Today U.S. Bancorp disclosed a summary of its Dodd-Frank Act
Stress Test (“DFAST”) results. The disclosure includes U.S.
Bancorp’s projected stressed minimum and end-of-period capital
ratios for the period from the fourth quarter of 2014 through the
fourth quarter of 2016. The projections assume annual common stock
dividends equal to the quarterly average dollar amount of common
stock dividends that the company paid in the previous year and no
redemption or repurchase of any capital instrument, in addition to
estimates of losses, revenues, net income before taxes and loan
losses by type of loan over the same time period. The projections
were made under the Supervisory Severely Adverse Scenario defined
by the Federal Reserve. This hypothetical stressed economic
scenario is designed to assess the overall strength and resilience
of the banking industry and does not necessarily represent future
economic conditions expected by the Company.
A summary of the Company’s DFAST results are included in the
table below. The Company’s DFAST results may differ from those
calculated and published by the Federal Reserve due to differences
in models, methodologies and tax rate, among other things. A
document summarizing the risks and methodologies used to calculate
the results, as well as an analysis of the significant reasons for
the changes in capital ratios under the hypothetical stressed
economic scenario is available on our website at
www.usbank.com.
CCAR 2015 U.S. Bancorp Disclosure
Dodd-Frank Act Stress
Testing Results 2015 Projected stressed capital ratios,
risk-weighted assets, losses, revenues, net income before taxes,
and loan losses
Supervisory-defined severely adverse
scenario U.S. Bancorp Actual 2014:Q3
and projected stressed capital ratios Actual 2014:Q3 and
projected 2016:Q4 risk-weighted through 2016:Q4
assets
Actual
2014:Q3
Stressed capital ratios (1)
Ending Minimum Actual
2014:Q3
Projected 2016:Q4
Generalapproach
Basel lllstandardizedapproach
Tier 1 common ratio (%) 9.5% 7.9% 7.9%
Common equity tier 1 capital ratio (%)
(2) 9.7% 7.6% 7.6% Risk-weighted assets 311.9 301.0
314.1
Tier 1 risk-based capital ratio (%) 11.3% 9.0% 9.0% (billions of
dollars) (1) Total
risk-based capital ratio (%) 13.6% 11.2% 11.2% Tier 1 leverage
ratio (%) 9.4% 7.6% 7.6%
(1) For each quarter in 2014,
risk-weighted assets are calculated using the
general risk-based capital approach set
forth in 12 CFR 225, appendix A.
(1) The capital ratios are calculated
using capital action assumptions provided
For each quarter in 2015 and 2016,
risk-weighted assets are calculated
within the Dodd-Frank Act stress testing
rule. These projections represent
under the Board's standardized capital
risk-based approach in 12 CFR 217,
hypothetical estimates that involve an
economic outcome that is more adverse
subpart D, except for the risk-weighted
assets used to calculate the tier 1
than expected. These estimates are not
forecasts of expected losses,
common ratio, which uses the general
risk-based capital approach for all quarters.
revenues, net income before taxes, or
capital ratios. The minimum capital
ratio presented is for the period 2014:Q4
to 2016:Q4.
(2) Advanced approaches bank holding
companies (BHCs) are subject to the
Projected losses, revenues, net income, and other
common equity tier 1 ratio for the third
and fourth quarter of 2014. All bank
comprehensive income through 2016:Q4
holding companies are subject to the
common equity tier 1 ratio for each quarter
of 2015 and 2016. An advanced approaches
BHC includes any BHC that has
Percent of
consolidated total assets greater than or
equal to $250 billion or consolidated
Billions of average
total on-balance sheet foreign exposure of
at least $10 billion.
dollars assets (1)
See 12 CFR 217.100(b)(1). Other BHCs
include any BHC that is subject
Pre-provision net revenue (2) 15.6 4.0%
to 12 CFR 225.8 and is not an advanced
approaches BHC.
Other revenue (3) 0.0
less Provisions 17.8
Realized losses/gains on securities (AFS/HTM) 0.2 Trading and
counterparty losses (4) 0.0 Other losses/gains (5) 0.0 equals
Projected loan losses, by type of loan, 2014:Q4 - 2016:Q4
Net income before taxes (2.4 ) -0.6%
Memo
items Portfolio Other comprehensive income (6) (0.9 ) Billions
of loss Other effects on capital Actual 2014:Q3 2016:Q4 dollars
rates (%)(1) AOCI included in capital (billions of dollars)
(7) (0.1 ) (0.9) Loan losses 15.1 6.2% First-lien mortgages,
domestic 1.1 2.0%
(1) Average assets is the
nine-quarter average of total assets.
Junior liens and HELOCs, domestic 0.6 3.5%
(2) Pre-provision net revenue
includes losses from operational-risk events,
Commercial and industrial (2) 4.0 7.0%
mortgage repurchase expenses, and other
real estate owned (OREO) costs.
Commercial real estate, domestic 3.0 7.5%
(3) Other revenue includes one-time
income and (expense) items not included in
Credit cards 4.0 19.5%
pre-provision net revenue.
Other consumer (3) 1.3 4.2%
(4) Trading and counterparty losses
include mark-to-market and credit valuation
Other loans (4) 1.0 4.2%
adjustments (CVA) losses and losses
arising from the counterparty default
scenario component applied to derivatives,
securities lending, and repurchase
agreement activities.
(1) Average loan balances used to
calculate portfolio loss rates exclude loans held
(5) Other losses/gains includes
projected change in fair value of loans held for sale
for sale and loans held for investment
under the fair-value option, and are
and loans held for investment measured
under the fair-value option, and
calculated over nine quarters.
goodwill impairment losses.
(2) Commercial and industrial loans
include small- and medium-enterprise loans
(6) Other comprehensive income (OCI)
is only calculated for advanced approaches
and corporate cards.
BHCs, and other BHCs that opt into the
advanced approaches treatment
(3) Other consumer loans include
student loans and automobile loans.
of AOCI.
(4) Other loans include international
real estate loans.
(7) Certain AOCI items are subject to
transition into projected regulatory capital.
Those transitions are 20 percent included
in projected regulatory capital for
Note: Estimates may not sum
precisely due to rounding.
2014, 40 percent included in projected
regulatory capital for 2015, and
60 percent included in projected
regulatory capital for 2016.
Minneapolis-based U.S. Bancorp (NYSE:USB), with $403 billion in
assets as of Dec. 31, 2014, is the parent company of U.S. Bank
National Association, the fifth largest commercial bank in the
United States. The company operates 3,176 banking offices in 25
states and 5,022 ATMs and provides a comprehensive line of banking,
investment, mortgage, trust and payment services products to
consumers, businesses and institutions. Visit U.S. Bancorp on the
web at www.usbank.com.
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. The forward-looking statements contained in
this press release include, among other things, projected future
capital ratios, risk-weighted assets, revenue, net income before
taxes, and loan losses of U.S. Bancorp based on a hypothetical
scenario containing assumptions that may not come to pass in the
future. There can be no assurance that U.S. Bancorp’s actual
results would match the results disclosed herein if the assumed
scenario was to occur.
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 economic recovery or another severe contraction could
adversely affect U.S. Bancorp’s 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. Stress in the commercial real estate
markets, as well as a downturn in the residential real estate
markets could cause credit losses and deterioration in asset
values. In addition, U.S. Bancorp’s business and financial
performance is likely to be negatively impacted by recently enacted
and future legislation and regulation. U.S. Bancorp’s 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 management’s 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. Bancorp’s Annual
Report on Form 10-K for the year ended December 31, 2014, as
amended, 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. Bancorp’s
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.
U.S. BancorpSean O’Connor, 612-303-0778Investor RelationsorDana
Ripley, 612-303-3167Corporate Communications
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