3Q14
Average Loans
$5,664
$6,014
$5,991
30-89 Delinquencies
0.15%
0.16%
0.14%
90+ Delinquencies
0.02%
0.00%
0.02%
Nonperforming Loans
0.02%
0.02%
0.02%
$ in millions
*
Manheim
Used
Vehicle
Value
Index
source:
www.manheimconsulting.com,
January
1995
=
100,
quarter
value
=
average
monthly
ending
value
24
3Q14 Earnings
Conference Call |
|
25
3Q14 Earnings
Conference Call
Credit Quality -
Other Retail
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Auto
loan
growth
continued
to
offset
declines
in
student
lending
loan
balances
Net
charge-offs
and
delinquencies
remained
low
on
a
linked
quarter
and
year-over-year
basis
3Q13
2Q14
3Q14
Average Loans
$25,682
$26,587
$27,003
30-89 Delinquencies
0.48%
0.47%
0.49%
90+ Delinquencies
0.14%
0.11%
0.13%
Nonperforming Loans
0.10%
0.06%
0.06%
Installment
$6,072
Auto Loans
$14,404
Revolving
Credit
$3,231
Student
Lending
$3,296
$ in millions
25
3Q14 Earnings
Conference Call |
|
26
3Q14 Earnings
Conference Call
Credit Quality -
Auto Loans
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Continued growth in auto loans driven by high-quality originations in the
Indirect Channel (weighted average FICO 762)
Net charge-offs increased due to seasonality as well as growth initiatives
beginning to mature 3Q13
2Q14
3Q14
Average Loans
$12,946
$14,108
$14,404
30-89 Delinquencies
0.30%
0.38%
0.41%
90+ Delinquencies
0.03%
0.03%
0.05%
Nonperforming Loans
0.02%
0.01%
0.03%
$ in millions
Auto Loans are included in Other Retail category
Direct: 6%
Wtd Avg FICO: 748
NCO: .06%
Indirect: 94%
Wtd Avg FICO: 763
NCO: 0.26%
26
3Q14 Earnings
Conference Call |
|
27
3Q14 Earnings
Conference Call
Mortgage Repurchase
Mortgages Repurchased and Make-whole Payments
Mortgage Representation and Warranties Reserve
$ in millions
3Q14
2Q14
1Q14
4Q13
3Q13
Beginning Reserve
$69
$75
$83
$176
$190
Net Realized Losses
(1)
(2)
(10)
(63)
(13)
Change in Reserve
(6)
(4)
2
(30)
(1)
Ending Reserve
$62
$69
$75
$83
$176
Mortgages
repurchased
and make-whole
payments
$19
$30
$36
$32
$42
Repurchase activity lower than
peers due to:
Conservative credit and
underwriting culture
Disciplined origination process -
primarily conforming loans
(
95%
sold
to
GSEs)
Do not participate in private
placement securitization market
Outstanding repurchase and
make-whole requests balance
= $29 million |
|
28
3Q14 Earnings
Conference Call
Non-GAAP Financial Measures
$ in millions
3Q14
2Q14
1Q14
4Q13
3Q13
Total equity
43,829
$
43,386
$
42,743
$
41,807
$
41,552
$
Preferred stock
(4,756)
(4,756)
(4,756)
(4,756)
(4,756)
Noncontrolling interests
(688)
(686)
(689)
(694)
(1,420)
Goodwill (net of deferred tax liability) (1)
(8,503)
(8,548)
(8,352)
(8,343)
(8,319)
Intangible assets, other than mortgage servicing rights
(877)
(925)
(804)
(849)
(878)
Tangible common equity (a)
29,005
28,471
28,142
27,165
26,179
Tangible common equity (as calculated above)
29,005
28,471
28,142
27,165
26,179
Adjustments (2)
187
224
239
224
258
Common equity tier 1 capital estimated for the Basel III fully
implemented standardized and advanced approaches (b)
29,192
28,695
28,381
27,389
26,437
Tier 1 capital, determined in accordance with prescribed
regulatory requirements using Basel I definition
33,386
32,707
Preferred stock
(4,756)
(4,756)
Noncontrolling interests, less preferred stock not eligible for Tier 1 capital
(688)
(686)
Tier 1 common equity using Basel I definition (c)
27,942
27,265
(1) Includes goodwill related to certain investments in unconsolidated financial institutions per
prescribed regulatory requirements beginning March 31, 2014. (2) Includes net losses on cash
flow hedges included in accumulated other comprehensive income and other adjustments. (3)
Beginning March 31, 2014, calculated under the Basel III transitional standardized approach; all other
periods calculated under Basel I. (4) Includes higher risk-weighting for unfunded loan
commitments, investment securities, residential mortgages, mortgage servicing rights and other adjustments.
(5)
Primarily reflects higher risk-weighting for mortgage servicing rights.
|
|
29
3Q14 Earnings
Conference Call
Non-GAAP Financial Measures
$ in millions
3Q14
2Q14
1Q14
4Q13
3Q13
Total assets
391,284
$
389,065
$
371,289
$
364,021
$
360,681
$
Goodwill (net of deferred tax liability) (1)
(8,503)
(8,548)
(8,352)
(8,343)
(8,319)
Intangible assets, other than mortgage servicing rights
(877)
(925)
(804)
(849)
(878)
Tangible assets (d)
381,904
379,592
362,133
354,829
351,484
Risk-weighted assets, determined in accordance with prescribed
regulatory requirements (3)(e)
311,914
*
309,929
302,841
297,919
293,155
Adjustments (4)
12,837
*
12,753
13,238
13,712
13,473
Risk-weighted assets estimated for the Basel III fully implemented
standardized approach (f)
324,751
*
322,682
316,079
311,631
306,628
Risk-weighted assets, determined in accordance with prescribed
transitional advanced approaches regulatory requirements
243,905
*
241,929
Adjustments (5)
3,443
*
3,383
Risk-weighted assets estimated for the Basel III fully implemented
247,348
*
245,312
advanced approaches (g)
Ratios
Tangible common equity to tangible assets (a)/(d)
7.6
%
7.5
%
7.8
%
7.7
%
7.4
%
Tangible common equity to risk-weighted assets (a)/(e)
9.3
9.2
9.3
9.1
8.9
Tier 1 common equity to risk-weighted assets using Basel I definition (c)/(e)
--
--
--
9.4
9.3
Common equity tier 1 capital to risk-weighted assets estimated for the
Basel III fully implemented standardized approach (b)/(f)
9.0
8.9
9.0
8.8
8.6
Common equity tier 1 capital to risk-weighted assets estimated for the
Basel III fully implemented advanced approaches (b)/(g)
11.8
11.7
* Preliminary data. Subject to change prior to filings with applicable regulatory
agencies. (1) Includes goodwill related to certain investments in unconsolidated
financial institutions per prescribed regulatory requirements beginning March 31, 2014. (2)
Includes net losses on cash flow hedges included in accumulated other comprehensive income and other adjustments.
(3)
Beginning March 31, 2014, calculated under the Basel III transitional standardized approach; all other
periods calculated under Basel I. (4) Includes higher risk-weighting for unfunded loan
commitments, investment securities, residential mortgages, mortgage servicing rights and other adjustments.
(5)
Primarily reflects higher risk-weighting for mortgage servicing rights.
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U.S.
Bancorp 3Q14 Earnings
Conference Call
U.S. Bancorp
3Q14 Earnings
Conference Call
October 22, 2014 |
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