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): April 15, 2015
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 April 15, 2015, U.S. Bancorp (the Company) issued a press release reporting quarter ended March 31, 2015 results, and
posted on its website its 1Q15 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 1Q15 Earnings Conference Call Presentation is included as Exhibit 99.2 hereto and is incorporated
herein by reference. The information included in the 1Q15 Earnings Conference Call Presentation is considered to be furnished under the Securities Exchange Act of 1934. The press release and 1Q15 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 April 15, 2015, deemed filed under the Securities Exchange Act of 1934. |
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99.2 |
1Q15 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: April 15, 2015
Exhibit 99.1
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News Release |
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Contacts: Dana Ripley
Media
(612) 303-3167 |
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Sean O Connor
Investors/Analysts (612)
303-0778 |
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U.S. BANCORP REPORTS FIRST QUARTER 2015 EARNINGS
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Ø |
Year-over-year increase in earnings per diluted common share of 4.1 percent |
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Ø |
Return on average assets of 1.44 percent and return on average common equity of 14.1 percent |
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Ø |
Returned 70 percent of first quarter earnings to shareholders |
MINNEAPOLIS, April 15, 2015 U.S. Bancorp (NYSE: USB) today reported net income of $1,431 million for the first
quarter of 2015, or $0.76 per diluted common share, compared with $1,397 million, or $0.73 per diluted common share, in the first quarter of 2014.
U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis said, U.S. Bancorp, once again, delivered
industry-leading performance measures in the first quarter. We achieved net income of $1.43 billion, or $0.76 per diluted common share, return on average assets (ROA) of 1.44 percent, return on average common equity (ROE) of 14.1 percent, and an
efficiency ratio of 54.3 percent. The first quarter results reflect normal seasonal effects, such as the expected reduction of post-holiday spending. We believe the diversification of our business mix has served us well through the prolonged low
interest rate environment and slow economic recovery, and we are well positioned for stronger growth when the economy gains momentum and interest rates rise.
Davis continued, In the first quarter, we returned 70 percent of our earnings to shareholders through dividends and share
buybacks, demonstrating our continued commitment to value creation for our shareholders. We were also pleased to receive the Federal Reserves non-objection to our capital distribution plan, which will allow us to increase our annual dividend
by 4.1 percent in the second quarter. Because of our diverse business profile, wide-ranging customer base, and balanced revenue generation between margin and fee businesses, we are able to withstand challenging revenue environments. For example,
average total loans grew 5.1 percent in the first quarter compared to a year ago, fueled by the strength of our Wholesale Banking franchise. Average total commercial loans grew 15.1 percent demonstrating the versatility of our earnings platform. In
addition, average total deposits rose 8.1 percent, which emphasizes the overall strength and stability of both our Retail and Wholesale Banking franchises. As we look toward our financial performance in the quarters ahead, we will continue to stay
focused on the best revenue growth opportunities, while prudently controlling expenses.
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
2
One of U.S. Bancorps highlights from the first quarter was being
named as one of the Worlds Most Ethical Companies® by the Ethisphere Institute. This designation recognizes the deep commitment our 67,000 employees have toward serving our customers,
helping them build financially secure futures, and always doing the right thing. A commitment to ethical leadership is one of the cornerstones of the U.S. Bancorp culture and core values. We are proud to be bankers and to have the privilege to be a
trusted partner for our shareholders, customers, and communities as we move toward our vision for the future.
Highlights for the first quarter of
2015 included:
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Ø |
Growth in average total loans of 5.1 percent over the first quarter of 2014 |
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¡ |
Growth in average total loans of 0.6 percent on a linked quarter basis (0.8 percent excluding the impact of a reclassification of certain municipal loans to securities at the end of the fourth quarter 2014)
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¡ |
Growth in average total commercial loans of 15.1 percent over the first quarter of 2014 and 2.4 percent over the fourth quarter of 2014 |
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¡ |
Growth in average commercial and commercial real estate revolving commitments of 11.7 percent year-over-year and 1.9 percent over the prior quarter |
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Strong new lending activity of $48.8 billion during the first quarter, including: |
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¡ |
$29.0 billion of new and renewed commercial and commercial real estate commitments |
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$2.8 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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Growth in average total deposits of 8.1 percent over the first quarter of 2014 (6.4 percent excluding the Charter One franchise acquisition in late June 2014) and 1.1 percent on a linked quarter basis, the strongest
first quarter deposit growth in the past three years |
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¡ |
Average low cost deposits, including noninterest-bearing and total savings deposits, grew by 11.4 percent year-over-year and 1.7 percent on a linked quarter basis |
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Ø |
Net interest income growth over the first quarter of 2014 driven by average earning assets growth of 10.6 percent and continued strong growth in lower cost core deposit funding. Linked quarter net interest income
decreased 1.7 percent principally due to fewer days in the quarter. |
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
3
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Ø |
Declines in net charge-offs of 9.4 percent on a linked quarter basis and 18.2 percent on a year-over-year basis. Provision for credit losses was $15 million less than net charge-offs in the current quarter
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¡ |
Allowance for credit losses to period-end loans was 1.77 percent at March 31, 2015 |
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¡ |
Annualized net charge-offs to average total loans ratio decreased to 0.46 percent |
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Decreases in nonperforming assets of 15.2 percent on a year-over-year basis and 6.2 percent on a linked quarter basis |
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Capital generation continued to reinforce capital position and returns. Ratios at March 31, 2015, were: |
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Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach of 9.2 percent and for the Basel III fully implemented advanced approaches of 11.8 percent
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¡ |
Basel III transitional standardized approach: |
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¡ |
Common equity tier 1 capital ratio of 9.6 percent |
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Tier 1 capital ratio of 11.1 percent |
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¡ |
Total risk-based capital ratio of 13.3 percent |
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Returned 70 percent of first quarter earnings to shareholders through dividends and the buyback of 12 million common shares |
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Early compliance with fully implemented U.S. Liquidity Coverage Ratio (LCR) based on the Companys interpretation of the final U.S. LCR rule |
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Ø |
Supplementary Leverage Ratio (SLR) exceeds the applicable minimum requirement |
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
4
Net income attributable to U.S. Bancorp was $1,431 million for the first
quarter of 2015, 2.4 percent higher than the $1,397 million for the first quarter of 2014, and 3.8 percent lower than the $1,488 million for the fourth quarter of 2014. Diluted earnings per common share of $0.76 in the first quarter of 2015 were
$0.03 higher than the first quarter of 2014 and $0.03 lower than the previous quarter. Return on average assets and return on average common equity were 1.44 percent and 14.1 percent, respectively, for the first quarter of 2015, compared with 1.56
percent and 14.6 percent, respectively, for the first quarter of 2014. The provision for credit losses was lower than net charge-offs by $15 million in the first quarter of 2015, $20 million lower than net charge-offs in the fourth quarter of 2014,
and $35 million lower than net charge-offs in the first quarter of 2014.
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EARNINGS SUMMARY |
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Table 1 |
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($ in millions, except per-share data) |
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1Q 2015 |
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4Q 2014 |
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1Q 2014 |
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Percent Change 1Q15 vs 4Q14 |
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Percent Change 1Q15 vs 1Q14 |
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Net income attributable to U.S. Bancorp |
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$1,431 |
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$1,488 |
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$1,397 |
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(3.8 |
) |
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2.4 |
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Diluted earnings per common share |
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$.76 |
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$.79 |
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$.73 |
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(3.8 |
) |
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4.1 |
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Return on average assets (%) |
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1.44 |
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1.50 |
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1.56 |
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Return on average common equity (%) |
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14.1 |
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14.4 |
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14.6 |
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Net interest margin (%) |
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3.08 |
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3.14 |
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3.35 |
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Efficiency ratio (%) (a) |
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54.3 |
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54.3 |
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52.9 |
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Tangible efficiency ratio (%) (a) |
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53.4 |
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53.3 |
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51.9 |
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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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Book value per common share (period end) |
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$22.20 |
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$21.68 |
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$20.48 |
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2.4 |
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8.4 |
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(a) 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 for tangible efficiency ratio, intangible amortization. |
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Net income attributable to U.S. Bancorp for the first quarter of 2015 was $34 million (2.4
percent) higher than the first quarter of 2014, and $57 million (3.8 percent) lower than the fourth quarter of 2014. The increase in net income year-over-year was principally due to increases in net interest income and fee-based revenue, and a
decline in the provision for credit losses, partially offset by an increase in noninterest expense. The decrease in net income on a linked quarter basis was due to lower net interest income, primarily the result of two fewer days in the quarter, and
seasonally lower fee-based revenue, partially offset by decrease in noninterest expense.
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
5
Total net revenue on a taxable-equivalent basis for the first quarter of 2015
was $4,906 million, which was $92 million (1.9 percent) higher than the first quarter of 2014, reflecting a 2.2 percent increase in noninterest income and a 1.7 percent increase in net interest income. 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, partially offset by an approximately $50 million decrease related to the previously communicated wind down of the
short-term, small-dollar deposit advance product, Checking Account Advance (CAA), lower reinvestment rates on investment securities, and lower rates on new loans and a change in loan portfolio mix. Noninterest income increased
year-over-year due to higher revenue in most fee businesses and higher equity investment gains in other income. Total net revenue on a taxable-equivalent basis was $263 million (5.1 percent) lower on a linked quarter basis due to a 1.7 percent
decrease in net interest income, mainly the result of two fewer days in the quarter, and a 9.1 percent decrease in noninterest income, due to seasonally lower revenue in most fee businesses and the fourth quarter 2014 Nuveen gain.
Total noninterest expense in the first quarter of 2015 was $2,665 million, which was $121 million (4.8 percent) higher than the
first quarter of 2014 and $139 million (5.0 percent) lower than the fourth 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 and increased benefits expense due to higher pension costs, along with higher other expense primarily related to mortgage servicing-related activities. The decrease in total
noninterest expense on a linked quarter basis was due to seasonally lower costs related to investments in tax-advantaged projects and professional services, as well as lower marketing and business development and other expense due to the impact of
the fourth quarter 2014 notable items, comprised of charitable contributions and legal accruals, partially offset by higher compensation expense and benefits expense related to higher pension costs and seasonally higher payroll taxes.
The Companys provision for credit losses for the first quarter of 2015 was $264 million, $24 million (8.3 percent) lower
than the prior quarter and $42 million (13.7 percent) lower than the first quarter of 2014. The provision for credit losses was lower than net charge-offs by $15 million in the first quarter of 2015, $20 million lower than net charge-offs in the
fourth quarter of 2014, and $35 million lower than net charge-offs in the first quarter of 2014. Net charge-offs in the first quarter of 2015 were $279 million, compared with $308 million in the fourth quarter of 2014, and $341 million in the first
quarter of 2014. Given current economic conditions, the Company expects the level of net charge-offs to increase modestly in the second quarter of 2015.
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
6
Nonperforming assets were $1,696 million at March 31, 2015, compared
with $1,808 million at December 31, 2014, and $1,999 million at March 31, 2014. The decrease in nonperforming assets compared with a year ago was driven primarily by reductions in the commercial, commercial mortgage and construction and
development portfolios, as well as improvement in credit card loans. The Company expects total nonperforming assets to remain relatively stable in the second quarter of 2015. The ratio of the allowance for credit losses to period-end loans was 1.77
percent at March 31, 2015, and at December 31, 2014, compared with 1.89 percent at March 31, 2014.
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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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1Q 2015 |
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4Q 2014 |
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1Q 2014 |
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Percent Change 1Q15 vs 4Q14 |
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Percent Change 1Q15 vs 1Q14 |
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Net interest income |
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$2,752 |
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$2,799 |
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$2,706 |
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(1.7 |
) |
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1.7 |
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Noninterest income |
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2,154 |
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2,370 |
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2,108 |
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(9.1 |
) |
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2.2 |
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Total net revenue |
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4,906 |
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5,169 |
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4,814 |
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(5.1 |
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1.9 |
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Noninterest expense |
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2,665 |
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2,804 |
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2,544 |
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(5.0 |
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4.8 |
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Income before provision and taxes |
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2,241 |
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2,365 |
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2,270 |
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(5.2 |
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(1.3 |
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Provision for credit losses |
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264 |
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288 |
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306 |
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(8.3 |
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(13.7 |
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Income before taxes |
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1,977 |
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2,077 |
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1,964 |
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(4.8 |
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.7 |
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Taxable-equivalent adjustment |
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54 |
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55 |
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56 |
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(1.8 |
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(3.6 |
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Applicable income taxes |
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479 |
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521 |
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496 |
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(8.1 |
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(3.4 |
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Net income |
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1,444 |
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1,501 |
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1,412 |
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(3.8 |
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2.3 |
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Net (income) loss attributable to noncontrolling interests |
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(13 |
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(13 |
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(15 |
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13.3 |
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Net income attributable to U.S. Bancorp |
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$1,431 |
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$1,488 |
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$1,397 |
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(3.8 |
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2.4 |
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Net income applicable to U.S. Bancorp common shareholders |
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$1,365 |
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$1,420 |
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$1,331 |
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(3.9 |
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2.6 |
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Diluted earnings per common share |
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$.76 |
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$.79 |
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$.73 |
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(3.8 |
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4.1 |
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Net Interest Income
Net interest income on a taxable-equivalent basis in the first quarter of 2015 was $2,752 million, an increase of $46 million
(1.7 percent) over the first quarter of 2014. The increase was the result of growth in average earning assets and in lower cost core deposit funding, partially offset by lower rates on new loans and securities and the CAA product wind down. Average
earning assets were $34.6 billion (10.6 percent) higher than the first quarter of 2014, driven by increases of $18.5 billion (22.5 percent) in average investment securities and $12.1 billion (5.1 percent) in average total loans. Net interest income
decreased $47 million (1.7 percent) on a linked quarter basis, primarily the result of two fewer days in the quarter and
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
7
lower net interest margin. The net interest margin in the first quarter of 2015 was 3.08 percent, compared with 3.35 percent in the first quarter of 2014, and 3.14 percent in the fourth quarter
of 2014. The decline in the net interest margin on a year-over-year basis primarily reflected growth in the investment portfolio at lower average rates, as well as lower reinvestment rates on investment securities, lower loan fees due to the CAA
product wind down, lower rates on new loans and a change in loan portfolio mix, 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 reinvestment rates, lower interest recoveries, lower rates on new loans and a change in loan portfolio mix, along with the impact of higher cash balances at the Federal Reserve as a result of continued deposit growth.
Average investment securities in the first quarter of 2015 were $18.5 billion (22.5 percent) higher year-over-year and $2.5
billion (2.6 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, to support liquidity coverage ratio regulatory requirements.
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NET
INTEREST INCOME |
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Table 3 |
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(Taxable-equivalent basis; $ in millions) |
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1Q
2015 |
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4Q
2014 |
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1Q
2014 |
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Change 1Q15 vs 4Q14 |
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Change 1Q15 vs 1Q14 |
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Components of net interest income |
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Income on earning assets |
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$3,116 |
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$3,158 |
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$3,078 |
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$(42 |
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$38 |
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Expense on interest-bearing liabilities |
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364 |
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359 |
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372 |
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5 |
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(8 |
) |
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Net interest income |
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$2,752 |
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$2,799 |
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$2,706 |
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$(47 |
) |
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$46 |
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Average yields and rates paid |
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Earning assets yield |
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3.49% |
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3.54% |
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3.81% |
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(.05)% |
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(.32)% |
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Rate paid on interest-bearing liabilities |
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.55 |
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.55 |
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.63 |
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(.08) |
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Gross interest margin |
|
|
2.94% |
|
|
|
2.99% |
|
|
|
3.18% |
|
|
|
(.05)% |
|
|
|
(.24)% |
|
|
|
|
|
|
Net interest margin |
|
|
3.08% |
|
|
|
3.14% |
|
|
|
3.35% |
|
|
|
(.06)% |
|
|
|
(.27)% |
|
|
|
|
|
|
|
|
|
|
|
|
Average balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities (a) |
|
|
$100,712 |
|
|
|
$98,164 |
|
|
|
$82,216 |
|
|
|
$2,548 |
|
|
|
$18,496 |
|
Loans |
|
|
247,950 |
|
|
|
246,421 |
|
|
|
235,859 |
|
|
|
1,529 |
|
|
|
12,091 |
|
Earning assets |
|
|
360,841 |
|
|
|
354,961 |
|
|
|
326,226 |
|
|
|
5,880 |
|
|
|
34,615 |
|
Interest-bearing liabilities |
|
|
267,882 |
|
|
|
259,938 |
|
|
|
238,276 |
|
|
|
7,944 |
|
|
|
29,606 |
|
|
|
|
|
|
|
(a) Excludes unrealized gain
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average total loans were $12.1 billion (5.1 percent) higher in the first quarter of 2015 than
the first quarter of 2014, driven by growth in total commercial loans (15.1 percent), total commercial real estate (6.5
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
8
percent), total other retail loans (3.5 percent), and credit card (2.4 percent). These increases were partially offset by declines in covered loans (37.5 percent) and residential mortgages (0.3
percent). Average total loans, excluding covered loans, were higher by 6.7 percent year-over-year. Average total loans were $1.5 billion (0.6 percent) higher in the first quarter of 2015 than the fourth quarter of 2014, driven by growth in total
commercial real estate (4.2 percent), total commercial loans (2.4 percent), and total other retail loans (0.4 percent). These increases were partially offset by declines in covered loans (24.2 percent), residential mortgages (0.9 percent), and
credit card (0.9 percent). Average total loans, excluding covered loans, were higher by 1.3 percent on a linked quarter basis. At the end of the first quarter, approximately $3 billion of student loans were transferred from the loan portfolio to
loans held for sale.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE LOANS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4 |
|
($ in millions) |
|
1Q
2015 |
|
|
4Q
2014 |
|
|
1Q
2014 |
|
|
Percent Change 1Q15 vs 4Q14 |
|
|
Percent Change 1Q15 vs 1Q14 |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
$76,183 |
|
|
|
$74,333 |
|
|
|
$65,645 |
|
|
|
2.5 |
|
|
|
16.1 |
|
Lease financing |
|
|
5,325 |
|
|
|
5,292 |
|
|
|
5,189 |
|
|
|
.6 |
|
|
|
2.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial |
|
|
81,508 |
|
|
|
79,625 |
|
|
|
70,834 |
|
|
|
2.4 |
|
|
|
15.1 |
|
|
|
|
|
|
|
Commercial mortgages |
|
|
33,119 |
|
|
|
31,783 |
|
|
|
32,049 |
|
|
|
4.2 |
|
|
|
3.3 |
|
Construction and development |
|
|
9,552 |
|
|
|
9,183 |
|
|
|
8,001 |
|
|
|
4.0 |
|
|
|
19.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate |
|
|
42,671 |
|
|
|
40,966 |
|
|
|
40,050 |
|
|
|
4.2 |
|
|
|
6.5 |
|
|
|
|
|
|
|
Residential mortgages |
|
|
51,426 |
|
|
|
51,872 |
|
|
|
51,584 |
|
|
|
(.9 |
) |
|
|
(.3 |
) |
|
|
|
|
|
|
Credit card |
|
|
17,823 |
|
|
|
17,990 |
|
|
|
17,407 |
|
|
|
(.9 |
) |
|
|
2.4 |
|
|
|
|
|
|
|
Retail leasing |
|
|
5,819 |
|
|
|
5,939 |
|
|
|
5,979 |
|
|
|
(2.0 |
) |
|
|
(2.7 |
) |
Home equity and second mortgages |
|
|
15,897 |
|
|
|
15,853 |
|
|
|
15,366 |
|
|
|
.3 |
|
|
|
3.5 |
|
Other |
|
|
27,604 |
|
|
|
27,317 |
|
|
|
26,312 |
|
|
|
1.1 |
|
|
|
4.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other retail |
|
|
49,320 |
|
|
|
49,109 |
|
|
|
47,657 |
|
|
|
.4 |
|
|
|
3.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, excluding covered loans |
|
|
242,748 |
|
|
|
239,562 |
|
|
|
227,532 |
|
|
|
1.3 |
|
|
|
6.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covered loans |
|
|
5,202 |
|
|
|
6,859 |
|
|
|
8,327 |
|
|
|
(24.2 |
) |
|
|
(37.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
|
|
$247,950 |
|
|
|
$246,421 |
|
|
|
$235,859 |
|
|
|
.6 |
|
|
|
5.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average total deposits for the first quarter of 2015 were $21.0 billion (8.1 percent) higher
than the first quarter of 2014. Average noninterest-bearing deposits increased $3.7 billion (5.2 percent) year-over-year, mainly in Consumer and Small Business Banking, as well as Wholesale Banking and Commercial Real Estate, partially offset by
decreases in corporate trust balances. Average total savings deposits were $20.8
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
9
billion (14.5 percent) higher year-over-year, the result of growth in Consumer and Small Business Banking, including the $3.3 billion impact of the Charter One acquisition, corporate trust, and
in Wholesale Banking and Commercial Real Estate balances. Average time deposits less than $100,000 were $1.0 billion (9.0 percent) lower due to maturities, while average time deposits greater than $100,000 decreased $2.5 billion (8.0 percent),
primarily due to a decline in Wholesale Banking and Commercial Real Estate, corporate trust and Consumer and Small Business Banking balances. Time deposits greater than $100,000 are primarily managed as an alternative to other funding sources, such
as wholesale borrowing, based largely on relative pricing.
Average total deposits increased $3.0 billion (1.1 percent)
over the fourth quarter of 2014. Average noninterest-bearing deposits decreased $2.4 billion (3.2 percent) on a linked quarter basis, due to seasonally lower balances in corporate trust and Consumer and Small Business Banking, partially offset by
higher balances in Wholesale Banking and Commercial Real Estate. Average total savings deposits increased $6.5 billion (4.1 percent), reflecting increases in Consumer and Small Business Banking, Wholesale Banking and Commercial Real Estate and
institutional trust balances. Compared with the fourth quarter of 2014, average time deposits less than $100,000 decreased $356 million (3.3 percent) due to maturities. Average time deposits greater than $100,000 decreased $728 million (2.5 percent)
on a linked quarter basis, principally due to declines in Wholesale Banking and Commercial Real Estate, corporate trust and Consumer and Small Business Banking balances.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE DEPOSITS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5 |
|
($ in millions) |
|
1Q
2015 |
|
|
4Q
2014 |
|
|
1Q
2014 |
|
|
Percent Change 1Q15 vs 4Q14 |
|
|
Percent Change 1Q15 vs 1Q14 |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
|
|
$74,511 |
|
|
|
$76,958 |
|
|
|
$70,824 |
|
|
|
(3.2 |
) |
|
|
5.2 |
|
Interest-bearing savings deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest checking |
|
|
54,658 |
|
|
|
54,199 |
|
|
|
51,305 |
|
|
|
.8 |
|
|
|
6.5 |
|
Money market savings |
|
|
73,889 |
|
|
|
68,914 |
|
|
|
59,244 |
|
|
|
7.2 |
|
|
|
24.7 |
|
Savings accounts |
|
|
36,033 |
|
|
|
34,955 |
|
|
|
33,200 |
|
|
|
3.1 |
|
|
|
8.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total of savings deposits |
|
|
164,580 |
|
|
|
158,068 |
|
|
|
143,749 |
|
|
|
4.1 |
|
|
|
14.5 |
|
Time deposits less than $100,000 |
|
|
10,410 |
|
|
|
10,766 |
|
|
|
11,443 |
|
|
|
(3.3 |
) |
|
|
(9.0 |
) |
Time deposits greater than $100,000 |
|
|
28,959 |
|
|
|
29,687 |
|
|
|
31,463 |
|
|
|
(2.5 |
) |
|
|
(8.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing deposits |
|
|
203,949 |
|
|
|
198,521 |
|
|
|
186,655 |
|
|
|
2.7 |
|
|
|
9.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
|
|
$278,460 |
|
|
|
$275,479 |
|
|
|
$257,479 |
|
|
|
1.1 |
|
|
|
8.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
10
Noninterest Income
First quarter noninterest income was $2,154 million, which was $46 million (2.2 percent) higher than the first quarter of 2014
and $216 million (9.1 percent) lower than the fourth quarter of 2014. The year-over-year increase in noninterest income was due to increases in a majority of fee revenue categories and equity investment gains in other income, partially offset by
small reductions in commercial products revenue and corporate payment products revenue. In particular, trust and investment management fees increased $18 million (5.9 percent) year-over-year, reflecting account growth and improved market conditions.
Merchant processing service fees reflected a growth rate of 0.8 percent inclusive of the impact of foreign currency rate changes. Excluding the impact of foreign currency rate changes the growth would have been approximately 5.0 percent. The
decrease in commercial products revenue of $5 million (2.4 percent) was primarily due to lower wholesale transaction activity, including standby letters of credit and syndication fees, and lower commercial leasing revenue, partially offset by
increased bond underwriting fees.
Noninterest income was $216 million (9.1 percent) lower in the first quarter of 2015
than the fourth quarter of 2014, principally due to seasonally lower fee revenue and the fourth quarter 2014 Nuveen gain. Credit and debit card revenue decreased $31 million (11.4 percent) primarily due to seasonally lower sales volumes and fewer
days. Merchant processing services was $25 million (6.5 percent) lower on a linked quarter basis due to seasonally lower product fees and fewer days. Deposit service charges decreased $19 million (10.6 percent) due to fewer days and seasonally lower
volumes. Commercial products revenue decreased $19 million (8.7 percent) primarily due to lower wholesale transaction activity, including standby letters of credit and syndication fees, partially offset by increased bond underwriting fees. Partially
offsetting these decreases was an increase in mortgage banking revenue, which increased $5 million (2.1 percent), due to higher origination and sales volume, partially offset by an unfavorable change in the valuation of mortgage servicing rights
(MSRs), net of hedging activities.
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6 |
|
($ in millions) |
|
1Q 2015 |
|
|
4Q 2014 |
|
|
1Q 2014 |
|
|
Percent Change 1Q15 vs 4Q14 |
|
|
Percent Change 1Q15 vs 1Q14 |
|
|
|
|
|
|
|
|
|
|
|
|
Credit and debit card revenue |
|
|
$241 |
|
|
|
$272 |
|
|
|
$239 |
|
|
|
(11.4 |
) |
|
|
.8 |
|
Corporate payment products revenue |
|
|
170 |
|
|
|
174 |
|
|
|
173 |
|
|
|
(2.3 |
) |
|
|
(1.7 |
) |
Merchant processing services |
|
|
359 |
|
|
|
384 |
|
|
|
356 |
|
|
|
(6.5 |
) |
|
|
.8 |
|
ATM processing services |
|
|
78 |
|
|
|
80 |
|
|
|
78 |
|
|
|
(2.5 |
) |
|
|
|
|
Trust and investment management fees |
|
|
322 |
|
|
|
322 |
|
|
|
304 |
|
|
|
|
|
|
|
5.9 |
|
Deposit service charges |
|
|
161 |
|
|
|
180 |
|
|
|
157 |
|
|
|
(10.6 |
) |
|
|
2.5 |
|
Treasury management fees |
|
|
137 |
|
|
|
136 |
|
|
|
133 |
|
|
|
.7 |
|
|
|
3.0 |
|
Commercial products revenue |
|
|
200 |
|
|
|
219 |
|
|
|
205 |
|
|
|
(8.7 |
) |
|
|
(2.4 |
) |
Mortgage banking revenue |
|
|
240 |
|
|
|
235 |
|
|
|
236 |
|
|
|
2.1 |
|
|
|
1.7 |
|
Investment products fees |
|
|
47 |
|
|
|
49 |
|
|
|
46 |
|
|
|
(4.1 |
) |
|
|
2.2 |
|
Securities gains (losses), net |
|
|
|
|
|
|
1 |
|
|
|
5 |
|
|
|
nm |
|
|
|
nm |
|
Other |
|
|
199 |
|
|
|
318 |
|
|
|
176 |
|
|
|
(37.4 |
) |
|
|
13.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest income |
|
|
$2,154 |
|
|
|
$2,370 |
|
|
|
$2,108 |
|
|
|
(9.1 |
) |
|
|
2.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense
Noninterest expense in the first quarter of 2015 totaled $2,665 million, an increase of $121 million (4.8 percent) over the
first quarter of 2014, and a $139 million (5.0 percent) decrease from the fourth quarter of 2014. The increase in total noninterest expense year-over-year was primarily the result of higher compensation, employee benefits and other expenses. The
increase in compensation expense of $64 million (5.7 percent) reflected the impact of merit increases, acquisitions, and higher staffing for risk and compliance activities, and commissions related to mortgage production. The increase in employee
benefits expense of $28 million (9.7 percent) was driven by higher pension costs. The increase in other expense of $48 million (12.4 percent) was primarily due to mortgage servicing-related expenses.
Noninterest expense decreased $139 million (5.0 percent) on a linked quarter basis, primarily driven by a decrease in other
noninterest expense of $107 million (19.7 percent) due to seasonally lower costs related to investments in tax-advantaged projects and the impact of the fourth quarter 2014 legal accruals, partially offset by increased mortgage servicing-related
expenses. Marketing and business development expense decreased $59 million (45.7 percent) due to the fourth quarter 2014 charitable contributions and lower advertising costs. Professional services expense was $55 million (41.7 percent) lower due to
seasonally lower costs across a majority of the lines of business. Partially offsetting these decreases were higher employee benefits expense, which increased $72 million (29.4 percent) due to increased pension costs and
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
12
seasonally higher payroll taxes, and compensation expense, which increased $28 million (2.4 percent) reflecting the seasonal impact of stock based compensation grants and commissions related to
mortgage production.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7 |
|
($ in millions) |
|
1Q 2015 |
|
|
4Q 2014 |
|
|
1Q 2014 |
|
|
Percent Change 1Q15 vs 4Q14 |
|
|
Percent Change 1Q15 vs 1Q14 |
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
$ |
1,179 |
|
|
$ |
1,151 |
|
|
$ |
1,115 |
|
|
|
2.4 |
|
|
|
5.7 |
|
Employee benefits |
|
|
317 |
|
|
|
245 |
|
|
|
289 |
|
|
|
29.4 |
|
|
|
9.7 |
|
Net occupancy and equipment |
|
|
247 |
|
|
|
248 |
|
|
|
249 |
|
|
|
(.4 |
) |
|
|
(.8 |
) |
Professional services |
|
|
77 |
|
|
|
132 |
|
|
|
83 |
|
|
|
(41.7 |
) |
|
|
(7.2 |
) |
Marketing and business development |
|
|
70 |
|
|
|
129 |
|
|
|
79 |
|
|
|
(45.7 |
) |
|
|
(11.4 |
) |
Technology and communications |
|
|
214 |
|
|
|
219 |
|
|
|
211 |
|
|
|
(2.3 |
) |
|
|
1.4 |
|
Postage, printing and supplies |
|
|
82 |
|
|
|
86 |
|
|
|
81 |
|
|
|
(4.7 |
) |
|
|
1.2 |
|
Other intangibles |
|
|
43 |
|
|
|
51 |
|
|
|
49 |
|
|
|
(15.7 |
) |
|
|
(12.2 |
) |
Other |
|
|
436 |
|
|
|
543 |
|
|
|
388 |
|
|
|
(19.7 |
) |
|
|
12.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense |
|
$ |
2,665 |
|
|
$ |
2,804 |
|
|
$ |
2,544 |
|
|
|
(5.0 |
) |
|
|
4.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes
The provision for income taxes for the first quarter of 2015 resulted in a tax rate on a taxable-equivalent basis of 27.0
percent (effective tax rate of 24.9 percent), compared with 28.1 percent (effective tax rate of 26.0 percent) in the first quarter of 2014, and 27.7 percent (effective tax rate of 25.8 percent) in the fourth quarter of 2014. The decrease was the
result of resolution of certain tax matters.
Credit Quality
The allowance for credit losses was $4,351 million at March 31, 2015, compared with $4,375 million at December 31,
2014, and $4,497 million at March 31, 2014. Nonperforming assets decreased on a linked quarter and year-over-year basis as economic conditions continued to slowly improve. Total net charge-offs in the first quarter of 2015 were $279 million,
compared with $308 million in the fourth quarter of 2014, and $341 million in the first quarter of 2014. The $29 million (9.4 percent) decrease in net charge-offs on a linked quarter basis was due to improvement in the commercial, commercial real
estate and other retail portfolios, while the $62 million (18.2 percent) decrease in net charge-offs on a year-over-year basis reflected improvements in residential mortgages, home equity and second mortgages, as well as in
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
13
construction and development. The Company recorded $264 million of provision for credit losses in the current quarter, which was $15 million less than net charge-offs.
The ratio of the allowance for credit losses to period-end loans was 1.77 percent at March 31, 2015, and at
December 31, 2014, compared with 1.89 percent at March 31, 2014. The ratio of the allowance for credit losses to nonperforming loans was 322 percent at March 31, 2015, compared with 298 percent at December 31, 2014, and 278
percent at March 31, 2014.
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLOWANCE FOR CREDIT LOSSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 8 |
|
|
|
|
|
($ in millions) |
|
1Q |
|
|
|
|
|
4Q |
|
|
|
|
|
3Q |
|
|
|
|
|
2Q |
|
|
|
|
|
1Q |
|
|
|
|
|
|
2015 |
|
|
% (b) |
|
|
2014 |
|
|
% (b) |
|
|
2014 |
|
|
% (b) |
|
|
2014 |
|
|
% (b) |
|
|
2014 |
|
|
% (b) |
|
|
|
|
|
|
Balance, beginning of period |
|
|
$4,375 |
|
|
|
|
|
|
|
$4,414 |
|
|
|
|
|
|
|
$4,449 |
|
|
|
|
|
|
|
$4,497 |
|
|
|
|
|
|
|
$4,537 |
|
|
|
|
|
Net charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
40 |
|
|
|
.21 |
|
|
|
48 |
|
|
|
.26 |
|
|
|
52 |
|
|
|
.29 |
|
|
|
52 |
|
|
|
.30 |
|
|
|
34 |
|
|
|
.21 |
|
Lease financing |
|
|
3 |
|
|
|
.23 |
|
|
|
(2 |
) |
|
|
(.15 |
) |
|
|
6 |
|
|
|
.46 |
|
|
|
3 |
|
|
|
.24 |
|
|
|
2 |
|
|
|
.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial |
|
|
43 |
|
|
|
.21 |
|
|
|
46 |
|
|
|
.23 |
|
|
|
58 |
|
|
|
.30 |
|
|
|
55 |
|
|
|
.29 |
|
|
|
36 |
|
|
|
.21 |
|
Commercial mortgages |
|
|
(1 |
) |
|
|
(.01 |
) |
|
|
(3 |
) |
|
|
(.04 |
) |
|
|
1 |
|
|
|
.01 |
|
|
|
(6 |
) |
|
|
(.08 |
) |
|
|
(1 |
) |
|
|
(.01 |
) |
Construction and development |
|
|
(17 |
) |
|
|
(.72 |
) |
|
|
(7 |
) |
|
|
(.30 |
) |
|
|
3 |
|
|
|
.13 |
|
|
|
2 |
|
|
|
.09 |
|
|
|
(2 |
) |
|
|
(.10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate |
|
|
(18 |
) |
|
|
(.17 |
) |
|
|
(10 |
) |
|
|
(.10 |
) |
|
|
4 |
|
|
|
.04 |
|
|
|
(4 |
) |
|
|
(.04 |
) |
|
|
(3 |
) |
|
|
(.03 |
) |
Residential mortgages |
|
|
35 |
|
|
|
.28 |
|
|
|
39 |
|
|
|
.30 |
|
|
|
42 |
|
|
|
.32 |
|
|
|
57 |
|
|
|
.44 |
|
|
|
57 |
|
|
|
.45 |
|
Credit card |
|
|
163 |
|
|
|
3.71 |
|
|
|
160 |
|
|
|
3.53 |
|
|
|
158 |
|
|
|
3.53 |
|
|
|
170 |
|
|
|
3.92 |
|
|
|
170 |
|
|
|
3.96 |
|
Retail leasing |
|
|
1 |
|
|
|
.07 |
|
|
|
1 |
|
|
|
.07 |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
.07 |
|
|
|
|
|
|
|
|
|
Home equity and second mortgages |
|
|
14 |
|
|
|
.36 |
|
|
|
17 |
|
|
|
.43 |
|
|
|
24 |
|
|
|
.61 |
|
|
|
23 |
|
|
|
.60 |
|
|
|
31 |
|
|
|
.82 |
|
Other |
|
|
41 |
|
|
|
.60 |
|
|
|
52 |
|
|
|
.76 |
|
|
|
49 |
|
|
|
.72 |
|
|
|
45 |
|
|
|
.68 |
|
|
|
45 |
|
|
|
.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other retail |
|
|
56 |
|
|
|
.46 |
|
|
|
70 |
|
|
|
.57 |
|
|
|
73 |
|
|
|
.59 |
|
|
|
69 |
|
|
|
.58 |
|
|
|
76 |
|
|
|
.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net charge-offs, excluding covered loans |
|
|
279 |
|
|
|
.47 |
|
|
|
305 |
|
|
|
.51 |
|
|
|
335 |
|
|
|
.56 |
|
|
|
347 |
|
|
|
.60 |
|
|
|
336 |
|
|
|
.60 |
|
Covered loans |
|
|
|
|
|
|
|
|
|
|
3 |
|
|
|
.17 |
|
|
|
1 |
|
|
|
.05 |
|
|
|
2 |
|
|
|
.10 |
|
|
|
5 |
|
|
|
.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net charge-offs |
|
|
279 |
|
|
|
.46 |
|
|
|
308 |
|
|
|
.50 |
|
|
|
336 |
|
|
|
.55 |
|
|
|
349 |
|
|
|
.58 |
|
|
|
341 |
|
|
|
.59 |
|
Provision for credit losses |
|
|
264 |
|
|
|
|
|
|
|
288 |
|
|
|
|
|
|
|
311 |
|
|
|
|
|
|
|
324 |
|
|
|
|
|
|
|
306 |
|
|
|
|
|
Other changes (a) |
|
|
(9 |
) |
|
|
|
|
|
|
(19 |
) |
|
|
|
|
|
|
(10 |
) |
|
|
|
|
|
|
(23 |
) |
|
|
|
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
|
$4,351 |
|
|
|
|
|
|
|
$4,375 |
|
|
|
|
|
|
|
$4,414 |
|
|
|
|
|
|
|
$4,449 |
|
|
|
|
|
|
|
$4,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
|
|
$4,023 |
|
|
|
|
|
|
|
$4,039 |
|
|
|
|
|
|
|
$4,065 |
|
|
|
|
|
|
|
$4,132 |
|
|
|
|
|
|
|
$4,189 |
|
|
|
|
|
Liability for unfunded credit commitments |
|
|
328 |
|
|
|
|
|
|
|
336 |
|
|
|
|
|
|
|
349 |
|
|
|
|
|
|
|
317 |
|
|
|
|
|
|
|
308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total allowance for credit losses |
|
|
$4,351 |
|
|
|
|
|
|
|
$4,375 |
|
|
|
|
|
|
|
$4,414 |
|
|
|
|
|
|
|
$4,449 |
|
|
|
|
|
|
|
$4,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross charge-offs |
|
|
$383 |
|
|
|
|
|
|
|
$415 |
|
|
|
|
|
|
|
$410 |
|
|
|
|
|
|
|
$432 |
|
|
|
|
|
|
|
$422 |
|
|
|
|
|
Gross recoveries |
|
|
$104 |
|
|
|
|
|
|
|
$107 |
|
|
|
|
|
|
|
$74 |
|
|
|
|
|
|
|
$83 |
|
|
|
|
|
|
|
$81 |
|
|
|
|
|
Allowance for credit losses as a percentage of Period-end loans, excluding
covered loans |
|
|
1.79 |
|
|
|
|
|
|
|
1.78 |
|
|
|
|
|
|
|
1.81 |
|
|
|
|
|
|
|
1.83 |
|
|
|
|
|
|
|
1.90 |
|
|
|
|
|
Nonperforming loans, excluding covered loans |
|
|
321 |
|
|
|
|
|
|
|
297 |
|
|
|
|
|
|
|
291 |
|
|
|
|
|
|
|
294 |
|
|
|
|
|
|
|
293 |
|
|
|
|
|
Nonperforming assets, excluding covered assets |
|
|
261 |
|
|
|
|
|
|
|
245 |
|
|
|
|
|
|
|
245 |
|
|
|
|
|
|
|
246 |
|
|
|
|
|
|
|
243 |
|
|
|
|
|
Period-end loans |
|
|
1.77 |
|
|
|
|
|
|
|
1.77 |
|
|
|
|
|
|
|
1.80 |
|
|
|
|
|
|
|
1.82 |
|
|
|
|
|
|
|
1.89 |
|
|
|
|
|
Nonperforming loans |
|
|
322 |
|
|
|
|
|
|
|
298 |
|
|
|
|
|
|
|
282 |
|
|
|
|
|
|
|
279 |
|
|
|
|
|
|
|
278 |
|
|
|
|
|
Nonperforming assets |
|
|
257 |
|
|
|
|
|
|
|
242 |
|
|
|
|
|
|
|
230 |
|
|
|
|
|
|
|
229 |
|
|
|
|
|
|
|
225 |
|
|
|
|
|
|
(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 First Quarter 2015 Results
April 15, 2015
Page
15
Nonperforming assets at March 31, 2015, totaled $1,696 million, compared
with $1,808 million at December 31, 2014, and $1,999 million at March 31, 2014. The ratio of nonperforming assets to loans and other real estate was 0.69 percent at March 31, 2015, compared with 0.73 percent at December 31, 2014,
and 0.84 percent at March 31, 2014. Total commercial nonperforming loans were $25 million (22.3 percent) lower on a linked quarter basis and $101 million (53.7 percent) lower year-over-year. Total commercial real estate nonperforming loans
decreased by $42 million (16.2 percent) on a linked quarter basis and were $52 million (19.3 percent) lower year-over-year. Residential mortgage nonperforming loans decreased $39 million (4.5 percent) on a linked quarter basis but increased $48
million (6.2 percent) year-over-year. Credit card nonperforming loans were $8 million (26.7 percent) lower on a linked quarter basis and $43 million (66.2 percent) lower year-over-year. Other retail nonperforming loans were relatively flat on a
linked quarter basis and year-over-year.
Accruing loans 90 days or more past due were $880 million ($521 million
excluding covered loans) at March 31, 2015, compared with $945 million ($550 million excluding covered loans) at December 31, 2014, and $1,167 million ($695 million excluding covered loans) at March 31, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES |
|
|
|
Table 9 |
|
(Percent) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar 31 2015 |
|
|
Dec 31 2014 |
|
|
Sep 30 2014 |
|
|
Jun 30 2014 |
|
|
Mar 31 2014 |
|
|
|
|
|
|
|
|
|
|
Delinquent loan ratios - 90 days or more past due
excluding nonperforming loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
.05 |
|
|
|
.05 |
|
|
|
.05 |
|
|
|
.06 |
|
|
|
.06 |
|
Commercial real estate |
|
|
.07 |
|
|
|
.05 |
|
|
|
.03 |
|
|
|
.06 |
|
|
|
.06 |
|
Residential mortgages |
|
|
.33 |
|
|
|
.40 |
|
|
|
.41 |
|
|
|
.49 |
|
|
|
.64 |
|
Credit card |
|
|
1.19 |
|
|
|
1.13 |
|
|
|
1.10 |
|
|
|
1.06 |
|
|
|
1.21 |
|
Other retail |
|
|
.15 |
|
|
|
.15 |
|
|
|
.16 |
|
|
|
.15 |
|
|
|
.18 |
|
Total loans, excluding covered loans |
|
|
.22 |
|
|
|
.23 |
|
|
|
.22 |
|
|
|
.25 |
|
|
|
.30 |
|
Covered loans |
|
|
7.01 |
|
|
|
7.48 |
|
|
|
6.10 |
|
|
|
6.14 |
|
|
|
5.83 |
|
Total loans |
|
|
.36 |
|
|
|
.38 |
|
|
|
.39 |
|
|
|
.43 |
|
|
|
.49 |
|
|
|
|
|
Delinquent loan ratios - 90 days or more past due
including nonperforming loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
.16 |
|
|
|
.19 |
|
|
|
.27 |
|
|
|
.30 |
|
|
|
.32 |
|
Commercial real estate |
|
|
.58 |
|
|
|
.65 |
|
|
|
.62 |
|
|
|
.62 |
|
|
|
.73 |
|
Residential mortgages |
|
|
1.95 |
|
|
|
2.07 |
|
|
|
2.02 |
|
|
|
2.06 |
|
|
|
2.14 |
|
Credit card |
|
|
1.32 |
|
|
|
1.30 |
|
|
|
1.32 |
|
|
|
1.35 |
|
|
|
1.59 |
|
Other retail |
|
|
.55 |
|
|
|
.53 |
|
|
|
.53 |
|
|
|
.54 |
|
|
|
.58 |
|
Total loans, excluding covered loans |
|
|
.77 |
|
|
|
.83 |
|
|
|
.84 |
|
|
|
.87 |
|
|
|
.95 |
|
Covered loans |
|
|
7.25 |
|
|
|
7.74 |
|
|
|
7.34 |
|
|
|
7.73 |
|
|
|
7.46 |
|
Total loans |
|
|
.91 |
|
|
|
.97 |
|
|
|
1.03 |
|
|
|
1.08 |
|
|
|
1.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET
QUALITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 10 |
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar 31 2015 |
|
|
Dec 31 2014 |
|
|
Sep 30 2014 |
|
|
Jun 30 2014 |
|
|
Mar 31 2014 |
|
|
|
|
|
|
Nonperforming loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
$74 |
|
|
|
$99 |
|
|
|
$161 |
|
|
|
$174 |
|
|
|
$174 |
|
Lease financing |
|
|
13 |
|
|
|
13 |
|
|
|
12 |
|
|
|
16 |
|
|
|
14 |
|
|
|
|
|
|
Total commercial |
|
|
87 |
|
|
|
112 |
|
|
|
173 |
|
|
|
190 |
|
|
|
188 |
|
|
|
|
|
|
|
Commercial mortgages |
|
|
142 |
|
|
|
175 |
|
|
|
147 |
|
|
|
121 |
|
|
|
156 |
|
Construction and development |
|
|
75 |
|
|
|
84 |
|
|
|
94 |
|
|
|
105 |
|
|
|
113 |
|
|
|
|
|
|
Total commercial real estate |
|
|
217 |
|
|
|
259 |
|
|
|
241 |
|
|
|
226 |
|
|
|
269 |
|
|
|
|
|
|
|
Residential mortgages |
|
|
825 |
|
|
|
864 |
|
|
|
841 |
|
|
|
818 |
|
|
|
777 |
|
Credit card |
|
|
22 |
|
|
|
30 |
|
|
|
40 |
|
|
|
52 |
|
|
|
65 |
|
Other retail |
|
|
187 |
|
|
|
187 |
|
|
|
184 |
|
|
|
191 |
|
|
|
188 |
|
|
|
|
|
|
Total nonperforming loans, excluding covered loans |
|
|
1,338 |
|
|
|
1,452 |
|
|
|
1,479 |
|
|
|
1,477 |
|
|
|
1,487 |
|
|
|
|
|
|
|
Covered loans |
|
|
12 |
|
|
|
14 |
|
|
|
88 |
|
|
|
119 |
|
|
|
132 |
|
|
|
|
|
|
Total nonperforming loans |
|
|
1,350 |
|
|
|
1,466 |
|
|
|
1,567 |
|
|
|
1,596 |
|
|
|
1,619 |
|
|
|
|
|
|
|
Other real estate (a) |
|
|
293 |
|
|
|
288 |
|
|
|
275 |
|
|
|
279 |
|
|
|
296 |
|
Covered other real estate (a) |
|
|
37 |
|
|
|
37 |
|
|
|
72 |
|
|
|
58 |
|
|
|
73 |
|
Other nonperforming assets |
|
|
16 |
|
|
|
17 |
|
|
|
9 |
|
|
|
10 |
|
|
|
11 |
|
|
|
|
|
|
Total nonperforming assets (b) |
|
|
$1,696 |
|
|
|
$1,808 |
|
|
|
$1,923 |
|
|
|
$1,943 |
|
|
|
$1,999 |
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming assets, excluding covered assets |
|
|
$1,647 |
|
|
|
$1,757 |
|
|
|
$1,763 |
|
|
|
$1,766 |
|
|
|
$1,794 |
|
|
|
|
|
|
|
|
|
|
|
|
Accruing loans 90 days or more past due, excluding covered loans |
|
|
$521 |
|
|
|
$550 |
|
|
|
$532 |
|
|
|
$581 |
|
|
|
$695 |
|
|
|
|
|
|
|
|
|
|
|
|
Accruing loans 90 days or more past due |
|
|
$880 |
|
|
|
$945 |
|
|
|
$962 |
|
|
|
$1,038 |
|
|
|
$1,167 |
|
|
|
|
|
|
|
|
|
|
|
|
Performing restructured loans, excluding GNMA and covered loans |
|
|
$2,684 |
|
|
|
$2,832 |
|
|
|
$2,818 |
|
|
|
$2,911 |
|
|
|
$3,006 |
|
|
|
|
|
|
|
|
|
|
|
|
Performing restructured GNMA and covered loans |
|
|
$2,186 |
|
|
|
$2,273 |
|
|
|
$2,685 |
|
|
|
$3,072 |
|
|
|
$3,003 |
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets to loans plus ORE, excluding covered assets (%) |
|
|
.68 |
|
|
|
.72 |
|
|
|
.74 |
|
|
|
.75 |
|
|
|
.78 |
|
|
|
|
|
|
|
Nonperforming assets to loans plus ORE (%) |
|
|
.69 |
|
|
|
.73 |
|
|
|
.78 |
|
|
|
.80 |
|
|
|
.84 |
|
|
(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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Management
Total U.S. Bancorp shareholders equity was $44.3 billion at March 31, 2015, compared with $43.5 billion at
December 31, 2014, and $42.1 billion at March 31, 2014. During the first quarter, the Company returned 70 percent of first quarter earnings to shareholders, including $438 million in common stock dividends and $518 million of repurchased
common stock.
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON SHARES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 11 |
|
(Millions) |
|
1Q 2015 |
|
|
4Q 2014 |
|
|
3Q 2014 |
|
|
2Q 2014 |
|
|
1Q
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning shares outstanding |
|
|
1,786 |
|
|
|
1,795 |
|
|
|
1,809 |
|
|
|
1,821 |
|
|
|
1,825 |
|
Shares issued for stock incentive plans, acquisitions and other corporate
purposes |
|
|
6 |
|
|
|
2 |
|
|
|
2 |
|
|
|
3 |
|
|
|
8 |
|
Shares repurchased |
|
|
(12 |
) |
|
|
(11 |
) |
|
|
(16 |
) |
|
|
(15 |
) |
|
|
(12 |
) |
|
|
|
|
|
Ending shares outstanding |
|
|
1,780 |
|
|
|
1,786 |
|
|
|
1,795 |
|
|
|
1,809 |
|
|
|
1,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under the Basel III transitional standardized approach, the common equity tier 1 capital ratio
was 9.6 percent at March 31, 2015, compared with 9.7 percent at December 31, 2014, and at March 31, 2014. The tier 1 capital ratio was 11.1 percent at March 31, 2015, compared with 11.3 percent at December 31, 2014, and 11.4
percent at March 31, 2014. Under the Basel III transitional advanced approaches, the common equity tier 1 capital to risk-weighted assets ratio was 12.3 percent at March 31, 2015, compared with 12.4 percent at December 31, 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 Basel III standardized approach as if fully implemented was 9.2
percent at March 31, 2015, compared with 9.0 percent at December 30, 2014, and at March 31, 2014, 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 March 31, 2015, and at December 31, 2014. The tangible common equity to tangible assets ratio was 7.6 percent at March 31, 2015, compared with 7.5 percent at December 31, 2014, and 7.8 percent at
March 31, 2014.
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL POSITION |
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 12 |
|
($ in millions) |
|
Mar 31 2015 |
|
|
Dec 31 2014 |
|
|
Sep 30 2014 |
|
|
Jun 30 2014 |
|
|
Mar 31 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. Bancorp shareholders equity |
|
|
$44,277 |
|
|
|
$43,479 |
|
|
|
$43,141 |
|
|
|
$42,700 |
|
|
|
$42,054 |
|
|
|
|
|
|
|
Standardized Approach |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III transitional standardized approach |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital |
|
|
$31,308 |
|
|
|
$30,856 |
|
|
|
$30,213 |
|
|
|
$29,760 |
|
|
|
$29,463 |
|
Tier 1 capital |
|
|
36,382 |
|
|
|
36,020 |
|
|
|
35,377 |
|
|
|
34,924 |
|
|
|
34,627 |
|
Total risk-based capital |
|
|
43,558 |
|
|
|
43,208 |
|
|
|
42,509 |
|
|
|
41,034 |
|
|
|
40,741 |
|
|
|
|
|
|
|
Common equity tier 1 capital ratio |
|
|
9.6 |
% |
|
|
9.7 |
% |
|
|
9.7 |
% |
|
|
9.6 |
% |
|
|
9.7 |
% |
Tier 1 capital ratio |
|
|
11.1 |
|
|
|
11.3 |
|
|
|
11.3 |
|
|
|
11.3 |
|
|
|
11.4 |
|
Total risk-based capital ratio |
|
|
13.3 |
|
|
|
13.6 |
|
|
|
13.6 |
|
|
|
13.2 |
|
|
|
13.5 |
|
Leverage ratio |
|
|
9.3 |
|
|
|
9.3 |
|
|
|
9.4 |
|
|
|
9.6 |
|
|
|
9.7 |
|
|
|
|
|
|
|
Common equity tier 1 capital to risk-weighted assets estimated for the
Basel III fully implemented standardized approach |
|
|
9.2 |
|
|
|
9.0 |
|
|
|
9.0 |
|
|
|
8.9 |
|
|
|
9.0 |
|
|
|
|
|
|
|
Advanced Approaches |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital to risk-weighted assets for the Basel III
transitional advanced approaches |
|
|
12.3 |
|
|
|
12.4 |
|
|
|
12.4 |
|
|
|
12.3 |
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital to risk-weighted assets estimated for the Basel
III fully implemented advanced approaches |
|
|
11.8 |
|
|
|
11.8 |
|
|
|
11.8 |
|
|
|
11.7 |
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets |
|
|
7.6 |
|
|
|
7.5 |
|
|
|
7.6 |
|
|
|
7.5 |
|
|
|
7.8 |
|
Tangible common equity to risk-weighted assets |
|
|
9.3 |
|
|
|
9.3 |
|
|
|
9.3 |
|
|
|
9.2 |
|
|
|
9.3 |
|
|
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. Basel III includes
two comprehensive methodologies for calculating risk-weighted assets: a general standardized approach and more risk-sensitive advanced approaches. In the second quarter of 2014, the Company exited its parallel run qualification period, resulting in
its capital adequacy now being evaluated against the Basel III methodology that is most restrictive. |
|
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
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
19
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 realigned to better respond to the Companys diverse customer base. During 2015, 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 $219 million of the Companys net income in the first quarter of 2015, compared with $275 million in the first quarter of 2014 and $281 million in the fourth quarter of 2014. Wholesale Banking and Commercial
Real Estates net income decreased $56 million (20.4 percent) from the same quarter of 2014 due to a higher provision for credit losses and an increase in total noninterest expense, partially offset by an increase in total net revenue. Total
net revenue increased by $6 million (0.8 percent), due to a 6.0 percent increase in net interest income, partially offset by a 9.4 percent decrease in total noninterest income. Net interest income increased by $29 million (6.0 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 $23 million (9.4 percent), driven by lower wholesale transaction activity and
loan-related fees, along with lower commercial leasing revenue, partially offset by increased bond underwriting fees. Total noninterest expense was $18 million (5.8 percent) higher compared with a year ago, due to an increase in variable
compensation expense and the FDIC insurance assessment allocation, based on the level of commitments. The provision for credit losses was $77 million higher year-over-year due to an unfavorable change in the reserve allocation reflecting the recent
decline in energy prices and higher net charge-offs.
Wholesale Banking and Commercial Real Estates contribution to
net income in the first quarter of 2015 was $62 million (22.1 percent) lower than the fourth quarter of 2014, due to a decrease in total net revenue, an increase in total noninterest expense, and an increase in the provision for credit losses. Total
net revenue decreased by $38 million (4.9 percent) compared with the prior quarter. Net interest income decreased by $21 million (3.9 percent) on a linked quarter basis, primarily due to lower rates and fees on loans and fewer days in the quarter,
partially offset by higher average loans. Total noninterest income decreased by $17 million (7.1 percent) due to lower wholesale transaction activity and loan-related fees, partially offset by increased bond underwriting fees. Total noninterest
expense increased by $18 million (5.8 percent) due to
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
20
higher compensation and employee benefits expense related to higher pension costs and seasonally higher payroll taxes, and higher net shared services expense. The provision for credit losses
increased by $42 million due to an unfavorable change in the reserve allocation reflecting the recent decline in energy prices and an increase in 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, workplace
banking, student banking and 24-hour banking (collectively, the retail banking division), as well as mortgage banking. Consumer and Small Business Banking contributed $302 million of the Companys net income in the first quarter of 2015, a $14
million (4.9 percent) increase from the first quarter of 2014 and an $8 million (2.6 percent) decrease from the prior quarter. Within Consumer and Small Business Banking, the retail banking division reported an 18.5 percent increase in its
contribution from the same quarter of last year, principally due to lower provision for credit losses, partially offset by an increase in total noninterest expense and lower total net revenue. Retail bankings total net revenue was 4.3 percent
lower than the first quarter of 2014. Net interest income decreased 5.8 percent, primarily as a result of lower fees due to the wind down of the CAA product and lower rates on loans, partially offset by higher average loan and deposit balances.
Total noninterest income for the retail banking division decreased 0.5 percent from a year ago, principally due to lower retail leasing revenue, partially offset by an increase in deposit service charges. Total noninterest expense for the retail
banking division in the first quarter of 2015 increased 3.7 percent over the same quarter of the prior year, primarily due to higher compensation and employee benefits expense, partially offset by lower marketing expenses and lower FDIC insurance
assessments. The provision for credit losses for the retail banking division decreased $140 million on a year-over-year basis due to a favorable change in the reserve allocation and lower net charge-offs. The contribution of the mortgage banking
division was 14.2 percent lower than the first quarter of 2014, reflecting an increase in total noninterest expense and an increase the provision for credit losses, partially offset by an increase in total net revenue. The divisions 5.6
percent increase in total net revenue was due to a 9.7 percent increase in net interest income, primarily the result of higher average loans held for sale, as well as a 3.0 percent increase in total noninterest income, principally due to higher
origination and sales volume, partially offset by an unfavorable change in the valuation of MSRs, net of hedging activities. Total noninterest expense was 14.0 percent higher compared with the prior year due to higher mortgage servicing-related
expenses and increased compensation expense, partially offset by lower
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
21
professional services expense. The $19 million increase in the provision for credit losses for the mortgage banking division was due to an unfavorable change in the reserve allocation, partially
offset by lower net charge-offs.
Consumer and Small Business Bankings contribution in the first quarter of 2015 was
$8 million (2.6 percent) lower than the fourth quarter of 2014, primarily due to a decrease in total net revenue and an increase in total noninterest expense, partially offset by a decrease in the provision for credit losses. Within Consumer and
Small Business Banking, the retail banking divisions contribution increased 5.3 percent, mainly due to a decrease in the provision for credit losses and a decrease in total noninterest expense, partially offset by a decrease in total net
revenue. Total net revenue for the retail banking division decreased 2.8 percent compared with the previous quarter. Net interest income was 2.3 percent lower compared with the prior quarter primarily due to fewer days in the quarter, partially
offset by higher average deposit balances. Total noninterest income was 4.0 percent lower on a linked quarter basis, driven by seasonally lower deposit service charges. The provision for credit losses decreased 88.3 percent on a linked quarter basis
due to a favorable change in the reserve allocation and lower net charge-offs. The contribution of the mortgage banking division decreased 14.9 percent from the fourth quarter of 2014 primarily due to higher total noninterest expense and provision
for credit losses. Total net revenue increased 0.5 percent due to a 1.7 percent increase in total noninterest income, the result of higher origination and sales revenue, partially offset by an unfavorable change in the valuation of MSRs, net of
hedging activities. The increase in total net revenue was partially offset by a 1.3 percent decrease in net interest income primarily due to two fewer days in the quarter and lower loan rates and average loan balances. Total noninterest expense
increased 13.4 percent, primarily reflecting higher mortgage servicing-related expenses, along with higher compensation and employee benefits expense related to higher pension costs and seasonally higher payroll taxes, partially offset by lower
professional services expense. The provision for credit losses for the mortgage banking division increased $4 million on a linked quarter basis primarily due to an unfavorable 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 $59 million of the Companys net income in the first quarter of 2015, compared with $52 million in the first quarter of 2014 and $65 million in the fourth quarter of 2014. The business lines
contribution was $7 million (13.5 percent)
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
22
higher than the same quarter of 2014, principally due to an increase in total net revenue, partially offset by an increase in total noninterest expense. Total net revenue increased by $29 million
(6.9 percent) year-over-year, driven by a $17 million (5.0 percent) increase in total noninterest income, reflecting the impact of account growth and improved market conditions, and an increase in net interest income of $12 million (15.0 percent),
principally due to higher average loan and deposit balances and an increase in the margin benefit from corporate trust deposits. Total noninterest expense increased by $15 million (4.4 percent) primarily as a result of higher net shared services and
compensation and employee benefits expense due to merit and increased pension costs. The provision for credit losses increased $2 million (50.0 percent) compared with the prior year quarter due to higher net charge-offs.
The business lines contribution in the first quarter of 2015 was $6 million (9.2 percent) lower than the prior quarter.
Total net revenue decreased 1.1 percent on a linked quarter basis, primarily reflecting a decrease in net interest income of $4 million (4.2 percent), principally due to lower average deposit balances and fewer days in the quarter, partially offset
by the impact of higher rates on the margin benefit from corporate trust deposits. Total noninterest expense was $7 million (2.0 percent) higher than the prior quarter primarily due to higher compensation and employee benefits expense, driven by
increased pension costs and the seasonal impact of stock based compensation grants and payroll taxes, partially offset by lower professional services expense. The provision for credit losses decreased $3 million on a linked quarter basis due to a
favorable change in the reserve allocation and lower net charge-offs.
Payment Services includes consumer and
business credit cards, stored-value cards, debit cards, corporate, government and purchasing card services, consumer lines of credit and merchant processing. Payment Services contributed $262 million of the Companys net income in the first
quarter of 2015, compared with $238 million in the first quarter of 2014 and $300 million in the fourth quarter of 2014. The $24 million (10.1 percent) increase in the business lines contribution over the prior year was due to an increase in
total net revenue, partially offset by an increase in total noninterest expense. Total net revenue increased by $53 million (4.5 percent) year-over-year. Net interest income increased by $51 million (12.3 percent), primarily due to higher average
loan balances and fees and improved loan rates. Total noninterest income was $2 million (0.3 percent) higher year-over-year, due to higher merchant processing services revenue driven by increased product fees and transaction volumes, partially
offset by the impact of foreign currency rate changes. Total noninterest expense increased by $20 million (3.3 percent) over the first quarter of 2014, primarily due to higher net shared services expense and compensation and employee benefits
expense related to higher pension costs, partially offset by reductions in professional services, marketing, and
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
23
other intangibles expense. The provision for credit losses decreased by $4 million (2.0 percent) due to lower net charge-offs, partially offset by an unfavorable change in the reserve allocation.
Payment Services contribution in the first quarter of 2015 decreased $38 million (12.7 percent) from the fourth
quarter of 2014. Total net revenue decreased $70 million (5.3 percent) on a linked quarter basis driven by lower total noninterest income. Net interest income decreased by $4 million (0.9 percent) from the fourth quarter due to fewer days in the
quarter and lower average loan balances, partially offset by higher loan rates. Total noninterest income decreased by $66 million (7.8 percent), primarily due to a decrease in credit and debit card revenue due to seasonally lower transaction volumes
and fewer processing days, and lower merchant processing revenue due to seasonally lower transaction volumes, fewer processing days and the impact of foreign currency rate changes. Total noninterest expense was $15 million (2.4 percent) lower on a
linked quarter basis primarily due to lower professional services and intangibles expenses. The provision for credit losses was $4 million (2.1 percent) higher on a linked quarter basis due to higher net charge-offs, partially offset by a favorable
change in the reserve allocation.
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, 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 $589 million in the first quarter of 2015,
compared with $544 million in the first quarter of 2014 and $532 million in the fourth quarter of 2014. The increase in net income of $45 million (8.3 percent) over the prior year was driven by an increase in total net revenue, primarily due to an
increase in total noninterest income, partially offset by a decrease in net interest income and an increase in total noninterest expense. Net interest income decreased by $5 million (0.8 percent) from the first quarter of 2014, principally due to
growth in the investment portfolio at lower average rates, along with lower income from the run-off of acquired assets. Total noninterest income increased by $45 million (34.1 percent) over the first quarter of last year, mainly due to gains on the
sales of equity investments and higher commercial products revenue. Total noninterest expense increased by $6 million (3.6 percent), principally due to an increase in compensation and employee benefits expense resulting from higher pension costs,
and increased mortgage servicing-related expenses, partially offset by lower costs for investments in tax-advantaged projects. The provision for credit losses was $4 million (66.7 percent) higher year-over-year due to an unfavorable change in the
reserve allocation, partially offset by a decrease in net charge-offs.
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
24
Net income in the first quarter of 2015 was $57 million (10.7 percent) higher
on a linked quarter basis, as decreases in total noninterest expense and the provision for credit losses were partially offset by a decrease in total net revenue. Total net revenue was $115 million (12.4 percent) lower than the prior quarter
primarily due to the fourth quarter 2014 Nuveen gain. The $175 million (50.1 percent) decrease in total noninterest expense was principally due to fourth quarter 2014 notable items, which included charitable contributions and legal accruals, and
lower costs related to investments in tax-advantaged projects, partially offset by increased pension costs and seasonally higher payroll taxes and compensation expense reflecting the seasonal impact of stock based compensation grants. The provision
for credit losses was $18 million lower compared with the fourth quarter of 2014 due to a decrease in net charge-offs, partially offset by an unfavorable change in the reserve allocation.
|
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|
LINE OF BUSINESS FINANCIAL PERFORMANCE (a) |
|
|
Table 13 |
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable
to U.S. Bancorp |
|
|
Percent Change |
|
|
1Q 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Line |
|
|
1Q 2015 |
|
|
|
4Q 2014 |
|
|
|
1Q 2014 |
|
|
|
1Q15 vs 4Q14 |
|
|
|
1Q15 vs 1Q14 |
|
|
|
Earnings Composition |
|
|
|
Wholesale Banking and Commercial Real Estate |
|
|
$219 |
|
|
|
$281 |
|
|
|
$275 |
|
|
|
(22.1 |
) |
|
|
(20.4 |
) |
|
|
15 |
% |
|
|
Consumer and Small Business Banking |
|
|
302 |
|
|
|
310 |
|
|
|
288 |
|
|
|
(2.6 |
) |
|
|
4.9 |
|
|
|
21 |
|
|
|
Wealth Management and Securities Services |
|
|
59 |
|
|
|
65 |
|
|
|
52 |
|
|
|
(9.2 |
) |
|
|
13.5 |
|
|
|
4 |
|
|
|
Payment Services |
|
|
262 |
|
|
|
300 |
|
|
|
238 |
|
|
|
(12.7 |
) |
|
|
10.1 |
|
|
|
19 |
|
|
|
Treasury and Corporate Support |
|
|
589 |
|
|
|
532 |
|
|
|
544 |
|
|
|
10.7 |
|
|
|
8.3 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Company |
|
|
$1,431 |
|
|
|
$1,488 |
|
|
|
$1,397 |
|
|
|
(3.8 |
) |
|
|
2.4 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) preliminary data
|
|
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.
(MORE)
U.S. Bancorp Reports First Quarter 2015 Results
April 15, 2015
Page
25
On Wednesday, April 15, 2015, at 8:30 a.m. CDT, Richard K. Davis, chairman, president
and chief executive officer, and Kathy Rogers, vice chairman and chief financial officer, will host a conference call to review the financial results. The conference call will be available online and by telephone. The presentation used during the
call will be available at www.usbank.com. 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 near the bottom of the page. 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 87116125. For those unable to participate during the live call, a recording of the call will be available beginning approximately two hours after the
conference call ends on Wednesday, April 15 and will be accessible through Wednesday, April 22 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 87116125.
Minneapolis-based U.S. Bancorp
(USB), with $410 billion in assets as of March 31, 2015, is the parent company of U.S. Bank National Association, the 5th largest commercial bank in the United States. The Company operates 3,172 banking offices in 25 states and
5,016 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 First Quarter 2015 Results
April 15, 2015
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 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. 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. 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; litigation; 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, 2014, 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 First Quarter 2015 Results
April 15, 2015
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, and
|
|
|
|
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced approaches. |
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
|
|
|
|
|
|
|
|
|
(Dollars and Shares in Millions, Except Per Share Data) |
|
Three Months Ended
March 31, |
|
|
|
|
|
|
(Unaudited) |
|
2015 |
|
|
2014 |
|
|
|
Interest Income |
|
|
|
|
|
|
|
|
Loans |
|
|
$2,493 |
|
|
|
$2,522 |
|
Loans held for sale |
|
|
41 |
|
|
|
27 |
|
Investment securities |
|
|
495 |
|
|
|
441 |
|
Other interest income |
|
|
32 |
|
|
|
32 |
|
|
|
|
|
|
Total interest income |
|
|
3,061 |
|
|
|
3,022 |
|
Interest Expense |
|
|
|
|
|
|
|
|
Deposits |
|
|
118 |
|
|
|
119 |
|
Short-term borrowings |
|
|
61 |
|
|
|
69 |
|
Long-term debt |
|
|
184 |
|
|
|
184 |
|
|
|
|
|
|
Total interest expense |
|
|
363 |
|
|
|
372 |
|
|
|
|
|
|
Net interest income |
|
|
2,698 |
|
|
|
2,650 |
|
Provision for credit losses |
|
|
264 |
|
|
|
306 |
|
|
|
|
|
|
Net interest income after provision for credit losses |
|
|
2,434 |
|
|
|
2,344 |
|
Noninterest Income |
|
|
|
|
|
|
|
|
Credit and debit card revenue |
|
|
241 |
|
|
|
239 |
|
Corporate payment products revenue |
|
|
170 |
|
|
|
173 |
|
Merchant processing services |
|
|
359 |
|
|
|
356 |
|
ATM processing services |
|
|
78 |
|
|
|
78 |
|
Trust and investment management fees |
|
|
322 |
|
|
|
304 |
|
Deposit service charges |
|
|
161 |
|
|
|
157 |
|
Treasury management fees |
|
|
137 |
|
|
|
133 |
|
Commercial products revenue |
|
|
200 |
|
|
|
205 |
|
Mortgage banking revenue |
|
|
240 |
|
|
|
236 |
|
Investment products fees |
|
|
47 |
|
|
|
46 |
|
Securities gains (losses), net |
|
|
|
|
|
|
5 |
|
Other |
|
|
199 |
|
|
|
176 |
|
|
|
|
|
|
Total noninterest income |
|
|
2,154 |
|
|
|
2,108 |
|
Noninterest Expense |
|
|
|
|
|
|
|
|
Compensation |
|
|
1,179 |
|
|
|
1,115 |
|
Employee benefits |
|
|
317 |
|
|
|
289 |
|
Net occupancy and equipment |
|
|
247 |
|
|
|
249 |
|
Professional services |
|
|
77 |
|
|
|
83 |
|
Marketing and business development |
|
|
70 |
|
|
|
79 |
|
Technology and communications |
|
|
214 |
|
|
|
211 |
|
Postage, printing and supplies |
|
|
82 |
|
|
|
81 |
|
Other intangibles |
|
|
43 |
|
|
|
49 |
|
Other |
|
|
436 |
|
|
|
388 |
|
|
|
|
|
|
Total noninterest expense |
|
|
2,665 |
|
|
|
2,544 |
|
|
|
|
|
|
Income before income taxes |
|
|
1,923 |
|
|
|
1,908 |
|
Applicable income taxes |
|
|
479 |
|
|
|
496 |
|
|
|
|
|
|
Net income |
|
|
1,444 |
|
|
|
1,412 |
|
Net (income) loss attributable to noncontrolling interests |
|
|
(13 |
) |
|
|
(15 |
) |
|
|
|
|
|
Net income attributable to U.S. Bancorp |
|
|
$1,431 |
|
|
|
$1,397 |
|
|
|
|
|
|
Net income applicable to U.S. Bancorp common shareholders |
|
|
$1,365 |
|
|
|
$1,331 |
|
|
|
|
|
|
Earnings per common share |
|
|
$.77 |
|
|
|
$.73 |
|
Diluted earnings per common share |
|
|
$.76 |
|
|
|
$.73 |
|
Dividends declared per common share |
|
|
$.245 |
|
|
|
$.230 |
|
Average common shares outstanding |
|
|
1,781 |
|
|
|
1,818 |
|
Average diluted common shares outstanding |
|
|
1,789 |
|
|
|
1,828 |
|
|
|
Page 28
U.S. Bancorp
Consolidated Ending Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions) |
|
March 31, 2015 |
|
|
December 31, 2014 |
|
|
March 31, 2014 |
|
|
|
Assets |
|
|
(Unaudited |
) |
|
|
|
|
|
|
(Unaudited |
) |
Cash and due from banks |
|
|
$14,072 |
|
|
|
$10,654 |
|
|
|
$7,408 |
|
Investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity |
|
|
45,597 |
|
|
|
44,974 |
|
|
|
40,712 |
|
Available-for-sale |
|
|
56,826 |
|
|
|
56,069 |
|
|
|
44,761 |
|
Loans held for sale |
|
|
8,012 |
|
|
|
4,792 |
|
|
|
1,843 |
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
82,732 |
|
|
|
80,377 |
|
|
|
73,701 |
|
Commercial real estate |
|
|
42,409 |
|
|
|
42,795 |
|
|
|
40,131 |
|
Residential mortgages |
|
|
51,089 |
|
|
|
51,619 |
|
|
|
51,708 |
|
Credit card |
|
|
17,504 |
|
|
|
18,515 |
|
|
|
17,129 |
|
Other retail |
|
|
46,449 |
|
|
|
49,264 |
|
|
|
47,607 |
|
|
|
|
|
|
Total loans, excluding covered loans |
|
|
240,183 |
|
|
|
242,570 |
|
|
|
230,276 |
|
Covered loans |
|
|
5,118 |
|
|
|
5,281 |
|
|
|
8,099 |
|
|
|
|
|
|
Total loans |
|
|
245,301 |
|
|
|
247,851 |
|
|
|
238,375 |
|
Less allowance for loan losses |
|
|
(4,023 |
) |
|
|
(4,039 |
) |
|
|
(4,189 |
) |
|
|
|
|
|
Net loans |
|
|
241,278 |
|
|
|
243,812 |
|
|
|
234,186 |
|
Premises and equipment |
|
|
2,575 |
|
|
|
2,618 |
|
|
|
2,589 |
|
Goodwill |
|
|
9,363 |
|
|
|
9,389 |
|
|
|
9,204 |
|
Other intangible assets |
|
|
3,033 |
|
|
|
3,162 |
|
|
|
3,422 |
|
Other assets |
|
|
29,477 |
|
|
|
27,059 |
|
|
|
27,164 |
|
|
|
|
|
|
Total assets |
|
|
$410,233 |
|
|
|
$402,529 |
|
|
|
$371,289 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing |
|
|
$79,220 |
|
|
|
$77,323 |
|
|
|
$73,363 |
|
Interest-bearing |
|
|
179,853 |
|
|
|
177,452 |
|
|
|
157,918 |
|
Time deposits greater than $100,000 |
|
|
27,528 |
|
|
|
27,958 |
|
|
|
29,331 |
|
|
|
|
|
|
Total deposits |
|
|
286,601 |
|
|
|
282,733 |
|
|
|
260,612 |
|
Short-term borrowings |
|
|
28,226 |
|
|
|
29,893 |
|
|
|
30,781 |
|
Long-term debt |
|
|
35,104 |
|
|
|
32,260 |
|
|
|
23,774 |
|
Other liabilities |
|
|
15,337 |
|
|
|
13,475 |
|
|
|
13,379 |
|
|
|
|
|
|
Total liabilities |
|
|
365,268 |
|
|
|
358,361 |
|
|
|
328,546 |
|
Shareholders equity |
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
|
4,756 |
|
|
|
4,756 |
|
|
|
4,756 |
|
Common stock |
|
|
21 |
|
|
|
21 |
|
|
|
21 |
|
Capital surplus |
|
|
8,315 |
|
|
|
8,313 |
|
|
|
8,236 |
|
Retained earnings |
|
|
43,463 |
|
|
|
42,530 |
|
|
|
39,584 |
|
Less treasury stock |
|
|
(11,564 |
) |
|
|
(11,245 |
) |
|
|
(9,693 |
) |
Accumulated other comprehensive income (loss) |
|
|
(714 |
) |
|
|
(896 |
) |
|
|
(850 |
) |
|
|
|
|
|
Total U.S. Bancorp shareholders equity |
|
|
44,277 |
|
|
|
43,479 |
|
|
|
42,054 |
|
Noncontrolling interests |
|
|
688 |
|
|
|
689 |
|
|
|
689 |
|
|
|
|
|
|
Total equity |
|
|
44,965 |
|
|
|
44,168 |
|
|
|
42,743 |
|
|
|
|
|
|
Total liabilities and equity |
|
|
$410,233 |
|
|
|
$402,529 |
|
|
|
$371,289 |
|
|
|
Page 29
U.S. Bancorp
Non-GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Millions, Unaudited) |
|
March 31, 2015 |
|
|
December 31, 2014 |
|
|
September 30, 2014 |
|
|
June 30, 2014 |
|
|
March 31, 2014 |
|
|
|
Total equity |
|
|
$44,965 |
|
|
|
$44,168 |
|
|
|
$43,829 |
|
|
|
$43,386 |
|
|
|
$42,743 |
|
Preferred stock |
|
|
(4,756 |
) |
|
|
(4,756 |
) |
|
|
(4,756 |
) |
|
|
(4,756 |
) |
|
|
(4,756 |
) |
Noncontrolling interests |
|
|
(688 |
) |
|
|
(689 |
) |
|
|
(688 |
) |
|
|
(686 |
) |
|
|
(689 |
) |
Goodwill (net of deferred tax liability) (1) |
|
|
(8,360 |
) |
|
|
(8,403 |
) |
|
|
(8,503 |
) |
|
|
(8,548 |
) |
|
|
(8,352 |
) |
Intangible assets, other than mortgage servicing rights |
|
|
(783 |
) |
|
|
(824 |
) |
|
|
(877 |
) |
|
|
(925 |
) |
|
|
(804 |
) |
|
|
|
|
|
Tangible common equity (a) |
|
|
30,378 |
|
|
|
29,496 |
|
|
|
29,005 |
|
|
|
28,471 |
|
|
|
28,142 |
|
|
|
|
|
|
|
Tangible common equity (as calculated above) |
|
|
30,378 |
|
|
|
29,496 |
|
|
|
29,005 |
|
|
|
28,471 |
|
|
|
28,142 |
|
Adjustments (2) |
|
|
158 |
|
|
|
172 |
|
|
|
187 |
|
|
|
224 |
|
|
|
239 |
|
|
|
|
|
|
Common equity tier 1 capital estimated for the Basel III fully implemented standardized and advanced approaches (b) |
|
|
30,536 |
|
|
|
29,668 |
|
|
|
29,192 |
|
|
|
28,695 |
|
|
|
28,381 |
|
|
|
|
|
|
|
Total assets |
|
|
410,233 |
|
|
|
402,529 |
|
|
|
391,284 |
|
|
|
389,065 |
|
|
|
371,289 |
|
Goodwill (net of deferred tax liability) (1) |
|
|
(8,360 |
) |
|
|
(8,403 |
) |
|
|
(8,503 |
) |
|
|
(8,548 |
) |
|
|
(8,352 |
) |
Intangible assets, other than mortgage servicing rights |
|
|
(783 |
) |
|
|
(824 |
) |
|
|
(877 |
) |
|
|
(925 |
) |
|
|
(804 |
) |
|
|
|
|
|
Tangible assets (c) |
|
|
401,090 |
|
|
|
393,302 |
|
|
|
381,904 |
|
|
|
379,592 |
|
|
|
362,133 |
|
|
|
|
|
|
|
Risk-weighted assets, determined in accordance with prescribed regulatory requirements (d) |
|
|
327,709 |
* |
|
|
317,398 |
|
|
|
311,914 |
|
|
|
309,929 |
|
|
|
302,841 |
|
Adjustments (3) |
|
|
3,153 |
* |
|
|
11,110 |
|
|
|
12,837 |
|
|
|
12,753 |
|
|
|
13,238 |
|
|
|
|
|
|
Risk-weighted assets estimated for the Basel III fully implemented standardized approach (e) |
|
|
330,862 |
* |
|
|
328,508 |
|
|
|
324,751 |
|
|
|
322,682 |
|
|
|
316,079 |
|
|
|
|
|
|
|
Risk-weighted assets, determined in accordance with prescribed transitional advanced approaches regulatory requirements |
|
|
254,892 |
* |
|
|
248,596 |
|
|
|
243,909 |
|
|
|
241,929 |
|
|
|
|
|
Adjustments (4) |
|
|
3,321 |
* |
|
|
3,270 |
|
|
|
3,443 |
|
|
|
3,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-weighted assets estimated for the Basel III fully implemented advanced approaches (f) |
|
|
258,213 |
* |
|
|
251,866 |
|
|
|
247,352 |
|
|
|
245,312 |
|
|
|
|
|
|
|
|
|
|
|
Ratios * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets (a)/(c) |
|
|
7.6 |
% |
|
|
7.5 |
% |
|
|
7.6 |
% |
|
|
7.5 |
% |
|
|
7.8 |
% |
Tangible common equity to risk-weighted assets (a)/(d) |
|
|
9.3 |
|
|
|
9.3 |
|
|
|
9.3 |
|
|
|
9.2 |
|
|
|
9.3 |
|
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach
(b)/(e) |
|
|
9.2 |
|
|
|
9.0 |
|
|
|
9.0 |
|
|
|
8.9 |
|
|
|
9.0 |
|
Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully
implemented advanced approaches (b)/(f) |
|
|
11.8 |
|
|
|
11.8 |
|
|
|
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.
(2) Includes net losses on cash flow hedges included in
accumulated other comprehensive income and other adjustments.
(3) Includes higher risk-weighting for unfunded loan
commitments, investment securities, residential mortgages, mortgage servicing rights and other adjustments.
(4)
Primarily reflects higher risk-weighting for mortgage servicing rights.
Page 30
|
Richard K. Davis
Kathy Rogers
U.S. Bancorp
1Q15 Earnings
Conference Call
U.S. Bancorp
1Q15 Earnings
Conference Call
April 15, 2015
Exhibit 99.2
Chairman, President and CEO
Vice Chairman and CFO |
|
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 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. 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. 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; litigation; 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, 2014, 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. |
|
1Q15 Earnings
Conference Call
1Q15 Highlights
Net income of $1.4 billion; $0.76 per diluted common share
Average loan growth of 5.1% vs. 1Q14 and 0.6% vs. 4Q14 (0.8% excluding the
reclassification of certain municipal loans to securities)
Average deposit growth of 8.1% vs. 1Q14 (6.4% excluding Charter One
acquisition) and 1.1% vs. 4Q14
Net charge-offs declined 18.2% vs. 1Q14 and 9.4% vs 4Q14
Nonperforming assets declined 15.2% vs. 1Q14 and 6.2% vs 4Q14
Capital generation continues to reinforce capital position
Common equity tier 1 capital ratio of 9.2% estimated for the Basel III fully
implemented standardized approach
Returned 70% of earnings to shareholders in 1Q15
Repurchased 12 million shares of common stock during the quarter
3 |
|
1Q15 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 ** Excluding $124 million gain related to an
equity interest in Nuveen and $88 million expense for charitable contributions and legal accruals
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 14.6%
15.1%
14.5%
14.4%
14.1%
1.56%
1.60%
1.51%
1.50%
1.44%
1.0%
1.5%
2.0%
2.5%
3.0%
8%
11%
14%
17%
20%
1Q14
2Q14
3Q14
4Q14
1Q15
52.9%
53.1%
52.4%
54.3%
53.8%**
51.3%*
3.35%
3.27%
3.16%
3.14%
3.08%
1.6%
2.2%
2.8%
3.4%
4.0%
48%
52%
56%
60%
64%
1Q14
2Q14
3Q14
4Q14
1Q15
54.3%
4 |
|
1Q15 Earnings
Conference Call
* Gain on Visa Inc. Class B common stock sale
** Gain related to an equity interest in Nuveen
Taxable-equivalent basis
Revenue Growth
Year-Over-Year Change
(1.2%)
4.9%
2.0%
5.7%
1.9%
$ in millions
$4,906
$4,814
$4,990
$5,188
$214*
$124**
3,500
4,000
4,500
5,000
5,500
1Q14
2Q14
3Q14
4Q14
1Q15
$5,169
5 |
|
1Q15 Earnings
Conference Call
Loan and Deposit Growth
Year-Over-Year Growth
Average Balances
$ in billions
5.9%
$246.4
5.1%
$248.0
6.0%
$235.9
6.8%
$240.5
6.3%
$243.9
7.2%
$275.5
8.1%
$278.5
5.1%
$257.5
6.0%
$262.4
7.4%
$271.0
210.0
230.0
250.0
270.0
290.0
1Q14
2Q14
3Q14
4Q14
1Q15
Loans
Deposits
6 |
|
1Q15 Earnings
Conference Call
Credit Quality
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)
$341
$349
$336
$308
$279
0.59%
0.58%
0.55%
0.50%
0.46%
0.00%
0.75%
1.50%
2.25%
3.00%
0
130
260
390
520
1Q14
2Q14
3Q14
4Q14
1Q15
$1,999
$1,943
$1,923
$1,808
$1,696
0.84%
0.80%
0.78%
0.73%
0.69%
0.00%
0.75%
1.50%
2.25%
3.00%
0
700
1,400
2,100
2,800
1Q14
2Q14
3Q14
4Q14
1Q15
7 |
|
1Q15 Earnings
Conference Call
Earnings Summary
$ and shares in millions, except per-share data
Taxable-equivalent basis
1Q15
4Q14
1Q14
vs 4Q14
vs 1Q14
Net Interest Income
2,752
$
2,799
$
2,706
$
(1.7)
1.7
Noninterest Income
2,154
2,370
2,108
(9.1)
2.2
Net Revenue
4,906
5,169
4,814
(5.1)
1.9
Noninterest Expense
2,665
2,804
2,544
5.0
(4.8)
Operating Income
2,241
2,365
2,270
(5.2)
(1.3)
Net Charge-offs
279
308
341
9.4
18.2
Excess Provision
(15)
(20)
(35)
(25.0)
(57.1)
Income before Taxes
1,977
2,077
1,964
(4.8)
0.7
Applicable Income Taxes
533
576
552
7.5
3.4
Noncontrolling Interests
(13)
(13)
(15)
-
13.3
Net Income
1,431
1,488
1,397
(3.8)
2.4
Preferred Dividends/Other
66
68
66
2.9
-
NI to Common
1,365
$
1,420
$
1,331
$
(3.9)
2.6
Diluted EPS
0.76
$
0.79
$
0.73
$
(3.8)
4.1
Average Diluted Shares
1,789
1,796
1,828
0.4
2.1
% B/(W)
8 |
|
1Q15 Earnings
Conference Call
1Q15 Results -
Key Drivers
vs. 1Q14
Net Revenue increase of 1.9%
Net interest income increase of 1.7%; net interest margin of 3.08% vs. 3.35% in
1Q14
Noninterest income increase of 2.2%
Noninterest expense increase of 4.8%
Provision for credit losses declined by $42 million
Net charge-offs lower by $62 million, or 18.2%
Provision lower than NCOs by $15 million vs. $35 million in 1Q14
vs. 4Q14
Net Revenue decrease of 5.1% (2.8% decrease excluding notable item in 4Q14)
Net interest income decrease of 1.7%; net interest margin
of 3.08% vs. 3.14% in 4Q14
Noninterest income decrease of 9.1% (4.1% decrease
excluding notable item in 4Q14)
Noninterest expense decrease of 5.0% (1.9% decrease
excluding notable items in 4Q14)
Provision for credit losses lower by $24 million
Net charge-offs decreased by $29 million, or 9.4%
Provision lower than NCOs by $15 million vs. $20 million in 4Q14
9 |
|
10
1Q15 Earnings
Conference Call
Capital Position
$ in billions
RWA = risk-weighted assets
1Q15
4Q14
3Q14
2Q14
1Q14
Total U.S. Bancorp shareholders' equity
44.3
$
43.5
$
43.1
$
42.7
$
42.1
$
Standardized Approach
Basel III transitional standardized approach
Common equity tier 1 capital
31.3
30.9
30.2
29.8
29.5
Tier 1 capital
36.4
36.0
35.4
34.9
34.6
Total risk-based capital
43.6
43.2
42.5
41.0
40.7
Common equity tier 1 capital ratio
9.6%
9.7%
9.7%
9.6%
9.7%
Tier 1 capital ratio
11.1%
11.3%
11.3%
11.3%
11.4%
Total risk-based capital ratio
13.3%
13.6%
13.6%
13.2%
13.5%
Leverage ratio
9.3%
9.3%
9.4%
9.6%
9.7%
Common equity tier 1 capital to RWA estimated for the
Basel III fully implemented standardized approach
9.2%
9.0%
9.0%
8.9%
9.0%
Advanced Approaches
Common equity tier 1 capital to RWA for the Basel III
transitional advanced approaches
12.3%
12.4%
12.4%
12.3%
Common equity tier 1 capital to RWA estimated for the
Basel III fully implemented advanced approaches
11.8%
11.8%
11.8%
11.7%
Tangible common equity ratio
7.6%
7.5%
7.6%
7.5%
7.8%
Tangible common equity as a % of RWA
9.3%
9.3%
9.3%
9.2%
9.3%
10 |
|
11
1Q15 Earnings
Conference Call
Capital Actions
Reinvest and
Acquisitions
Dividends
Share
Repurchases
20 -
40%
Targets:
30 -
40%
30 -
40%
30%
1Q15
Actual:
38%
32%
Earnings Distribution
Share repurchase authorization and expected dividend increase announced
March 11
Expect to increase annual dividend from $0.98 to $1.02, a 4.1% increase, effective
2Q15
Five-quarter authorization to repurchase up to $3.022 billion of outstanding
common stock effective April 1, 2015
Returned 70% of earnings to shareholders during 1Q15
th |
|
12
1Q15 Earnings
Conference Call |
|
1Q15 Earnings
Conference Call
Appendix
13 |
|
1Q15 Earnings
Conference Call
Average Loans
Key Points
$ in billions
vs. 1Q14
Average total loans grew by $12.1 billion, or
5.1% (4.8% excluding Charter One acquisition)
Average total commercial loans increased
$10.7 billion, or 15.1%; average commercial
real estate loans increased $2.6 billion, or 6.5%
vs. 4Q14
Average total loans grew by $1.6 billion, or
0.6% (0.8% increase excluding reclassification
of certain municipal loans to securities at the
end of 4Q14)
Average total commercial loans increased $1.9
billion, or 2.4%; average commercial real estate
loans increased $1.7 billion, or 4.2%
Year-Over-Year Growth
6.0%
6.8%
6.3%
5.9%
5.1%
Covered
Commercial
CRE
Res Mtg
Retail
Credit Card
Average Loans
8.5%
12.4%
13.6%
15.5%
15.1%
7.6%
6.9%
6.1%
4.2%
6.5%
14.4%
10.5%
5.8%
2.2%
(0.3%)
5.3%
5.9%
4.9%
3.6%
2.4%
0
70
140
280
1Q14
2Q14
3Q14
4Q14
1Q15
0.9%
2.3%
3.6%
3.6%
3.5%
210
14
$235.9
$240.5
$243.9
$246.4
$248.0 |
|
1Q15 Earnings
Conference Call
Average Deposits
Average Deposits
Key Points
$ in billions
vs. 1Q14
Average total deposits increased by $21.0
billion, or 8.1% (6.4% excluding Charter One
acquisition)
Average low-cost deposits (NIB, interest
checking, money market and savings)
increased by $24.5 billion, or 11.4%
vs. 4Q14
Average total deposits increased by $3.0
billion, or 1.1%
Average low-cost deposits increased by $4.1
billion, or 1.7%
Year-Over-Year Growth
5.1%
6.0%
7.4%
7.2%
8.1%
Time
Money Market
Checking and Savings
Noninterest-bearing
$257.5
$262.4
$271.0
$275.5
$278.5
(6.1%)
(5.9%)
(13.1%)
(4.9%)
(8.2%)
11.6%
10.8%
18.3%
19.7%
24.7%
5.9%
8.3%
10.9%
8.3%
7.3%
6.7%
7.4%
8.6%
3.3%
5.2.%
0
80
160
240
320
1Q14
2Q14
3Q14
4Q14
1Q15
15 |
|
1Q15 Earnings
Conference Call
Net Interest Income
Net Interest Income
Key Points
$ in millions
Taxable-equivalent basis
vs. 1Q14
Average earning assets grew by $34.6 billion,
or 10.6%
Net interest margin lower by 27 bps (3.08% vs. 3.35%)
driven by:
growth in the investment portfolio at lower average rates, as
well as lower reinvestment rates on investment securities,
lower loan fees due to the CAA product wind down, lower
rates on new loans and a change in loan portfolio mix
Partially offset by lower funding costs
vs. 4Q14
Average earning assets grew by $5.9 billion,
or 1.7%
Net interest margin lower by 6 bps (3.08% vs. 3.14%)
driven by:
Growth in lower rate investment securities and lower
reinvestment rates, lower interest recoveries, lower rates on
new loans and a change in loan portfolio mix, along with the
impact of higher cash balances at the Federal Reserve as a
result of continued deposit growth
Year-Over-Year Change
(0.1%)
2.7%
1.3%
2.4%
1.7%
$2,706
$2,744
$2,748
$2,799
$2,752
3.35%
3.27%
3.16%
3.14%
3.08%
0.0%
2.0%
4.0%
6.0%
8.0%
0
1,000
2,000
3,000
4,000
1Q14
2Q14
3Q14
4Q14
1Q15
Net Interest Income
Net Interest Margin
16 |
|
1Q15 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. 1Q14
Noninterest income increased by $46 million, or
2.2%, driven by:
Higher trust and investment management fees (5.9% increase)
due to account growth and improved market conditions
Higher other income due primarily to equity investment gains
Mortgage revenue increase of $4 million
Partially offset by lower commercial products revenue (2.4%
decrease) due to lower wholesale transaction activity and lower
commercial leasing revenue, partially offset by increased bond
underwriting fees
vs. 4Q14
Noninterest income decreased by $216 million, or
9.1%, driven by:
Lower credit and debit card revenue (11.4% decrease) primarily
due to seasonally lower sales volume and fewer days
Lower merchant processing revenue (6.5% decrease) due to
seasonally lower product fees and fewer days
Lower deposit service charges (10.6% decrease) due to fewer
days and seasonally lower volumes
Lower commercial products revenue (8.7% decrease) due to
lower wholesale transaction activity partially offset by increased
bond underwriting fees
Lower other income due primarily to 4Q Nuveen gain
Partially offset by mortgage revenue increase of $5 million
Year-Over-Year Change
(2.6%)
7.4%
3.0%
9.9%
2.2%
$2,108
$2,444
$2,242
$2,370
All Other
Mortgage
Service Charges
Trust and Inv Mgmt
Payments
1Q14
2Q14
3Q14
4Q14
1Q15
Nuveen Gain
-
$
-
$
-
$
124
$
-
$
Visa Gain
-
214
-
-
-
Total
-
$
214
$
-
$
124
$
-
$
Notable Noninterest Income Items
0
700
1,400
2,100
2,800
1Q14
2Q14
3Q14
4Q14
1Q15
$2,154
3.2%
1.7%
2.2%
5.9%
0.3%
17 |
|
1Q15 Earnings
Conference Call
Noninterest Expense
Noninterest Expense
Key Points
$ in millions
vs. 1Q14
Noninterest expense was higher by $121 million,
or 4.8%, driven by:
Higher compensation expense (5.7% increase) reflecting the
impact of merit increases, acquisitions, and higher staffing for
risk and compliance activities, and higher employee benefits
expense (9.7% increase) due to higher pension costs
Higher other expense (12.4% increase) primarily due to higher
mortgage servicing-related expenses
vs. 4Q14
Noninterest expense was lower by $139 million, or
5.0%, driven by:
Lower marketing and business development expense (45.7%
decrease) due to the fourth quarter 2014 charitable
contributions and lower advertising costs
Lower professional services expense (41.7% decrease) due to
seasonally lower costs
Lower other expense due to seasonally lower costs related to
investments in tax-advantaged projects and the impact of the
fourth quarter 2014 legal accruals, partially offset by increased
mortgage servicing-related expenses
Partially offset by higher employee benefit expense (29.4%
increase) due to increased pension costs and seasonally
higher payroll taxes and higher compensation expense (2.4%
increase) reflecting the seasonal impact of stock based
compensation grants and commissions related to mortgage
production
Year-Over-Year Change
3.0%
7.7%
1.9%
4.5%
4.8%
$2,544
$2,753
$2,614
$2,804
$2,665
All Other
Tech and Communications
Prof Svcs, Marketing and PPS
Occupancy and Equipment
Compensation and Benefits
1Q14
2Q14
3Q14
4Q14
1Q15
Charitable contributions
-
$
-
$
-
$
35
$
-
$
Accruals for legal matters
-
-
-
53
-
FHA DOJ settlement
-
200
-
-
-
Total
-
$
200
$
-
$
88
$
-
$
Notable Noninterest Expense Items
9.6%
1.4%
(0.8%)
6.6%
0
800
1,600
2,400
3,200
1Q14
2Q14
3Q14
4Q14
1Q15
(5.8%)
18 |
|
19
1Q15 Earnings
Conference Call
Credit Quality
-
Commercial Loans
Average Loans and Net Charge-offs Ratios
Key Statistics
Key Points
Continued new client growth led to 2.5% linked quarter loan growth and 16.1%
year-over-year growth; utilization rates improved modestly
Net charge-offs declined on a linked quarter basis and the NCO ratio was flat
year-over-year Nonperforming loans and delinquencies continued at
historically low levels 1Q14
4Q14
1Q15
Average Loans
$65,645
$74,333
$76,183
30-89 Delinquencies
0.25%
0.27%
0.19%
90+ Delinquencies
0.07%
0.05%
0.06%
Nonperforming Loans
0.25%
0.13%
0.10%
$ in millions
$65,645
$69,920
$72,190
$74,333
$76,183
0.21%
0.30%
0.29%
0.26%
0.21
0.0%
0.5%
1.0%
1.5%
2.0%
0
25,000
50,000
75,000
100,000
1Q14
2Q14
3Q14
4Q14
1Q15
Average Loans
Net Charge
-offs Ratio
20%
24%
28%
32%
36%
Revolving Line Utilization Trend |
|
20
1Q15 Earnings
Conference Call
Credit Quality
-
Commercial Leases
Average Loans and Net Charge-offs Ratios
Key Statistics
Key Points
Commercial
lease
balances
increased
slightly
on
a
linked
quarter
basis
Net charge-offs increased as recoveries returned to normal levels
Nonperforming loans and delinquencies continued at modest levels
1Q14
4Q14
1Q15
Average Loans
$5,189
$5,292
$5,325
30-89 Delinquencies
0.74%
0.78%
0.84%
90+ Delinquencies
0.00%
0.00%
0.00%
Nonperforming Loans
0.27%
0.24%
0.24%
$ in millions
Small Ticket
$3,095
Equipment
Finance
$2,230
Commercial Leases
$5,189
$5,100
$5,155
$5,292
$5,325
0.16%
0.24%
0.46%
-0.15%
0.23%
-0.7%
0.0%
0.7%
1.4%
2.1%
0
3,000
6,000
9,000
1Q14
2Q14
3Q14
4Q14
1Q15
Average Loans
Net Charge
-offs Ratio |
|
1Q15 Earnings
Conference Call
Credit
Quality
-
Commercial
Real
Estate
Average Loans and Net Charge-offs Ratios
Key Statistics
Key Points
Credit quality is stable at low levels; non-performing loans improved
quarter-over-quarter Net
recovery
ratio
of
0.17%,
continuing
a
trend
of
recoveries
in
the
portfolio
1Q14
4Q14
1Q15
Average Loans
$40,050
$40,966
$42,671
30-89 Delinquencies
0.14%
0.26%
0.24%
90+ Delinquencies
0.06%
0.05%
0.07%
Nonperforming Loans
0.67%
0.61%
0.51%
Performing TDRs*
$359
$365
$259
$ in millions
Investor
$21,551
Owner
Occupied
$11,568
Multi-family
$2,931
Retail
$745
Residential
Construction
$2,061
A&D
Construction
$714
Office
$1,024
Other
$2,077
* TDR = troubled debt restructuring
$40,050
$40,497
$40,839
$40,966
$42,671
-0.03%
-0.04%
0.04%
-0.10%
-0.17%
-0.5%
0.0%
0.5%
1.0%
1.5%
0
20,000
40,000
60,000
1Q14
2Q14
3Q14
4Q14
1Q15
Average Loans
Net Charge
-offs Ratio
CRE Mortgage
CRE Construction
21 |
|
1Q15 Earnings
Conference Call
Credit Quality
-
Residential Mortgage
Average Loans and Net Charge-offs Ratios
Key Statistics
Key Points
Originations are of high credit quality (weighted average FICO 755, weighted
average LTV 69%) 82% 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
1Q14
4Q14
1Q15
Average Loans
$51,584
$51,872
$51,426
30-89 Delinquencies
0.59%
0.43%
0.38%
90+ Delinquencies
0.64%
0.40%
0.33%
Nonperforming Loans
1.50%
1.67%
1.61%
$ in millions
*Excludes
GNMA
loans,
whose
repayments
are
insured
by
the
FHA
or
guaranteed
by
the
Department
of
VA
($2,157
million
in
1Q15)
$51,584
$51,815
$51,994
$51,872
$51,426
0.45%
0.44%
0.32%
0.30%
0.0%
0.5%
1.0%
1.5%
2.0%
0
15,000
30,000
45,000
60,000
1Q14
2Q14
3Q14
4Q14
1Q15
Average Loans
Net Charge
-offs Ratio
$1,962
$1,922
$1,899
$1,866
$1,851
0
1,000
2,000
3,000
4,000
1Q14
2Q14
3Q14
4Q14
1Q15
Residential Mortgage Performing TDRs*
22
0.28% |
|
23
1Q15 Earnings
Conference Call
1Q14
4Q14
1Q15
Average Loans
$17,407
$17,990
$17,823
30-89 Delinquencies
1.19%
1.24%
1.16%
90+ Delinquencies
1.21%
1.13%
1.19%
Nonperforming Loans
0.38%
0.16%
0.13%
Credit Quality -
Credit Card
Average Loans and Net Charge-offs Ratios
Key Statistics
Key Points
Average loans seasonally declined 0.9% on a linked quarter basis; up 2.4%
year-over-year Delinquencies and losses remain near historically low
levels with some seasonal impacts Nonperforming loans continued to
decline $ in millions
0
5,000
10,000
15,000
20,000
1Q14
2Q14
3Q14
4Q14
1Q15
0.0%
2.0%
4.0%
6.0%
8.0%
$17,407
$17,384
$17,753
$17,990
$17,823
3.96%
3.92%
3.53%
3.53%
3.71%
Average Loans
Net Charge
-offs Ratio
Credit Card Nonperforming Loans
0.0%
0.5%
1.0%
1.5%
2.0%
0
20
40
60
80
1Q14
2Q14
3Q14
4Q14
1Q15
$65
$52
$40
$30
$22
0.38%
0.29%
0.22%
0.16%
0.13% |
|
1Q15 Earnings
Conference Call
Credit Quality -
Home Equity
Average Loans and Net Charge-offs Ratios
Key Statistics
Key Points
High-quality originations (weighted average FICO on commitments was 766,
weighted average CLTV
71%)
originated
primarily
through
the
retail
branch
network
to
existing
bank
customers
on
their primary residences
Net charge-offs ratio declined on a linked quarter and year-over-year
basis 1Q14
4Q14
1Q15
Average Loans
$15,366
$15,853
$15,897
30-89 Delinquencies
0.57%
0.54%
0.41%
90+ Delinquencies
0.33%
0.26%
0.25%
Nonperforming Loans
1.09%
1.07%
1.07%
Subprime: 1%
Wtd Avg LTV*: 90%
NCO: 3.51%
$ in millions
Prime: 96%
Wtd Avg LTV*: 72%
NCO: 0.29%
*LTV at origination
Other: 3%
Wtd Avg LTV*: 72%
NCO: 0.81%
$15,366
$15,327
$15,704
$15,853
$15,897
0.82%
0.60%
0.61%
0.43%
0.36%
0.0%
1.0%
2.0%
3.0%
4.0%
0
5,000
10,000
15,000
20,000
1Q14
2Q14
3Q14
4Q14
1Q15
Average Loans
Net Charge
-offs Ratio
Home Equity
24 |
|
1Q15 Earnings
Conference Call
Credit Quality -
Retail Leasing
Average Loans and Net Charge-offs Ratios
Key Statistics
Key Points
Continued high-quality originations (weighted average FICO 789) support the
portfolios stable credit profile
Delinquencies remained relatively stable at very low levels
Strong used auto values continued to contribute to historically low net
charge-offs 1Q14
4Q14
1Q15
Average Loans
$5,979
$5,939
$5,819
30-89 Delinquencies
0.16%
0.18%
0.12%
90+ Delinquencies
0.02%
0.02%
0.00%
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 of monthly ending values $5,979
$6,014
$5,991
$5,939
$5,819
0.00%
0.07%
0.00%
0.07%
0.07%
0.0%
0.2%
0.4%
0.6%
0.8%
0
2,000
4,000
6,000
8,000
1Q14
2Q14
3Q14
4Q14
1Q15
Average Loans
Net Charge
-offs Ratio
100
110
120
130
140
Manheim
Used Vehicle Index*
25 |
|
26
1Q15 Earnings
Conference Call
Credit Quality -
Other Retail
Average Loans and Net Charge-offs Ratios
Key Statistics
Key Points
Growth in auto and installment loans continued to offset declines in student
lending loan balances Student lending balances were moved to held for sale at
the end of the quarter Net charge-offs and delinquencies improved
on a linked quarter basis reflecting seasonality and remained low
year-over-year 1Q14
4Q14
1Q15
Average Loans
$26,312
$27,317
$27,604
30-89 Delinquencies
0.40%
0.51%
0.44%
90+ Delinquencies
0.13%
0.12%
0.11%
Nonperforming Loans
0.08%
0.06%
0.06%
Installment
$6,274
Auto Loans
$15,013
Revolving
Credit
$3,272
Student
Lending
$3,045
$ in millions
$26,312
$26,587
$27,003
$27,317
$27,604
0.69%
0.68%
0.72%
0.76%
0.60%
0.0%
0.5%
1.0%
1.5%
2.0%
0
10,000
20,000
30,000
40,000
1Q14
2Q14
3Q14
4Q14
1Q15
Average Loans
Net Charge
-offs Ratio
Other Retail |
|
27
1Q15 Earnings
Conference Call
Credit Quality -
Auto Loans
Average Loans and Net Charge-offs Ratios
Key Statistics
Key Points
Continued growth (8.7% year-over-year) in auto loans driven by
high-quality originations in the indirect channel (weighted average FICO
765) Net charge-offs seasonally improved on a linked quarter basis, and
as expected, increased year-over-year as growth initiatives
continued to mature 1Q14
4Q14
1Q15
Average Loans
$13,815
$14,644
$15,013
30-89 Delinquencies
0.26%
0.45%
0.30%
90+ Delinquencies
0.03%
0.03%
0.01%
Nonperforming Loans
0.02%
0.03%
0.03%
$ in millions
Auto Loans are included in Other Retail category
Direct: 6%
Wtd Avg FICO: 748
NCO: 0.05%
Indirect: 94%
Wtd Avg FICO: 763
NCO: 0.20%
$13,815
$14,108
$14,404
$14,644
$15,013
0.09%
0.11%
0.25%
0.33%
0.19%
0.0%
0.5%
1.0%
1.5%
2.0%
0
4,000
8,000
12,000
16,000
1Q14
2Q14
3Q14
4Q14
1Q15
Average Loans
Net Charge
-offs Ratio
Indirect and Direct Channel |
|
28
1Q15 Earnings
Conference Call
Mortgage Repurchase
Mortgages Repurchased and Make-whole Payments
Mortgage Representation and Warranties Reserve
$ in millions
1Q15
4Q14
3Q14
2Q14
1Q14
Beginning Reserve
$46
$62
$69
$75
$83
Net Realized Losses
(2)
(15)
(1)
(2)
(10)
Change in Reserve
2
(1)
(6)
(4)
2
Ending Reserve
$46
$46
$62
$69
$75
Mortgages
repurchased
and make-whole
payments
$12
$14
$19
$30
$36
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
of $22 million |
|
1Q15 Earnings
Conference Call
Non-GAAP Financial Measures
March 31,
December 31,
September 30,
June 30,
March 31,
(Dollars in Millions, Unaudited)
2015
2014
2014
2014
2014
Total equity
$44,965
$44,168
$43,829
$43,386
$42,743
Preferred stock
(4,756)
(4,756)
(4,756)
(4,756)
(4,756)
Noncontrolling interests
(688)
(689)
(688)
(686)
(689)
Goodwill (net of deferred tax liability) (1)
(8,360)
(8,403)
(8,503)
(8,548)
(8,352)
Intangible assets, other than mortgage servicing rights
(783)
(824)
(877)
(925)
(804)
Tangible common equity (a)
30,378
29,496
29,005
28,471
28,142
Tangible common equity (as calculated above)
30,378
29,496
29,005
28,471
28,142
Adjustments (2)
158
172
187
224
239
Common equity tier 1 capital estimated for the Basel III fully
implemented standardized and advanced approaches (b)
30,536
29,668
29,192
28,695
28,381
Total assets
410,233
402,529
391,284
389,065
371,289
Goodwill (net of deferred tax liability) (1)
(8,360)
(8,403)
(8,503)
(8,548)
(8,352)
Intangible assets, other than mortgage servicing rights
(783)
(824)
(877)
(925)
(804)
Tangible assets (c)
401,090
393,302
381,904
379,592
362,133
Risk-weighted assets, determined in accordance with
prescribed regulatory requirements (d)
327,709
*
317,398
311,914
309,929
302,841
Adjustments (3)
3,153
*
11,110
12,837
12,753
13,238
Risk-weighted assets estimated for the Basel III fully
implemented standardized approach
(e) 330,862
*
328,508
324,751
322,682
316,079
Risk-weighted assets, determined in accordance with
prescribed transitional advanced approaches regulatory
requirements 254,892
*
248,596
243,909
241,929
Adjustments (4)
3,321
*
3,270
3,443
3,383
Risk-weighted assets estimated for the Basel III fully
implemented advanced approaches
(f) 258,213
*
251,866
247,352
245,312
Ratios *
Tangible common equity to tangible assets (a)/(c)
7.6
%
7.5
%
7.6
%
7.5
%
7.8
%
Tangible common equity to risk-weighted assets (a)/(d)
9.3
9.3
9.3
9.2
9.3
Common equity tier 1
capital to risk-weighted assets estimated for the Basel III
fully implemented standardized approach (b)/(e) 9.2
9.0
9.0
8.9
9.0
Common equity tier 1 capital to risk-weighted assets estimated for
the Basel III fully implemented advanced approaches (b)/(f)
11.8
11.8
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.
(2) Includes net losses on cash flow hedges included in accumulated
other comprehensive income and other adjustments. (3) Includes
higher risk-weighting for unfunded loan commitments, investment securities, residential mortgages, mortgage servicing rights and other adjustments.
(4)
Primarily reflects higher risk-weighting for mortgage servicing
rights. 29 |
|
April 15, 2015
U.S. Bancorp
1Q15 Earnings
Conference Call
U.S. Bancorp
1Q15 Earnings
Conference Call |
US Bancorp (NYSE:USB)
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