Record Earnings Per Diluted Common Share for
Full Year 2017
Full year return on average assets of 1.39
percent and average common equity of 13.8 percent
Returned 77 percent of full year earnings to
shareholders
U.S. Bancorp (NYSE: USB) today reported net income of $1,682
million for the fourth quarter of 2017, or $0.97 per diluted common
share, compared with $1,478 million, or $0.82 per diluted common
share, in the fourth quarter of 2016. The fourth quarter of 2017
included notable items related to the impacts of tax reform, a
special employee bonus, a charitable contribution to the U.S. Bank
Foundation, and a regulatory and legal accrual that, combined,
increased diluted earnings per common share by $0.09.
Highlights for the full year of 2017 included:
- Record diluted earnings per common
share of $3.51, record net revenue of $22,057 million, and record
net income of $6,218 million. Earnings to common shareholders were
$3.42 per diluted common share for 2017, excluding notable
items.
- Industry-leading return on average
assets of 1.39 percent and return on average common equity of 13.8
percent (1.35 percent and 13.4 percent, respectively, excluding
notable items)
- Returned 77 percent of 2017 earnings to
shareholders through dividends and share buybacks
Highlights for the fourth quarter of 2017 included:
- Record net revenue, both as reported
and excluding notable items
- Diluted earnings per common share of
$0.88 in the fourth quarter of 2017, excluding notable items
- Return on average assets of 1.46
percent and return on average common equity of 14.7 percent (1.33
percent and 13.4 percent, respectively, excluding notable
items)
- Returned 72 percent of fourth quarter
earnings to shareholders through dividends and share buybacks
- Net interest income grew 6.4 percent
year-over-year and 0.3 percent on a linked quarter basis
- Net interest margin of 3.08 percent for
the fourth quarter of 2017 was 10 basis points higher than the
fourth quarter of 2016 and 2 basis points lower than the third
quarter of 2017
- Positive operating leverage in the
fourth quarter of 2017, on a year-over-year basis, excluding
notable items
- Nonperforming assets decreased 25.1
percent on a year-over-year basis and 4.1 percent on a linked
quarter basis
- Average total loans grew 2.6 percent
over the fourth quarter of 2016 and 0.8 percent on a linked quarter
basis
- Average total commercial loans grew 4.0
percent over the fourth quarter of 2016 and 1.0 percent on a linked
quarter basis
- Average total other retail loans grew
6.0 percent over the fourth quarter of 2016 and 1.9 percent on a
linked quarter basis
- Strong capital position. At December
31, 2017, the estimated common equity tier 1 capital to
risk-weighted assets ratio was 9.1 percent using the Basel III
fully implemented standardized approach and was 11.6 percent using
the Basel III fully implemented advanced approaches method.
EARNINGS
SUMMARY
Table 1 ($
in millions, except per-share data)
Percent Percent
Change Change 4Q 3Q 4Q 4Q17
vs 4Q17 vs Full Year Full Year
Percent 2017 2017 2016
3Q17 4Q16 2017
2016 Change Net income attributable to
U.S. Bancorp $1,682 $1,563 $1,478 7.6 13.8 $6,218 $5,888 5.6
Diluted earnings per common share $.97 $.88 $.82 10.2 18.3 $3.51
$3.24 8.3 Return on average assets (%) 1.46 1.38 1.32 1.39
1.36 Return on average common equity (%) 14.7 13.6 13.1 13.8 13.4
Net interest margin (%) 3.08 3.10 2.98 3.06 3.01 Efficiency ratio
(%) (a) 70.0 54.3 55.3 58.8 54.9 Tangible efficiency ratio (%) (a)
69.2 53.5 54.5 58.0 54.0 Dividends declared per common share
$.30 $.30 $.28 -- 7.1 $1.16 $1.07 8.4 Book value per common share
(period end) $26.34 $25.98 $24.63 1.4 6.9 (a) See Non-GAAP
Financial Measures reconciliation on page 23
Net income attributable to U.S. Bancorp was $1,682 million for
the fourth quarter of 2017, 13.8 percent higher than the $1,478
million for the fourth quarter of 2016, and 7.6 percent higher than
the $1,563 million for the third quarter of 2017. Diluted earnings
per common share of $0.97 in the fourth quarter of 2017 were $0.15
higher than the fourth quarter of 2016 and $0.09 higher than the
third quarter of 2017. The fourth quarter of 2017 included $0.09 of
notable items, including a benefit of $910 million related to the
estimated impact of tax reform on the Company’s tax related assets
and liabilities, partially offset by a $608 million accrual for
regulatory and legal matters, and $152 million, net of tax, for a
charitable contribution to the U.S. Bank Foundation and a special
bonus to certain eligible employees. The regulatory and legal
accrual is related to previously disclosed matters related to Bank
Secrecy Act/anti-money laundering compliance program adequacy and
investigations by the United States Attorney’s Office in Manhattan
into that program and U.S. Bank National Association’s legacy
banking relationship with payday lending businesses associated with
a former customer. The increase in net income year-over-year was
primarily due to total net revenue growth, including an increase in
net interest income of 6.4 percent, mainly a result of the impact
of rising interest rates and loan growth. Noninterest income
increased 0.4 percent principally due to higher payment services
revenue, trust and investment management fees and deposit service
charges, mostly offset by a decrease in mortgage banking revenue
and lower equity investment income. Excluding the notable items,
the increase in total net revenue was partially offset by higher
noninterest expense, primarily due to increased compensation
expense related to hiring to support business growth and compliance
programs, merit increases, variable compensation related to revenue
growth and higher employee benefits expense, partially offset by
lower professional services expense driven by lower consulting
costs for risk and compliance programs. Excluding notable items,
net income decreased slightly on a linked quarter basis principally
due to a seasonal increase in noninterest expense of 2.5 percent
driven by seasonally higher costs related to investments in
tax-advantaged projects in addition to higher employee benefits and
professional services expense. These increases were partially
offset by an increase in total net revenue of 0.5 percent,
reflecting an increase in net interest income of 0.3 percent
primarily driven by loan growth, and an increase in noninterest
income of 0.8 percent related to higher trust and investment
management fees and payment services revenue.
U.S. Bancorp President and Chief Executive Officer Andy Cecere
said, “Our fourth quarter results were a strong end to what was a
record year for U.S. Bancorp on several measures: we delivered
record net revenue, net income, and diluted earnings per common
share. Excluding notable items, our fourth quarter performance
metrics were highlighted by a return on average common equity of
13.4 percent and a return on average assets of 1.33 percent. In the
fourth quarter we returned 72 percent of earnings to shareholders
through dividends and share buybacks.
“The economic backdrop is favorable, and tax reform legislation
enacted late last year has provided us an opportunity to accelerate
investment in our businesses, our people, and our communities,
while at the same time enhancing shareholder value through the
potential for increased payouts. We previously announced that we
will raise our minimum wage in the United States to $15 per hour,
provide one-time bonuses to certain eligible employees, and
contribute an additional $150 million to the U.S. Bank Foundation,
which will help revitalize our communities for years to come. With
the ongoing benefit provided by a lower corporate tax rate we plan
to increase our investments in technology and innovation, with a
focus on enhancing the customer experience and improving
operational efficiency that drives long-term growth and creates
value for shareholders.
“The successes of 2017 were a direct result of the outstanding
dedication and effort of our employees. I want to thank our amazing
team members who work tirelessly to be our customers’ most trusted
partner. We are operating from a position of strength as we enter
2018 and we will continue to work every day to create value for our
investors, our customers, our communities, and our employees.”
INCOME STATEMENT HIGHLIGHTS
Table 2 ($
in millions, except per-share data)
Percent Percent
Change Change 4Q 3Q 4Q 4Q17
vs 4Q17 vs Full Year Full Year
Percent 2017 2017 2016
3Q17 4Q16 2017
2016 Change Net interest income $3,144
$3,135 $2,955 .3 6.4 $12,241 $11,528 6.2 Taxable-equivalent
adjustment 53 51 49 3.9 8.2 205
203 1.0 Net interest income
(taxable-equivalent basis) 3,197 3,186
3,004 .3 6.4 12,446 11,731 6.1
Noninterest income 2,441 2,422 2,431
.8 .4 9,611 9,577 .4 Total net revenue
5,638 5,608 5,435 .5 3.7 22,057 21,308 3.5 Noninterest expense
3,939 3,039 3,004 29.6 31.1
12,945 11,676 10.9 Income before provision and
income taxes 1,699 2,569 2,431 (33.9 ) (30.1 ) 9,112 9,632 (5.4 )
Provision for credit losses 335 360 342
(6.9 ) (2.0 ) 1,390 1,324 5.0 Income
before taxes 1,364 2,209 2,089
(38.3 ) (34.7 ) 7,722 8,308 (7.1 )
Income taxes and
taxable-equivalent adjustment
(322 ) 640 598 nm nm 1,469
2,364 (37.9 ) Net income 1,686 1,569 1,491 7.5 13.1
6,253 5,944 5.2
Net (income) loss attributable
to noncontrolling interests
(4 ) (6 ) (13 ) 33.3 69.2 (35 ) (56 ) 37.5 Net
income attributable to U.S. Bancorp $1,682 $1,563
$1,478 7.6 13.8 $6,218 $5,888
5.6
Net income applicable to U.S.
Bancorp common shareholders
$1,611 $1,485 $1,391 8.5 15.8
$5,913 $5,589 5.8 Diluted earnings per common
share $.97 $.88 $.82 10.2 18.3
$3.51 $3.24 8.3
NET INTEREST INCOME
Table 3 (Taxable-equivalent
basis; $ in millions)
Change Change 4Q 3Q
4Q 4Q17 vs 4Q17 vs Full Year Full
Year 2017 2017 2016
3Q17 4Q16 2017
2016 Change Components of net interest income
Income on earning assets $3,795 $3,768 $3,424 $27 $371 $14,598
$13,375 $1,223 Expense on interest-bearing liabilities 598
582 420 16 178
2,152 1,644 508
Net interest income $3,197 $3,186
$3,004 $11 $193 $12,446
$11,731 $715 Average
yields and rates paid Earning assets yield 3.65 % 3.67 % 3.40 %
(.02 )% .25 % 3.59 % 3.43 % .16 % Rate paid on interest-bearing
liabilities .77 .76 .57
.01 .20 .71 .57
.14 Gross interest margin 2.88 % 2.91 %
2.83 % (.03 )% .05 % 2.88 % 2.86 %
.02 % Net interest margin 3.08 % 3.10 % 2.98 %
(.02 )% .10 % 3.06 % 3.01 % .05
% Average balances Investment securities (a) $113,287
$111,832 $110,386 $1,455 $2,901 $111,820 $107,922 $3,898 Loans
279,751 277,626 272,671 2,125 7,080 276,537 267,811 8,726 Earning
assets 413,510 408,825 401,971 4,685 11,539 406,421 389,877 16,544
Interest-bearing liabilities 308,976 304,236 295,288 4,740 13,688
302,204 287,760 14,444 (a) Excludes unrealized gain (loss)
Net Interest Income
Net interest income on a taxable-equivalent basis in the fourth
quarter of 2017 was $3,197 million, an increase of $193 million
(6.4 percent) over the fourth quarter of 2016. The increase was
principally driven by the impact of rising interest rates and loan
growth. Average earning assets were $11.5 billion (2.9 percent)
higher than the fourth quarter of 2016, reflecting increases of
$7.1 billion (2.6 percent) in average total loans, $2.9 billion
(2.6 percent) in average investment securities and $2.7 billion
(19.4 percent) in average other earning assets. Net interest income
on a taxable-equivalent basis increased $11 million (0.3 percent)
on a linked quarter basis primarily driven by loan growth and
higher interest rates. Average earning assets were $4.7 billion
(1.1 percent) higher on a linked quarter basis, reflecting
increases of $2.1 billion (0.8 percent) in average total loans,
$1.5 billion (1.3 percent) in average investment securities and
$1.1 billion (7.3 percent) in average other earning assets.
The net interest margin in the fourth quarter of 2017 was 3.08
percent, compared with 2.98 percent in the fourth quarter of 2016,
and 3.10 percent in the third quarter of 2017. The increase in the
net interest margin year-over-year was primarily due to higher
interest rates and loan mix, partially offset by higher funding
costs and higher cash balances. The decrease in net interest margin
on a linked quarter basis was primarily due to higher interest
recoveries in the third quarter of 2017.
Investment Securities
Average investment securities in the fourth quarter of 2017 were
$2.9 billion (2.6 percent) higher year-over-year and $1.5 billion
(1.3 percent) higher than the prior quarter. These increases were
primarily due to purchases of U.S. Treasury and U.S. government
mortgage-backed securities, net of prepayments and maturities, in
support of liquidity management.
AVERAGE
LOANS
Table 4 ($
in millions)
Percent
Percent Change Change
4Q 3Q 4Q 4Q17 vs 4Q17 vs Full
Year Full Year Percent 2017
2017 2016 3Q17
4Q16 2017 2016
Change Commercial $92,101 $91,077 $88,448 1.1 4.1
$90,393 $86,754 4.2 Lease financing 5,457 5,556 5,359
(1.8 ) 1.8 5,511 5,289 4.2 Total commercial 97,558 96,633
93,807 1.0 4.0 95,904 92,043 4.2 Commercial mortgages 29,543
30,114 31,767 (1.9 ) (7.0 ) 30,430 31,860 (4.5 ) Construction and
development 11,466 11,507 11,624 (.4 ) (1.4 ) 11,647
11,180 4.2 Total commercial real estate 41,009 41,621 43,391 (1.5 )
(5.5 ) 42,077 43,040 (2.2 ) Residential mortgages 59,639
59,030 56,718 1.0 5.2 58,784 55,682 5.6 Credit card 21,218
20,926 20,942 1.4 1.3 20,906 20,490 2.0 Retail leasing 7,982
7,762 6,191 2.8 28.9 7,354 5,619 30.9 Home equity and second
mortgages 16,299 16,299 16,444 -- (.9 ) 16,278 16,419 (.9 ) Other
32,856 32,008 31,245 2.6 5.2 31,784 30,292 4.9
Total other retail 57,137 56,069 53,880 1.9 6.0
55,416 52,330 5.9 Total loans, excluding covered
loans 276,561 274,279 268,738 .8 2.9 273,087
263,585 3.6 Covered loans 3,190 3,347 3,933
(4.7 ) (18.9 ) 3,450 4,226 (18.4 ) Total loans
$279,751 $277,626 $272,671 .8 2.6 $276,537
$267,811 3.3
Loans
Average total loans were $7.1 billion (2.6 percent) higher than
the fourth quarter of 2016. The increase was due to growth in total
commercial loans (4.0 percent), residential mortgages (5.2
percent), retail leasing (28.9 percent) and other retail loans (5.2
percent). These increases were partially offset by a decrease in
total commercial real estate loans (5.5 percent) due to disciplined
underwriting of construction and development loans and payoffs of
commercial mortgages given recent capital market financing by
customers. Loan growth was also muted by run-off in the covered
loans portfolio (18.9 percent). Average total loans were $2.1
billion (0.8 percent) higher than the third quarter of 2017. This
increase was primarily driven by linked quarter growth in total
other retail loans (1.9 percent), total commercial loans (1.0
percent) and residential mortgages (1.0 percent), partially offset
by decreases in total commercial real estate loans (1.5 percent)
and covered loans (4.7 percent).
AVERAGE
DEPOSITS
Table
5 ($ in millions)
Percent
Percent Change
Change 4Q 3Q 4Q 4Q17 vs 4Q17
vs Full Year Full Year Percent 2017
2017 2016 3Q17
4Q16 2017 2016
Change Noninterest-bearing deposits $82,303 $81,964
$84,892 .4 (3.0 ) $81,933 $81,176 .9 Interest-bearing savings
deposits Interest checking 70,717 68,066 64,647 3.9 9.4 67,953
61,726 10.1 Money market savings 105,348 105,072 106,637 .3 (1.2 )
106,476 96,518 10.3 Savings accounts 43,772 43,649
41,310 .3 6.0 43,393 40,382 7.5 Total savings deposits
219,837 216,787 212,594 1.4 3.4 217,822 198,626 9.7 Time deposits
37,022 36,400 31,697 1.7 16.8 33,759 33,008
2.3 Total interest-bearing deposits 256,859 253,187
244,291 1.5 5.1 251,581 231,634 8.6 Total deposits $339,162
$335,151 $329,183 1.2 3.0 $333,514 $312,810
6.6
Deposits
Average total deposits for the fourth quarter of 2017 were $10.0
billion (3.0 percent) higher than the fourth quarter of 2016.
Average noninterest-bearing deposits decreased $2.6 billion (3.0
percent) year-over-year primarily due to a decrease in Corporate
and Commercial Banking. Average total savings deposits were $7.2
billion (3.4 percent) higher year-over-year driven by growth in
Consumer and Business Banking and Wealth Management and Investment
Services, partially offset by a decrease in Corporate and
Commercial Banking. Average time deposits were $5.3 billion (16.8
percent) higher than the prior year quarter. Changes in time
deposits are largely related to those deposits managed as an
alternative to other funding sources such as wholesale borrowing,
based largely on relative pricing and liquidity
characteristics.
Average total deposits increased $4.0 billion (1.2 percent) over
the third quarter of 2017. On a linked quarter basis, average
noninterest-bearing deposits increased slightly and average total
savings deposits grew $3.1 billion (1.4 percent) reflecting
increases in Consumer and Business Banking and Wealth Management
and Investment Services. Average time deposits, which are managed
based on funding needs, relative pricing and liquidity
characteristics, increased $622 million (1.7 percent) on a linked
quarter basis.
NONINTEREST INCOME
Table 6 ($ in millions)
Percent Percent
Change Change 4Q 3Q 4Q 4Q17
vs 4Q17 vs Full Year Full Year
Percent 2017 2017 2016
3Q17 4Q16 2017
2016 Change Credit and debit card
revenue $333 $308 $316 8.1 5.4 $1,252 $1,177 6.4 Corporate payment
products revenue 189 201 171 (6.0 ) 10.5 753 712 5.8 Merchant
processing services 400 405 404 (1.2 ) (1.0 ) 1,590 1,592 (.1 ) ATM
processing services 95 92 87 3.3 9.2 362 338 7.1 Trust and
investment management fees 394 380 368 3.7 7.1 1,522 1,427 6.7
Deposit service charges 198 192 186 3.1 6.5 751 725 3.6 Treasury
management fees 152 153 147 (.7 ) 3.4 618 583 6.0 Commercial
products revenue 211 221 217 (4.5 ) (2.8 ) 849 871 (2.5 ) Mortgage
banking revenue 202 213 240 (5.2 ) (15.8 ) 834 979 (14.8 )
Investment products fees 43 39 38 10.3 13.2 163 158 3.2 Securities
gains (losses), net 10 9 6 11.1 66.7 57 22 nm Other 214 209
251 2.4 (14.7 ) 860 993 (13.4 ) Total
noninterest income $2,441 $2,422 $2,431 .8 .4 $9,611
$9,577 .4
Noninterest Income
Fourth quarter noninterest income of $2,441 million was $10
million (0.4 percent) higher than the fourth quarter of 2016
principally due to higher payment services revenue, trust and
investment management fees, and deposit service charges, partially
offset by lower mortgage banking and other revenue. Payment
services revenue was higher due to an increase in corporate payment
products revenue of $18 million (10.5 percent) and an increase in
credit and debit card revenue of $17 million (5.4 percent), both
driven by higher sales volumes. These increases were partially
offset by a decrease in merchant processing services revenue of $4
million (1.0 percent) mainly due to exiting certain joint ventures
in the second quarter of 2017. Trust and investment management fees
increased $26 million (7.1 percent) principally due to favorable
market conditions and net asset and account growth. Deposit service
charges increased $12 million (6.5 percent) primarily due to higher
transaction volumes and account growth. Mortgage banking revenue
decreased $38 million (15.8 percent) primarily due to lower
origination and sales volumes from home refinancing activities
which were higher in the prior year quarter and lower margins on
mortgage loan sales. Other revenue decreased $37 million (14.7
percent) primarily due to lower equity investment income in the
current quarter.
Noninterest income was $19 million (0.8 percent) higher in the
fourth quarter of 2017 than the third quarter of 2017 reflecting
growth in trust and investment management fees, payment services
revenue and deposit service charges, partially offset by lower
mortgage banking revenue and commercial products revenue. Trust and
investment management fees increased $14 million (3.7 percent)
driven by account growth and favorable market conditions. Payment
services revenue was higher due to an increase in credit and debit
card revenue of $25 million (8.1 percent) primarily due to
seasonally higher sales volumes. This increase was partially offset
by an expected seasonal decline in corporate payment products
revenue of $12 million (6.0 percent) and merchant processing
services revenue of $5 million (1.2 percent) due to seasonally
lower sales volumes. Deposit service charges increased $6 million
(3.1 percent) due to higher transaction volumes. Mortgage banking
revenue decreased $11 million (5.2 percent) primarily due to the
valuation of mortgage servicing rights, net of hedging activities,
along with lower origination and sales volumes and lower margins on
related sales. Commercial products revenue decreased $10 million
(4.5 percent) primarily driven by lower corporate bond fees.
NONINTEREST EXPENSE
Table 7 ($ in millions)
Percent Percent
Change Change 4Q 3Q
4Q 4Q17 vs 4Q17 vs Full Year Full
Year Percent 2017 2017
2016 3Q17 4Q16
2017 2016 Change
Compensation $1,499 $1,440 $1,357 4.1 10.5 $5,746 $5,212 10.2
Employee benefits 304 281 261 8.2 16.5 1,186 1,119 6.0 Net
occupancy and equipment 259 258 247 .4 4.9 1,019 988 3.1
Professional services 114 104 156 9.6 (26.9 ) 419 502 (16.5 )
Marketing and business development 251 92 107 nm nm 542 435 24.6
Technology and communications 254 246 238 3.3 6.7 977 955 2.3
Postage, printing and supplies 79 82 75 (3.7 ) 5.3 323 311 3.9
Other intangibles 44 44 45 -- (2.2 ) 175 179 (2.2 ) Other 1,135
492 518 nm nm 2,558 1,975 29.5 Total
noninterest expense $3,939 $3,039 $3,004 29.6 31.1
$12,945 $11,676 10.9
Noninterest Expense
Fourth quarter noninterest expense of $3,939 million was $935
million (31.1 percent) higher than the fourth quarter of 2016
primarily due to notable items which totaled $825 million. This
amount consisted of a special bonus to eligible employees, a
charitable contribution to the U.S. Bank Foundation, and a $608
million accrual for previously disclosed regulatory and legal
matters related to Bank Secrecy Act/anti-money laundering
compliance program adequacy and investigations by the United States
Attorney’s Office in Manhattan into that program and U.S. Bank
National Association’s legacy relationship with payday lending
businesses associated with a former customer. The Company is
working on a definitive settlement of these matters, which is
expected to finalize soon. Excluding the notable items, fourth
quarter noninterest expense increased $110 million (3.6 percent)
year-over-year primarily due to higher compensation and employee
benefits expense, partially offset by lower professional services
expense. Compensation expense increased principally due to the
impact of hiring to support business growth and compliance
programs, merit increases, and higher variable compensation related
to business production. The increase in employee benefits expense
was primarily driven by increased medical costs. Professional
services expense decreased $42 million (26.9 percent) primarily due
to fewer consulting services as compliance programs near
maturity.
Noninterest expense increased $900 million (29.6 percent) on a
linked quarter basis primarily due to the notable items. Excluding
the notable items, noninterest expense was $75 million (2.5
percent) higher in the fourth quarter of 2017 than the third
quarter of 2017 driven by seasonally higher costs related to
investments in tax-advantaged projects and seasonally higher
professional services expense in addition to an increase in
employee benefits expense due to increased medical costs.
Provision for Income Taxes
During the fourth quarter of 2017, tax legislation was enacted
that, among other provisions, reduced the statutory tax rate for
corporations from 35 percent to 21 percent effective in 2018. In
accordance with generally accepted accounting principles, the
Company revalued deferred tax assets and liabilities at the end of
the fourth quarter of 2017 resulting in an estimated net tax
benefit of $910 million during the fourth quarter of 2017. The
provision for income taxes for the fourth quarter of 2017 reflects
this benefit resulting in a tax benefit of 23.6 percent on a
taxable-equivalent basis (effective tax benefit of 28.6 percent),
compared with tax expense of 28.6 percent (effective tax rate of
26.9 percent) in the fourth quarter of 2016, and 29.0 percent
(effective tax rate of 27.3 percent) in the third quarter of
2017.
ALLOWANCE FOR CREDIT LOSSES
Table 8 ($ in
millions)
4Q 3Q
2Q 1Q 4Q
2017 % (b) 2017 %
(b) 2017 % (b) 2017
% (b) 2016 % (b)
Balance, beginning of period $4,407 $4,377 $4,366 $4,357 $4,338
Net charge-offs Commercial 22 .09 79 .34 75 .33 71 .33 71
.32 Lease financing 6 .44 4 .29 3 .22 4
.30 5 .37 Total commercial 28 .11 83 .34 78 .33 75 .32 76
.32 Commercial mortgages 18 .24 (2 ) (.03 ) (7 ) (.09 ) (1 ) (.01 )
(3 ) (.04 ) Construction and development -- -- (5 ) (.17 )
(2 ) (.07 ) (1 ) (.03 ) (6 ) (.21 ) Total commercial real estate 18
.17 (7 ) (.07 ) (9 ) (.08 ) (2 ) (.02 ) (9 ) (.08 )
Residential mortgages 10 .07 7 .05 8 .05 12 .08 12 .08
Credit card 205 3.83 187 3.55 204 3.97 190 3.70 181 3.44
Retail leasing 3 .15 2 .10 2 .11 3 .19 1 .06 Home equity and second
mortgages (2 ) (.05 ) (1 ) (.02 ) (1 ) (.02 ) (1 ) (.02 ) (1 ) (.02
) Other 63 .76 59 .73 58 .75 58 .76 62
.79 Total other retail 64 .44 60 .42 59 .43 60 .45 62 .46
Total net charge-offs, excluding
covered loans 325 .47 330 .48 340 .50 335 .50 322 .48 Covered loans
-- -- -- -- -- -- -- -- -- --
Total net charge-offs 325 .46 330 .47 340 .49 335 .50 322 .47
Provision for credit losses 335 360 350 345 342 Other changes (a)
-- -- 1 (1 ) (1 ) Balance, end of period
$4,417 $4,407 $4,377 $4,366 $4,357
Components Allowance for loan losses $3,925 $3,908
$3,856 $3,816 $3,813
Liability for unfunded credit
commitments
492 499 521 550 544 Total
allowance for credit losses $4,417 $4,407 $4,377
$4,366 $4,357 Gross charge-offs $464
$433 $437 $417 $405 Gross recoveries $139 $103 $97 $82 $83
Allowance for credit losses as a percentage of
Period-end loans, excluding covered
loans
1.58 1.59 1.59 1.61 1.60
Nonperforming loans, excluding
covered loans
438 425 385 338 317
Nonperforming assets, excluding
covered assets
374 359 331 296 275 Period-end loans 1.58 1.58 1.58 1.60
1.59 Nonperforming loans 438 426 383 338 318 Nonperforming assets
368 352 324 292 272
(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
Credit Quality
The Company’s provision for credit losses for the fourth quarter
of 2017 was $335 million, which was $25 million (6.9 percent) lower
than the prior quarter and $7 million (2.0 percent) lower than the
fourth quarter of 2016. Credit quality was relatively stable
compared with the third quarter of 2017.
Total net charge-offs in the fourth quarter of 2017 were $325
million, compared with $330 million in the third quarter of 2017,
and $322 million in the fourth quarter of 2016. Net charge-offs
decreased $5 million (1.5 percent) compared with the third quarter
of 2017 mainly due to lower total commercial loan net charge-offs
driven by higher recoveries, partially offset by higher total
commercial real estate and credit card loan net charge-offs. Net
charge-offs increased $3 million (0.9 percent) compared with the
fourth quarter of 2016 primarily due to higher total commercial
real estate and credit card loan net charge-offs, mostly offset by
lower total commercial loan net charge-offs driven by higher
recoveries. The net charge-off ratio was 0.46 percent in the fourth
quarter of 2017, compared with 0.47 percent in the third quarter of
2017 and in the fourth quarter of 2016.
The allowance for credit losses was $4,417 million at December
31, 2017, compared with $4,407 million at September 30, 2017, and
$4,357 million at December 31, 2016. The ratio of the allowance for
credit losses to period-end loans was 1.58 percent at December 31,
2017 and at September 30, 2017, compared with 1.59 percent at
December 31, 2016. The ratio of the allowance for credit losses to
nonperforming loans was 438 percent at December 31, 2017, compared
with 426 percent at September 30, 2017, and 318 percent at December
31, 2016.
Nonperforming assets were $1,200 million at December 31, 2017,
compared with $1,251 million at September 30, 2017, and $1,603
million at December 31, 2016. The ratio of nonperforming assets to
loans and other real estate was 0.43 percent at December 31, 2017,
compared with 0.45 percent at September 30, 2017, and 0.59 percent
at December 31, 2016. The linked quarter and year-over-year
decreases in nonperforming assets were driven by improvements in
total commercial loans, residential mortgages and other real estate
owned, partially offset by an increase in total commercial real
estate loans. Accruing loans 90 days or more past due were $720
million ($572 million excluding covered loans) at December 31,
2017, compared with $649 million ($497 million excluding covered
loans) at September 30, 2017, and $764 million ($552 million
excluding covered loans) at December 31, 2016.
DELINQUENT LOAN RATIOS AS A PERCENT OF
ENDING LOAN BALANCES
Table 9
(Percent)
Dec 31 Sep 30
Jun 30 Mar 31 Dec 31 2017
2017 2017 2017
2016 Delinquent loan ratios - 90 days or more past
due
excluding nonperforming loans Commercial .06 .05 .05 .06
.06 Commercial real estate .01 .01 -- .01 .02 Residential mortgages
.22 .18 .20 .24 .27 Credit card 1.28 1.20 1.10 1.23 1.16 Other
retail .17 .15 .14 .14 .15 Total loans, excluding covered loans .21
.18 .17 .19 .20 Covered loans 4.74 4.66 4.71 5.34 5.53 Total loans
.26 .23 .23 .26 .28 Delinquent loan ratios - 90 days or more
past due
including nonperforming loans Commercial .31 .33
.39 .52 .57 Commercial real estate .37 .30 .29 .27 .31 Residential
mortgages .96 .98 1.10 1.23 1.31 Credit card 1.28 1.20 1.10 1.24
1.18 Other retail .46 .43 .42 .43 .45 Total loans, excluding
covered loans .57 .55 .59 .67 .71 Covered loans 4.93 4.84 5.06 5.53
5.68 Total loans .62 .60 .64 .73 .78
ASSET QUALITY
Table 10 ($ in millions)
Dec 31 Sep 30 Jun 30 Mar
31 Dec 31 2017 2017
2017 2017 2016 Nonperforming
loans Commercial $225 $231 $283 $397 $443 Lease financing 24
38 39 42 40 Total commercial 249 269 322 439
483 Commercial mortgages 108 89 84 74 87 Construction and
development 34 33 35 36 37 Total
commercial real estate 142 122 119 110 124 Residential
mortgages 442 474 530 575 595 Credit card 1 1 1 2 3 Other retail
168 163 158 157 157 Total nonperforming
loans, excluding covered loans 1,002 1,029 1,130 1,283 1,362
Covered loans 6 6 12 7 6 Total
nonperforming loans 1,008 1,035 1,142 1,290 1,368 Other real
estate (a) 141 164 157 155 186 Covered other real estate (a) 21 26
25 22 26 Other nonperforming assets 30 26 25
28 23 Total nonperforming assets (b) $1,200
$1,251 $1,349 $1,495 $1,603 Total
nonperforming assets, excluding covered assets $1,173 $1,219
$1,312 $1,466 $1,571
Accruing loans 90 days or more past
due, excluding covered loans
$572 $497 $477 $524 $552
Accruing loans 90 days or more past due $720 $649
$639 $718 $764
Performing restructured loans, excluding
GNMA and covered loans
$2,306 $2,419 $2,473 $2,478 $2,557
Performing restructured GNMA and covered loans $1,713
$1,600 $1,803 $1,746 $1,604
Nonperforming assets to loans plus
ORE, excluding covered assets (%)
.42 .44 .48 .54 .58 Nonperforming assets to loans plus ORE
(%) .43 .45 .49 .55 .59 (a) Includes equity investments in
entities whose principal assets are other real estate owned. (b)
Does not include accruing loans 90 days or more past due.
COMMON SHARES
Table 11 (Millions)
4Q 3Q 2Q 1Q
4Q 2017 2017 2017
2017 2016 Beginning shares outstanding
1,667 1,679 1,692 1,697 1,705
Shares issued for stock incentive
plans, acquisitions and other corporate purposes
1 -- 1 6 6 Shares repurchased (12 ) (12 ) (14 )
(11 ) (14 ) Ending shares outstanding 1,656
1,667 1,679 1,692
1,697
CAPITAL
POSITION
Table 12 ($ in millions)
Dec
31 Sep 30 Jun 30 Mar
31 Dec 31 2017 2017
2017 2017 2016 Total U.S.
Bancorp shareholders' equity $49,040 $48,723 $48,320 $47,798
$47,298
Standardized Approach Basel III
transitional standardized approach Common equity tier 1 capital
$34,369 $34,876 $34,408 $33,847 $33,720 Tier 1 capital 39,806
40,411 39,943 39,374 39,421 Total risk-based capital 47,503 48,104
47,824 47,279 47,355 Common equity tier 1 capital ratio 9.3
% 9.6 % 9.5 % 9.5 % 9.4 % Tier 1 capital ratio 10.8 11.1 11.1 11.0
11.0 Total risk-based capital ratio 12.9 13.2 13.2 13.3 13.2
Leverage ratio 8.9 9.1 9.1 9.1 9.0
Common equity tier 1 capital to
risk-weighted assets estimated for the Basel III fully
implemented standardized approach (a)
9.1 9.4 9.3 9.2 9.1
Advanced Approaches
Common equity tier 1 capital to
risk-weighted assets for the Basel III transitional advanced
approaches
12.0 12.1 12.0 11.8 12.2
Common equity tier 1 capital to
risk-weighted assets estimated for the Basel III fully
implemented advanced approaches (a)
11.6 11.8 11.7 11.5 11.7
Tangible common equity to
tangible assets (a) 7.6 7.7 7.5 7.6 7.5
Tangible common
equity to risk-weighted assets (a) 9.4 9.5 9.4 9.4 9.2
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 following 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, with the Company's capital adequacy being evaluated
against the methodology that is most restrictive. (a) See
Non-GAAP Financial Measures reconciliation on page 23
Capital Management
Total U.S. Bancorp shareholders’ equity was $49.0 billion at
December 31, 2017, compared with $48.7 billion at September 30,
2017, and $47.3 billion at December 31, 2016. During the fourth
quarter, the Company returned 72 percent of earnings to
shareholders through dividends and share buybacks.
All regulatory ratios continue to be in excess of
“well-capitalized” requirements. The estimated common equity tier 1
capital to risk-weighted assets ratio using the Basel III fully
implemented standardized approach was 9.1 percent at December 31,
2017, compared with 9.4 percent at September 30, 2017, and 9.1
percent at December 31, 2016. The estimated common equity tier 1
capital to risk-weighted assets ratio using the Basel III fully
implemented advanced approaches method was 11.6 percent at December
31, 2017, compared with 11.8 percent at September 30, 2017, and
11.7 percent at December 31, 2016.
On Wednesday, January 17, 2018, at 8:00 a.m. CST, Andy
Cecere, president and chief executive officer, and Terry Dolan,
vice chairman and chief financial officer, will host a conference
call to review the financial results. The conference call will be
available online or by telephone. 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 8669609. For those
unable to participate during the live call, a recording will be
available at approximately 11:00 a.m. CST on Wednesday, January 17
and will be accessible through Wednesday, January 24 at 11:00 p.m.
CST. To access the recorded message within the United States and
Canada, please 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 8669609.
Minneapolis-based U.S. Bancorp (NYSE: USB), with $462 billion in
assets as of December 31, 2017, is the parent company of U.S. Bank
National Association, the fifth largest commercial bank in the
United States. The Company operates 3,067 banking offices in 25
states and 4,771 ATMs and provides a comprehensive line of banking,
investment, mortgage, trust and payment services products to
consumers, businesses and institutions. Visit U.S. Bancorp on the
web at www.usbank.com.
Forward-Looking Statements
The following information appears in accordance with the Private
Securities Litigation Reform Act of 1995:
This press release contains forward-looking statements about
U.S. Bancorp. Statements that are not historical or current facts,
including statements about beliefs and expectations, are
forward-looking statements and are based on the information
available to, and assumptions and estimates made by, management as
of the date hereof. 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. Bancorp’s
revenues and the values of its assets and liabilities. Global
financial markets could experience a recurrence of significant
turbulence, which could reduce the availability of funding to
certain financial institutions and lead to a tightening of credit,
a reduction of business activity, and increased market volatility.
Stress in the commercial real estate markets, as well as a downturn
in the residential real estate markets could cause credit losses
and deterioration in asset values. In addition, changes to
statutes, regulations, or regulatory policies or practices could
affect U.S. Bancorp in substantial and unpredictable ways. U.S.
Bancorp’s results could also be adversely affected by deterioration
in general business and economic conditions; changes in interest
rates; deterioration in the credit quality of its loan portfolios
or in the value of the collateral securing those loans;
deterioration in the value of securities held in its investment
securities portfolio; legal and regulatory developments;
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 management’s ability to effectively manage credit risk, market
risk, operational risk, compliance risk, strategic risk, interest
rate risk, liquidity risk and reputational risk.
For discussion of these and other risks that may cause actual
results to differ from expectations, refer to U.S. Bancorp’s Annual
Report on Form 10-K for the year ended December 31, 2016, on file
with the Securities and Exchange Commission, including the sections
entitled “Risk Factors” and “Corporate Risk Profile” contained in
Exhibit 13, and all subsequent filings with the Securities and
Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934. However, factors other than these
also could adversely affect U.S. Bancorp’s results, and the reader
should not consider these factors to be a complete set of all
potential risks or uncertainties. Forward-looking statements speak
only as of the date hereof, and U.S. Bancorp undertakes no
obligation to update them in light of new information or future
events.
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 capital measures are viewed by management as useful
additional methods of reflecting the level of capital available to
withstand unexpected negative market or economic conditions.
Additionally, presentation of these measures allows investors,
analysts and banking regulators to assess the Company’s 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 of the
currently effective ratios, which are subject to certain
transitional provisions, temporarily excludes a portion of
unrealized gains and losses related to available-for-sale
securities and retirement plan obligations, and includes a portion
of capital related to intangible assets, other than mortgage
servicing rights. These capital 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 capital measures disclosed by the Company may be
considered non-GAAP financial measures.
The Company also discloses net interest income and related
ratios and analysis on a taxable-equivalent basis, which may also
be considered non-GAAP financial measures. The Company believes
this presentation to be the preferred industry measurement of net
interest income as it provides a relevant comparison of net
interest income arising from taxable and tax-exempt sources. In
addition, certain performance measures, including the efficiency
ratio and net interest margin utilize net interest income on a
taxable-equivalent basis.
In addition, certain performance measures are presented
excluding notable items in the fourth quarter of 2017. Management
believes this information helps investors understand the effect of
these items on reported results.
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 Company’s calculation of these non-GAAP financial
measures.
U.S. Bancorp
Consolidated Statement
of Income Three Months Ended Year Ended (Dollars and Shares in
Millions, Except Per Share Data) December 31, December 31,
(Unaudited) 2017 2016 2017 2016
Interest Income Loans $3,070 $2,771 $11,827 $10,810 Loans
held for sale 40 44 144 154 Investment securities 579 523 2,232
2,078 Other interest income 51 36 182
125 Total interest income 3,740 3,374 14,385
13,167
Interest Expense Deposits 311 170 1,041 622
Short-term borrowings 86 62 319 263 Long-term debt 199
187 784 754 Total
interest expense 596 419 2,144
1,639 Net interest income 3,144 2,955 12,241 11,528
Provision for credit losses 335 342
1,390 1,324 Net interest income after
provision for credit losses 2,809 2,613 10,851 10,204
Noninterest Income Credit and debit card revenue 333 316
1,252 1,177 Corporate payment products revenue 189 171 753 712
Merchant processing services 400 404 1,590 1,592 ATM processing
services 95 87 362 338 Trust and investment management fees 394 368
1,522 1,427 Deposit service charges 198 186 751 725 Treasury
management fees 152 147 618 583 Commercial products revenue 211 217
849 871 Mortgage banking revenue 202 240 834 979 Investment
products fees 43 38 163 158 Securities gains (losses), net 10 6 57
22 Other 214 251 860 993
Total noninterest income 2,441 2,431 9,611 9,577
Noninterest Expense Compensation 1,499 1,357 5,746 5,212
Employee benefits 304 261 1,186 1,119 Net occupancy and equipment
259 247 1,019 988 Professional services 114 156 419 502 Marketing
and business development 251 107 542 435 Technology and
communications 254 238 977 955 Postage, printing and supplies 79 75
323 311 Other intangibles 44 45 175 179 Other 1,135
518 2,558 1,975 Total
noninterest expense 3,939 3,004 12,945
11,676 Income before income taxes 1,311 2,040
7,517 8,105 Applicable income taxes (375 ) 549
1,264 2,161 Net income 1,686 1,491 6,253 5,944
Net (income) loss attributable to noncontrolling interests (4 )
(13 ) (35 ) (56 ) Net income attributable to
U.S. Bancorp $1,682 $1,478 $6,218
$5,888 Net income applicable to U.S. Bancorp
common shareholders $1,611 $1,391
$5,913 $5,589 Earnings per common share
$.97 $.82 $3.53 $3.25 Diluted earnings per common share $.97 $.82
$3.51 $3.24 Dividends declared per common share $.30 $.28 $1.16
$1.07 Average common shares outstanding 1,659 1,700 1,677 1,718
Average diluted common shares outstanding 1,664
1,705 1,683 1,724
U.S. Bancorp
Consolidated Ending Balance Sheet
December 31, December 31, (Dollars in Millions) 2017
2016
Assets Cash and due from banks $19,505 $15,705
Investment securities Held-to-maturity 44,362 42,991
Available-for-sale 68,137 66,284 Loans held for sale 3,554 4,826
Loans Commercial 97,561 93,386 Commercial real estate 40,463 43,098
Residential mortgages 59,783 57,274 Credit card 22,180 21,749 Other
retail 57,324 53,864 Total loans, excluding
covered loans 277,311 269,371 Covered loans 3,121
3,836 Total loans 280,432 273,207 Less allowance for loan
losses (3,925 ) (3,813 ) Net loans 276,507 269,394 Premises
and equipment 2,432 2,443 Goodwill 9,434 9,344 Other intangible
assets 3,228 3,303 Other assets 34,881 31,674
Total assets $462,040 $445,964
Liabilities and Shareholders' Equity Deposits
Noninterest-bearing $87,557 $86,097 Interest-bearing 259,658
248,493 Total deposits 347,215 334,590 Short-term
borrowings 16,651 13,963 Long-term debt 32,259 33,323 Other
liabilities 16,249 16,155 Total liabilities
412,374 398,031 Shareholders' equity Preferred stock 5,419 5,501
Common stock 21 21 Capital surplus 8,464 8,440 Retained earnings
54,142 50,151 Less treasury stock (17,602 ) (15,280 ) Accumulated
other comprehensive income (loss) (1,404 ) (1,535 ) Total
U.S. Bancorp shareholders' equity 49,040 47,298 Noncontrolling
interests 626 635 Total equity 49,666
47,933 Total liabilities and equity $462,040
$445,964 U.S. Bancorp
Non-GAAP
Financial Measures
December 31, September 30, June 30,
March 31, December 31, (Dollars in Millions, Unaudited)
2017 2017 2017 2017
2016 Total equity $49,666 $49,351 $48,949 $48,433 $47,933
Preferred stock (5,419 ) (5,419 ) (5,419 ) (5,419 ) (5,501 )
Noncontrolling interests (626 ) (628 ) (629 ) (635 ) (635 )
Goodwill (net of deferred tax liability) (1) (8,613 ) (8,141 )
(8,181 ) (8,186 ) (8,203 ) Intangible assets, other than mortgage
servicing rights (583 ) (595 ) (634 )
(671 ) (712 ) Tangible
common equity (a) 34,425 34,568 34,086 33,522 32,882
Tangible common equity (as calculated above) 34,425 34,568 34,086
33,522 32,882 Adjustments (2) (550 ) (52 )
(51 ) (136 ) (55 )
Common equity tier 1 capital estimated for
the Basel III fully implemented standardized and advanced
approaches (b)
33,875 34,516 34,035 33,386 32,827 Total assets 462,040
459,227 463,844 449,522 445,964 Goodwill (net of deferred tax
liability) (1) (8,613 ) (8,141 ) (8,181 ) (8,186 ) (8,203 )
Intangible assets, other than mortgage servicing rights (583 )
(595 ) (634 ) (671
) (712 ) Tangible assets (c) 452,844 450,491
455,029 440,665 437,049
Risk-weighted assets, determined in
accordance with prescribed transitional standardized approach
regulatory requirements (d)
367,771 * 363,957 361,164 356,373 358,237 Adjustments (3) 4,473
* 3,907 3,967
4,731 4,027
Risk-weighted assets estimated for the
Basel III fully implemented standardized approach (e)
372,244 * 367,864 365,131 361,104 362,264
Risk-weighted assets, determined in
accordance with prescribed transitional advanced approaches
regulatory requirements
287,211 * 287,800 287,124 285,963 277,141 Adjustments (4) 4,769
* 4,164 4,231
5,046 4,295
Risk-weighted assets estimated for the
Basel III fully implemented advanced approaches (f)
291,980 * 291,964 291,355 291,009 281,436
Ratios *
Tangible common equity to tangible assets (a)/(c) 7.6 % 7.7 % 7.5 %
7.6 % 7.5
%
Tangible common equity to risk-weighted assets (a)/(d) 9.4 9.5 9.4
9.4 9.2
Common equity tier 1 capital to
risk-weighted assets estimated for the Basel III fully
implemented standardized approach (b)/(e)
9.1 9.4 9.3 9.2 9.1
Common equity tier 1 capital to
risk-weighted assets estimated for the Basel III fully
implemented advanced approaches (b)/(f)
11.6 11.8 11.7 11.5 11.7 Three Months Ended
Year Ended December 31, September 30, June 30, March 31,
December 31, December 31, December 31, 2017 2017 2017
2017 2016 2017 2016 Net interest
income $3,144 $3,135 $3,017 $2,945 $2,955 $12,241 $11,528
Taxable-equivalent adjustment (5) 53 51
51 50 49
205 203
Net interest income, on a taxable-equivalent basis 3,197
3,186 3,068 2,995 3,004 12,446 11,731 Net interest income,
on a taxable-equivalent basis (as calculated above) 3,197 3,186
3,068 2,995 3,004 12,446 11,731 Noninterest income 2,441 2,422
2,419 2,329 2,431 9,611 9,577 Less: Securities gains (losses), net
10 9 9
29 6 57
22 Total net revenue, excluding
net securities gains (losses) (g) 5,628 5,599 5,478 5,295 5,429
22,000 21,286 Noninterest expense (h) 3,939 3,039 3,023
2,944 3,004 12,945 11,676 Less: Intangible amortization 44
44 43 44
45 175
179 Noninterest expense, excluding
intangible amortization (i) 3,895 2,995 2,980 2,900 2,959 12,770
11,497 Efficiency ratio (h)/(g) 70.0 % 54.3 % 55.2 % 55.6 %
55.3 % 58.8 % 54.9
%
Tangible efficiency ratio (i)/(g) 69.2
53.5 54.4 54.8
54.5 58.0
54.0
* 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 (loss) 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.
(5) Utilizes a tax rate of 35 percent
for those assets and liabilities whose income or expense is not
included for federal income tax purposes.
U.S. Bancorp
Non-GAAP Financial Measures
(continued) Three Months Ended Year
Ended (Dollars and Shares in Millions, Except Per Share Data)
December 31, December 31, (Unaudited) 2017 2017 Net
income applicable to U.S. Bancorp common shareholders $1,611 $5,913
Less: Notable items (1) 150 150 Net income
applicable to U.S. Bancorp common shareholders, excluding notable
items (a) $1,461 $5,763 Average diluted common shares
outstanding (b) 1,664 1,683 Diluted earnings per common
share, excluding notable items (a)/(b) $.88 $3.42 Net income
attributable to U.S. Bancorp $1,682 $6,218 Less: Notable items (1)
150 150 Net income attributable to U.S.
Bancorp, excluding notable items $1,532 $6,068 Annualized net
income attributable to U.S. Bancorp, excluding notable items (c)
$6,078 $6,068 Average assets (d) $456,098 $448,582
Return on average assets, excluding notable items (c)/(d) 1.33 %
1.35 % Net income applicable to U.S. Bancorp common
shareholders, excluding notable items (as calculated above) $1,461
$5,763 Annualized net income applicable to U.S. Bancorp common
shareholders, excluding notable items (e) $5,796 $5,763
Average common equity (f) $43,415 $42,976 Return on average
common equity, excluding notable items (e)/(f) 13.4 %
13.4 %
(1) Notable items for the three months
ended December 31, 2017, include: $910 million reduction in income
tax expense due to tax reform legislation, $608 million regulatory
and legal accrual, $105 million (after-tax) contribution to the
U.S. Bank Foundation and $47 million (after-tax) one-time bonus to
certain eligible employees.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180117005303/en/
U.S. BancorpDana Ripley, 612-303-3167MediaorJennifer Thompson,
612-303-0778Investors/Analysts
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