- Record net revenue and diluted earnings
per share for 4Q18 and Full Year
- Record net income for the Full
Year
U.S. Bancorp (NYSE: USB):
4Q18 and Full Year Key Financial Data
Full Year Full
Year
PROFITABILITY METRICS 4Q18 3Q18
4Q17 2018 2017 Return on average assets (%) 1.59 1.58
1.46 1.55 1.39 Return on average common equity (%) 15.8 15.5 14.7
15.4 13.8 Return on tangible common equity (%) (a) 20.2 19.9 18.8
19.8 17.6 Net interest margin (%) 3.15 3.15 3.11 3.14 3.10
Efficiency ratio (%) (a) 56.3 53.5 69.8 55.1 58.5
Full
Year Full Year
INCOME STATEMENT (b) 4Q18 3Q18
4Q17 2018 2017 Net interest income
(taxable-equivalent basis) $3,331 $3,281 $3,228 $13,035 $12,585
Noninterest income $2,498 $2,418 $2,370 $9,602 $9,317 Net income
attributable to U.S. Bancorp $1,856 $1,815 $1,682 $7,096 $6,218
Diluted earnings per common share $1.10 $1.06 $.97 $4.14 $3.51
Dividends declared per common share $.37 $.37 $.30 $1.34 $1.16
Full Year Full Year
BALANCE SHEET (b)
4Q18 3Q18 4Q17 2018 2017 Average total
loans $283,677 $281,065 $279,751 $280,701 $276,537 Average total
deposits $334,365 $330,121 $339,162 $333,462 $333,514 Net
charge-off ratio .49 % .46 % .46 % .48 % .48 % Book value per
common share (period end) $28.01 $27.35 $26.34 Basel III
standardized CET1 (c) 9.1 % 9.0 % 9.1 %
(a) See Non-GAAP
Financial Measures reconciliation on pages 16-17 (b) Dollars in
millions, except per share data (c) CET1 = Common equity tier 1
capital ratio, 4Q17 as if fully implemented
4Q18 and Full Year Highlights
- Net income of $1,856 million and
diluted earnings per common share of $1.10 for 4Q18, including $45
million of notable items, net of taxes, representing an increase of
$0.03 per diluted common share
- Industry leading return on average
assets of 1.59% and return on average common equity of 15.8% for
4Q18
- Return on tangible common equity of
20.2% for 4Q18
- Returned 80% of 4Q earnings to
shareholders through dividends and share buybacks
- Net interest income grew 4.0%
year-over-year (3.2% on a taxable-equivalent basis)
- Average total loans increased 0.9% and
1.4% compared to 3Q18 and 4Q17, respectively (1.5% and 2.6%
excluding the impact of loan sales)
- Total noninterest income grew 5.4%
year-over year, driven by payments revenue and trust and investment
management fees
- Full year net income of $7,096 million
and diluted earnings per common share of $4.14
- Positive operating leverage for full
year 2018 with net revenue increase of 3.4% and noninterest expense
decrease of 2.5%. Excluding notable items, net revenue increase of
3.0% and noninterest expense increase of 2.7%.
CEO Commentary
“Fourth quarter results capped a strong year for U.S. Bank and
the momentum we are seeing in our lending and fee businesses
positions us well for 2019. This quarter we achieved record revenue
and EPS and delivered a best-in-class return on tangible common
equity of 20.2%. These strong results enabled us to return 80% to
our shareholders through dividends and share repurchases. Loan
growth accelerated in the fourth quarter even as we maintained our
consistent and disciplined underwriting standards. Furthermore, we
continued to see strong sales activity and expanded customer
relationships across all of our businesses supported by our
investments in technology and innovation, as well as our employees’
dedication to helping to make our customers’ financial lives
simpler and more productive. I want to thank our employees for
their efforts this year and every year, and for their unwavering
commitment to making U.S. Bank the most trusted choice for our
customers.”
— Andy Cecere, Chairman, President and CEO,
U.S. Bancorp
In the Spotlight
Termination of AML-Related Consent OrderU.S. Bancorp
recently announced that the Office of the Comptroller of the
Currency has terminated its 2015 consent order related to the
Company’s Anti-Money Laundering (AML) and Bank Secrecy Act (BSA)
program and controls. Since 2014, U.S. Bancorp has made significant
investments to risk management and compliance to enhance and
strengthen our programs.
Elavon Acquisitions enhance Payments CapabilitiesRecent
acquisitions of financial technologies companies Electronic
Transaction Systems and CenPOS, Inc. by Elavon, a global merchant
payment processing provider and subsidiary of USB, enhances its
eCommerce offerings and integrated payments capabilities.
U.S. Bank Pullman Community CenterThe U.S. Bank Pullman
Community Center, a 135,000-square-foot facility, recently opened
in the historic Pullman neighborhood of Chicago and is the latest
result of significant community investment U.S. Bank has made in
the Pullman community since 2009. U.S. Bank has partnered with the
community to help welcome major retailers, a grocery store,
healthcare, workout facilities, restaurants and several plants and
distribution centers to the community.
Digital Small Business LendingWe launched a fully digital
small business lending experience in the third quarter that has
successfully fostered small business digital adoption during the
past few months. Small businesses, on a national basis, have
started borrowing through the digital experience, and two-thirds of
funded deals were approved in one day or less.
INCOME STATEMENT HIGHLIGHTS
($ in millions, except per-share data)
Percent Change
4Q 3Q 4Q 4Q18 vs 4Q18
vs Full Year Full Year Percent
2018 2018 2017
3Q18 4Q17 2018
2017 Change Net interest income $3,303
$3,251 $3,175 1.6 4.0 $12,919 $12,380 4.4 Taxable-equivalent
adjustment 28 30 53 (6.7 ) (47.2
) 116 205 (43.4 ) Net interest income
(taxable-equivalent basis) 3,331 3,281 3,228 1.5 3.2 13,035 12,585
3.6 Noninterest income 2,498 2,418
2,370 3.3 5.4 9,602 9,317 3.1 Total net
revenue 5,829 5,699 5,598 2.3 4.1 22,637 21,902 3.4 Noninterest
expense 3,280 3,044 3,899 7.8
(15.9 ) 12,464 12,790 (2.5 ) Income before
provision and income taxes 2,549 2,655 1,699 (4.0 ) 50.0 10,173
9,112 11.6 Provision for credit losses 368 343
335 7.3 9.9 1,379 1,390 (.8 )
Income before taxes 2,181 2,312 1,364 (5.7 ) 59.9 8,794 7,722 13.9
Income taxes and
taxable-equivalent adjustment
319 490 (322 ) (34.9 ) nm 1,670
1,469 13.7 Net income 1,862 1,822 1,686 2.2 10.4
7,124 6,253 13.9
Net (income) loss attributable
to noncontrolling interests
(6 )
(7
) (4 ) 14.3 (50.0 ) (28 ) (35 ) 20.0 Net income
attributable to U.S. Bancorp $1,856 $1,815
$1,682 2.3 10.3 $7,096 $6,218
14.1
Net income applicable to U.S.
Bancorp common shareholders
$1,777 $1,732 $1,611 2.6 10.3
$6,784 $5,913 14.7 Diluted earnings per common
share $1.10 $1.06 $.97 3.8 13.4
$4.14 $3.51 17.9
Net income attributable to U.S. Bancorp was $1,856 million for
the fourth quarter of 2018, which was 10.3 percent higher than the
$1,682 million for the fourth quarter of 2017, and 2.3 percent
higher than the $1,815 million for the third quarter of 2018.
Diluted earnings per common share were $1.10 in the fourth quarter
of 2018, compared with $0.97 in the fourth quarter of 2017 and
$1.06 in the third quarter of 2018. The fourth quarter of 2018
included $0.03 per diluted common share of notable items related to
the impact of the gain from the sale of the Company’s ATM servicing
business and the sale of a majority of the Company’s FDIC covered
loans, charges related to severance, certain asset impairments, an
accrual for legal matters, and the favorable impact to deferred tax
assets and liabilities related to changes in estimates from tax
reform.
The increase in net income year-over-year was due to total net
revenue growth of 4.1 percent and a decrease in noninterest expense
of 15.9 percent. Net interest income increased 4.0 percent (3.2
percent on a taxable-equivalent basis), mainly a result of the
impact of rising interest rates on assets, earning assets growth,
and higher yields on reinvestment of securities, partially offset
by higher rates on deposits and funding mix. Excluding the notable
items, noninterest income increased 2.2 percent compared with a
year ago, driven by strong growth in payment services revenue and
trust and investment management fees, along with higher other
noninterest revenue, partially offset by decreases in mortgage
banking revenue and ATM processing services. Excluding the notable
items, noninterest expense increased 1.0 percent primarily due to
increased compensation expense supporting business growth and
compliance programs, merit increases, and variable compensation
related to revenue growth, higher employee benefits expense, an
increase in legal and professional expense, and higher technology
and communications expense in support of business growth. Partially
offsetting these increases was lower other noninterest expense
driven by lower costs related to tax-advantaged projects, lower
FDIC assessment costs, and a reduction in mortgage servicing
costs.
Net income increased on a linked quarter basis primarily driven
by total net revenue growth of 2.3 percent offset by an increase in
noninterest expense of 7.8 percent. Net interest income increased
1.6 percent (1.5 percent on a taxable-equivalent basis) due to the
impact of rising interest rates on assets, earning assets growth,
and interest recoveries, partially offset by higher rates on
deposits and funding mix. Excluding the notable items, noninterest
income increased 0.2 percent compared with the third quarter of
2018 driven by higher payment services revenue primarily due to
seasonally higher credit and debit card revenue and higher
commercial products revenue, partially offset by lower ATM
processing services due to the ATM servicing sale. Excluding the
notable items, noninterest expense increased 2.0 percent primarily
driven by compensation expense due to timing of payroll cycles and
variable compensation related to revenue growth, along with an
increase in employee benefits expense due to higher medical costs,
seasonally higher professional services expense, and seasonally
higher costs related to investments in tax-advantaged projects.
Partially offsetting these increases was lower FDIC assessment
costs.
NET INTEREST INCOME
(Taxable-equivalent basis; $ in
millions)
Change
4Q 3Q 4Q 4Q18 vs 4Q18 vs
Full Year Full Year 2018
2018 2017 3Q18
4Q17 2018 2017
Change Components of net interest income Income on earning
assets $4,341 $4,155 $3,785 $186 $556 $16,298 $14,559 $1,739
Expense on interest-bearing liabilities 1,010 874
557 136 453
3,263 1,974 1,289 Net interest
income $3,331 $3,281 $3,228
$50 $103 $13,035
$12,585 $450 Average yields and rates
paid Earning assets yield 4.11 % 3.98 % 3.64 % .13 % .47 % 3.93 %
3.58 % .35 % Rate paid on interest-bearing liabilities 1.26
1.10 .72 .16 .54
1.04 .65 .39 Gross
interest margin 2.85 % 2.88 % 2.92 % (.03 )%
(.07 )% 2.89 % 2.93 % (.04 )% Net
interest margin 3.15 % 3.15 % 3.11 % -- %
.04 % 3.14 % 3.10 % .04 %
Average balances Investment securities (a) $114,138 $113,547
$113,287 $591 $851 $113,940 $111,820 $2,120 Loans 283,677 281,065
279,751 2,612 3,926 280,701 276,537 4,164 Earning assets 420,472
415,177 413,510 5,295 6,962 415,067 406,421 8,646 Interest-bearing
liabilities 319,289 314,816 308,976 4,473 10,313 314,506 302,204
12,302 (a) Excludes unrealized gain (loss)
Net interest income on a taxable-equivalent basis in the fourth
quarter of 2018 was $3,331 million, an increase of $103 million
(3.2 percent) over the fourth quarter of 2017. The increase was
principally driven by the impact of rising interest rates, earning
assets growth, and higher yields on securities, partially offset by
higher rates on deposits and funding mix shift, as well as the
impact of tax reform which reduced the taxable-equivalent
adjustment benefit related to tax exempt assets. Average earning
assets were $7.0 billion (1.7 percent) higher than the fourth
quarter of 2017, reflecting increases of $3.9 billion (1.4 percent)
in average total loans and $3.0 billion (18.0 percent) in average
other earning assets. Excluding the impact of the second quarter of
2018 sale of the Company’s federally guaranteed student loan
portfolio and the fourth quarter of 2018 sale of the majority of
the Company’s FDIC covered loans, average total loans grew 2.6
percent compared with the fourth quarter of 2017.
Net interest income on a taxable-equivalent basis increased $50
million (1.5 percent) on a linked quarter basis primarily driven by
the impact of higher interest rates on assets and earning assets
growth, partially offset by higher rates on deposits and funding
mix shift. Average earning assets were $5.3 billion (1.3 percent)
higher on a linked quarter basis, reflecting increases of $2.6
billion (0.9 percent) in average total loans and $2.1 billion (11.8
percent) in average other earning assets. Excluding the impact of
the fourth quarter of 2018 sale of the majority of FDIC covered
loans, total average loans grew 1.5 percent over the third quarter
of 2018.
The net interest margin in the fourth quarter of 2018 was 3.15
percent, compared with 3.11 percent in the fourth quarter of 2017
and 3.15 percent in the third quarter of 2018. The increase in the
net interest margin year-over-year was primarily due to higher
interest rates, partially offset by deposit and funding mix, lower
loan spreads due to mix, higher cash balances, and the impact of
tax reform. Net interest margin was flat on a linked quarter basis
reflecting the impact of higher rates on assets and higher interest
recoveries, offset by deposit and funding mix, as well as higher
cash balances.
Average investment securities in the fourth quarter of 2018
increased $851 million (0.8 percent) from the fourth quarter of
2017 and $591 million (0.5 percent) from the third quarter of 2018
due to purchases of U.S. Treasury, mortgage-backed and state and
political securities, net of prepayments and maturities.
AVERAGE LOANS ($ in millions)
Percent Change 4Q
3Q 4Q 4Q18 vs 4Q18 vs Full
Year Full Year Percent 2018
2018 2017 3Q18
4Q17 2018 2017
Change Commercial $95,025 $93,541 $92,101 1.6 3.2
$93,342 $90,393 3.3 Lease financing 5,490 5,507 5,457
(.3 ) .6 5,512 5,511 -- Total commercial 100,515 99,048
97,558 1.5 3.0 98,854 95,904 3.1 Commercial mortgages 28,930
28,362 29,543 2.0 (2.1 ) 28,793 30,430 (5.4 ) Construction and
development 11,219 11,180 11,466 .3 (2.2 ) 11,184
11,647 (4.0 ) Total commercial real estate 40,149 39,542
41,009 1.5 (2.1 ) 39,977 42,077 (5.0 ) Residential mortgages
64,476 62,042 59,639 3.9 8.1 61,893 58,784 5.3 Credit card
22,396 21,774 21,218 2.9 5.6 21,672 20,906 3.7 Retail
leasing 8,489 8,383 7,982 1.3 6.4 8,253 7,354 12.2 Home equity and
second mortgages 16,065 16,000 16,299 .4 (1.4 ) 16,076 16,278 (1.2
) Other 31,587 31,520 32,856 .2 (3.9 ) 31,807
31,784 .1 Total other retail 56,141 55,903 57,137 .4 (1.7 ) 56,136
55,416 1.3 Covered loans (a) -- 2,756 3,190 nm
nm 2,169 3,450 (37.1 ) Total loans $283,677
$281,065 $279,751 .9 1.4 $280,701 $276,537 1.5
(a) During the fourth quarter of 2018, the majority of the
Company's covered loans were sold or the loss share coverage
expired.
At December 31, 2018, remaining acquired
loan balances are included in the portfolio type they would have
otherwise been included in had the loss share coverage not
been in place.
Average total loans were $3.9 billion (1.4 percent) higher than
the fourth quarter of 2017. Excluding the impact of the second
quarter of 2018 sale of the Company’s federally guaranteed student
loan portfolio and the fourth quarter of 2018 sale of the majority
of the Company’s FDIC covered loans, average total loans grew 2.6
percent over the prior year quarter. The increase was due to growth
in residential mortgages (8.1 percent), total commercial loans (3.0
percent), credit card loans (5.6 percent), and retail leasing (6.4
percent). These increases were partially offset by a decrease in
total commercial real estate loans (2.1 percent) due to customers
paying down balances and a decrease in other loans (3.9 percent)
impacted by the sale of student loans.
Average total loans were $2.6 billion (0.9 percent) higher than
the third quarter of 2018 driven by growth in residential mortgages
(3.9 percent) and total commercial loans (1.5 percent), partially
offset by the sale of covered loans in the fourth quarter of 2018.
Excluding the impact of the fourth quarter of 2018 covered loans
sale, total average loans grew 1.5 percent over the third quarter
of 2018.
AVERAGE DEPOSITS ($ in millions)
Percent Change 4Q
3Q 4Q 4Q18 vs 4Q18 vs Full
Year Full Year Percent 2018
2018 2017 3Q18
4Q17 2018 2017
Change Noninterest-bearing deposits $77,160 $77,192
$82,303 -- (6.2 ) $78,196 $81,933 (4.6 ) Interest-bearing savings
deposits Interest checking 71,013 69,330 70,717 2.4 .4 70,154
67,953 3.2 Money market savings 99,594 100,688 105,348 (1.1 ) (5.5
) 101,732 106,476 (4.5 ) Savings accounts 44,544 44,848
43,772 (.7 ) 1.8 44,713 43,393 3.0 Total savings
deposits 215,151 214,866 219,837 .1 (2.1 ) 216,599 217,822 (.6 )
Time deposits 42,054 38,063 37,022 10.5 13.6 38,667
33,759 14.5 Total interest-bearing deposits 257,205
252,929 256,859 1.7 .1 255,266 251,581 1.5 Total
deposits $334,365 $330,121 $339,162 1.3 (1.4 )
$333,462 $333,514 --
Average total deposits for the fourth quarter of 2018 were $4.8
billion (1.4 percent) lower than the fourth quarter of 2017.
Average noninterest-bearing deposits decreased $5.1 billion (6.2
percent) year-over-year primarily due to decreases in business
deposits within Corporate and Commercial Banking and corporate
trust balances within Wealth Management and Investment Services.
Average total savings deposits were $4.7 billion (2.1 percent)
lower year-over-year driven by decreases in Wealth Management and
Investment Services and Corporate and Commercial Banking, partially
offset by an increase in Consumer and Business Banking. Average
time deposits were $5.0 billion (13.6 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 $4.2 billion (1.3 percent) from
the third quarter of 2018. On a linked quarter basis, average
noninterest-bearing deposits were essentially flat reflecting
seasonal growth in Wealth Management and Investment Services
balances, offset by decreases in balances within Corporate and
Commercial Banking. Average total savings deposits increased $285
million (0.1 percent) primarily due to increases in Corporate and
Commercial Banking, partially offset by decreases in Wealth
Management and Investment Services and Consumer and Business
Banking. Average time deposits increased $4.0 billion (10.5
percent) during the quarter. Average time deposit growth partially
reflects consumer customers’ migration to certificates of deposit
for higher yields. In addition, the balance of time deposits is
managed based on funding needs, relative pricing and liquidity
characteristics.
NONINTEREST INCOME ($ in millions)
Percent Change 4Q
3Q 4Q 4Q18 vs 4Q18 vs Full
Year Full Year Percent 2018
2018 2017 3Q18
4Q17 2018 2017
Change Credit and debit card revenue $382 $344 $342
11.0 11.7 $1,401 $1,289 8.7 Corporate payment products revenue 163
169 148 (3.6 ) 10.1 644 575 12.0 Merchant processing services 389
392 374 (.8 ) 4.0 1,531 1,486 3.0 ATM processing services 54 85 80
(36.5 ) (32.5 ) 308 303 1.7 Trust and investment management fees
409 411 394 (.5 ) 3.8 1,619 1,522 6.4 Deposit service charges 199
198 194 .5 2.6 762 732 4.1 Treasury management fees 143 146 152
(2.1 ) (5.9 ) 594 618 (3.9 ) Commercial products revenue 225 216
224 4.2 .4 895 954 (6.2 ) Mortgage banking revenue 171 174 202 (1.7
) (15.3 ) 720 834 (13.7 ) Investment products fees 48 47 45 2.1 6.7
188 173 8.7 Securities gains (losses), net 5 10 10 (50.0 ) (50.0 )
30 57 (47.4 ) Other 310 226 205 37.2 51.2 910
774 17.6 Total noninterest income $2,498 $2,418
$2,370 3.3 5.4 $9,602 $9,317 3.1
Fourth quarter noninterest income of $2,498 million was $128
million (5.4 percent) higher than the fourth quarter of 2017 led by
strong growth in payment services revenue and trust and investment
management fees. Payment services revenue increased $70 million
(8.1 percent) due to higher credit and debit card revenue of $40
million (11.7 percent), an increase in corporate payment products
revenue of $15 million (10.1 percent), and higher merchant
processing services of $15 million (4.0 percent) all driven by
higher sales volumes. Trust and investment management fees
increased $15 million (3.8 percent) due to business growth. Other
noninterest income included the impacts of notable items related to
the gain from the sale of the Company’s ATM servicing business of
$340 million and charges for asset impairments related to the sale
of a majority of the Company’s covered loans and other certain
assets of $264 million. Excluding these notable items, other
noninterest income increased year-over-year primarily due to higher
equity investment income. Partially offsetting these increases was
a decline in mortgage banking revenue of $31 million (15.3 percent)
primarily due to lower mortgage production. Also, ATM processing
services decreased $26 million (32.5 percent) due to the sale of
the Company’s ATM servicing business.
Noninterest income was $80 million (3.3 percent) higher in the
fourth quarter of 2018 compared with the third quarter of 2018
reflecting higher payment services revenue as credit and debit card
revenue grew $38 million (11.0 percent) due to seasonally higher
sales volumes, partially offset by seasonally lower corporate
payment products revenue of $6 million (3.6 percent). Due to the
sale of the Company’s ATM third party servicing business, ATM
processing services fees declined $31 million (36.5 percent) in the
fourth quarter. Excluding the notable items, noninterest income
increased 0.2 percent on a linked quarter basis.
NONINTEREST EXPENSE ($ in millions)
Percent Change 4Q
3Q 4Q 4Q18 vs 4Q18 vs Full
Year Full Year Percent 2018
2018 2017 3Q18
4Q17 2018 2017
Change Compensation $1,568 $1,529 $1,499 2.6 4.6
$6,162 $5,746 7.2 Employee benefits 308 294 291 4.8 5.8 1,231 1,134
8.6 Net occupancy and equipment 266 270 259 (1.5 ) 2.7 1,063 1,019
4.3 Professional services 133 96 114 38.5 16.7 407 419 (2.9 )
Marketing and business development 115 106 251 8.5 (54.2 ) 429 542
(20.8 ) Technology and communications 254 247 236 2.8 7.6 978 903
8.3 Postage, printing and supplies 80 84 79 (4.8 ) 1.3 324 323 .3
Other intangibles 41 41 44 -- (6.8 ) 161 175 (8.0 ) Other 515
377 1,126 36.6 (54.3 ) 1,709 2,529 (32.4 )
Total noninterest expense $3,280 $3,044 $3,899
7.8 (15.9 ) $12,464 $12,790 (2.5 )
Fourth quarter noninterest expense of $3,280 million was $619
million (15.9 percent) lower than the fourth quarter of 2017.
Included in the fourth quarter are Company expenses related to
severance charges and accruals of legal matters of $174 million in
2018 and incurred expenses of $825 million in 2017 related to a
special employee bonus and contribution to its foundation as well
as the settlement of a regulatory matter. Excluding the impact of
the notable items, fourth quarter noninterest expense was 1.0
percent higher than fourth quarter of 2017 primarily due to an
increase in compensation expense driven by the impact of hiring to
support business growth and compliance programs, merit increases,
and higher variable compensation related to business production.
Employee benefits expense increased primarily due to higher medical
costs compared with a year ago. Partially offsetting these
increases was a decrease in other noninterest expense due to lower
costs related to tax-advantaged projects, lower FDIC assessment
costs, driven by the elimination of the surcharge in the fourth
quarter of 2018, and a reduction in mortgage servicing costs.
Noninterest expense increased $236 million (7.8 percent) on a
linked quarter basis. Excluding the impact of the notable items,
fourth quarter noninterest expense increased 2.0 percent primarily
due to an increase in compensation expense, including higher
incentives, seasonally higher professional services expenses, and
growth in other noninterest expense due to seasonally higher costs
related to tax-advantaged projects, partially offset by lower FDIC
assessment costs driven by the elimination of the surcharge in the
fourth quarter of 2018.
Provision for Income Taxes
The provision for income taxes for the fourth quarter of 2018
resulted in a tax rate of 14.6 percent on a taxable-equivalent
basis (effective tax rate of 13.5 percent), compared with a tax
benefit of 23.6 percent on a taxable-equivalent basis (effective
tax benefit of 28.6 percent) in the fourth quarter of 2017, and a
tax rate of 21.2 percent on a taxable-equivalent basis (effective
tax rate of 20.2 percent) in the third quarter of 2018. The tax
benefit in the fourth quarter of 2017 reflected the impact of tax
reform legislation that was enacted during that quarter. The 2018
tax rates reflected the reduced statutory tax rate for corporations
from 35 percent to 21 percent effective beginning in 2018 and the
fourth quarter of 2018 tax rates reflected the favorable impact of
deferred tax assets and liabilities adjustments related to tax
reform estimates. Excluding the changes in estimates related to
deferred tax assets and liabilities, the taxable-equivalent rate
was 20.1 percent in the fourth quarter of 2018.
ALLOWANCE FOR CREDIT LOSSES ($ in millions)
4Q 3Q 2Q
1Q 4Q
2018 % (b) 2018 %
(b) 2018 % (b) 2018
% (b) 2017 % (b)
Balance, beginning of period $4,426 $4,411 $4,417 $4,417 $4,407
Net charge-offs Commercial 64 .27 63 .27 54 .23 56 .25 22
.09 Lease financing 3 .22 3 .22 4 .29 4
.29 6 .44 Total commercial 67 .26 66 .26 58 .24 60 .25 28
.11 Commercial mortgages (8 ) (.11 ) (5 ) (.07 ) -- -- (4 ) (.06 )
18 .24 Construction and development 1 .04 (4 ) (.14 ) --
-- 1 .04 -- -- Total commercial real estate (7
) (.07 ) (9 ) (.09 ) -- -- (3 ) (.03 ) 18 .17 Residential
mortgages 2 .01 4 .03 4 .03 7 .05 10 .07 Credit card 219
3.88 206 3.75 210 3.97 211 4.02 205 3.83 Retail leasing 3
.14 3 .14 3 .15 3 .15 3 .15 Home equity and second mortgages 1 .02
(1 ) (.02 ) (2 ) (.05 ) (1 ) (.03 ) (2 ) (.05 ) Other 68 .85
59 .74 59 .76 64 .79 63 .76 Total other
retail 72 .51 61 .43 60 .43 66 .47 64
.44 Total net charge-offs 353 .49 328 .46 332 .48 341 .49
325 .46 Provision for credit losses 368 343 327 341 335 Other
changes (a) -- -- (1 ) -- -- Balance,
end of period $4,441 $4,426 $4,411 $4,417
$4,417 Components Allowance for loan losses
$3,973 $3,954 $3,920 $3,918 $3,925
Liability for unfunded credit
commitments
468 472 491 499 492 Total
allowance for credit losses $4,441 $4,426 $4,411
$4,417 $4,417 Gross charge-offs $442
$428 $437 $453 $464 Gross recoveries $89 $100 $105 $112 $139
Allowance for credit losses as a percentage of Period-end loans
1.55 1.57 1.57 1.59 1.58 Nonperforming loans 544 544 484 431 438
Nonperforming assets
449 441 404 367 368
(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 was relatively stable on both a linked quarter
and year-over-year basis. The Company’s provision for credit losses
for the fourth quarter of 2018 was $368 million, which was $25
million (7.3 percent) higher than the prior quarter and $33 million
(9.9 percent) higher than the fourth quarter of 2017.
Total net charge-offs in the fourth quarter of 2018 were $353
million, compared with $328 million in the third quarter of 2018,
and $325 million in the fourth quarter of 2017. Net charge-offs
increased $25 million (7.6 percent) compared with the third quarter
of 2018 mainly due to seasonally lower credit card net charge-offs
in the third quarter and higher total other retail net charge-offs
in the fourth quarter. Net charge-offs increased $28 million (8.6
percent) compared with the fourth quarter of 2017 primarily due to
higher total commercial and credit card net charge-offs, partially
offset by lower total commercial real estate net charge-offs. The
net charge-off ratio was 0.49 percent in the fourth quarter of
2018, compared with 0.46 percent in both the third quarter of 2018
and in the fourth quarter of 2017.
The allowance for credit losses was $4,441 million at December
31, 2018, compared with $4,426 million at September 30, 2018, and
$4,417 million at December 31, 2017. The ratio of the allowance for
credit losses to period-end loans was 1.55 percent at December 31,
2018, compared with 1.57 percent at September 30, 2018, and 1.58
percent at December 31, 2017. The ratio of the allowance for credit
losses to nonperforming loans was 544 percent at December 31, 2018,
and at September 30, 2018, compared with 438 percent at December
31, 2017.
Nonperforming assets were $989 million at December 31, 2018,
compared with $1,004 million at September 30, 2018, and $1,200
million at December 31, 2017. The ratio of nonperforming assets to
loans and other real estate was 0.34 percent at December 31, 2018,
compared with 0.36 percent at September 30, 2018, and 0.43 percent
at December 31, 2017. The year-over-year decrease in nonperforming
assets was driven by improvements in nonperforming residential
mortgages, total commercial loans, total commercial real estate and
other real estate owned. Accruing loans 90 days or more past due
were $584 million at December 31, 2018, compared with $551 million
at September 30, 2018, and $720 million at December 31, 2017.
DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN
BALANCES (Percent)
Dec 31 Sep 30
Jun 30 Mar 31 Dec 31
2018 2018 2018
2018 2017 Delinquent loan ratios
- 90 days or more past due
excluding nonperforming loans
Commercial .07 .06 .06 .06 .06 Commercial real estate -- .01 .01
.01 .01 Residential mortgages .18 .19 .18 .22 .22 Credit card 1.25
1.18 1.15 1.29 1.28 Other retail .19 .17 .16 .18 .17 Covered loans
-- .86 4.46 4.57 4.74 Total loans .20 .20 .23 .25 .26
Delinquent loan ratios - 90 days or more past due
including
nonperforming loans Commercial .27 .28 .28 .37 .31 Commercial real
estate .29 .27 .27 .31 .37 Residential mortgages .63 .69 .84 .93
.96 Credit card 1.25 1.18 1.15 1.29 1.28 Other retail .54 .49 .48
.48 .46 Covered loans -- .86 4.68 4.77 4.93 Total loans .49 .48 .55
.62 .62
ASSET QUALITY (a) ($ in
millions)
Dec 31 Sep
30 Jun 30 Mar 31 Dec 31
2018 2018 2018
2018 2017 Nonperforming loans Commercial $186
$193 $199 $274 $225 Lease financing 23 23 25
27 24
Total commercial
209 216 224 301 249 Commercial mortgages 76 77 72 86 108
Construction and development 39 28 32 33
34 Total commercial real estate 115 105 104 119 142
Residential mortgages 296 317 400 430 442 Credit card -- -- -- -- 1
Other retail 197 175 178 168 168 Covered loans -- --
6 6 6 Total nonperforming loans 817 813 912 1,024
1,008 Other real estate 111 100 108 124 141 Covered other
real estate -- 19 20 20 21 Other nonperforming assets 61 72
51 36 30 Total nonperforming assets $989
$1,004 $1,091 $1,204 $1,200
Accruing loans 90 days or more past due $584 $551
$640 $702 $720 Performing restructured loans,
excluding GNMA $2,218 $2,272 $2,194 $2,222
$2,338 Performing restructured GNMA $1,639 $1,668
$1,665 $1,566 $1,681 Nonperforming
assets to loans plus ORE (%) .34 .36 .39 .43 .43 (a)
Throughout this document, nonperforming assets and related ratios
do not include accruing loans 90 days or more past due
COMMON SHARES (Millions)
4Q
3Q 2Q 1Q 4Q
2018 2018 2018
2018 2017 Beginning shares
outstanding 1,623 1,636 1,649 1,656 1,667
Shares issued for stock incentive
plans, acquisitions and other corporate purposes
1 1 -- 4 1 Shares repurchased (16 ) (14 ) (13 )
(11 ) (12 ) Ending shares outstanding 1,608
1,623 1,636 1,649
1,656
CAPITAL POSITION
($ in millions)
Dec 31 Sep 30
Jun 30 Mar 31 Dec 31
2018 2018
2018 2018 2017
Total U.S. Bancorp shareholders' equity $51,029
$50,375 $49,628 $49,187 $49,040
Basel III Standardized
Approach (a) Common equity tier 1 capital $34,724 $34,097
$34,161 $33,539 $34,369 Tier 1 capital 40,741 40,114 39,611 38,991
39,806 Total risk-based capital 48,178 47,531 47,258 46,640 47,503
Fully implemented common equity tier 1 capital ratio (a) 9.1
% 9.0 % 9.1 % 9.0 % 9.1 % (b) Tier 1 capital ratio 10.7 10.6 10.5
10.4 10.8 Total risk-based capital ratio 12.6 12.6 12.6 12.5 12.9
Leverage ratio 9.0 9.0 8.9 8.8 8.9
Basel III Advanced
Approaches (a) Fully implemented common equity tier 1 capital
ratio (a) 11.8 11.8 11.6 11.5 11.6 (b)
Tangible common
equity to tangible assets (b) 7.8 7.7 7.8 7.7 7.6
Tangible
common equity to risk-weighted assets (b) 9.4 9.3 9.3 9.3 9.4
Common equity tier 1 capital ratio
calculated under the transitional standardized approach (a)
-- -- -- -- 9.3
Common equity tier 1 capital ratio
calculated under the transitional advanced approaches (a)
-- -- -- -- 12.0
(a) Beginning January 1, 2018, the
regulatory capital requirements fully reflect implementation of
Basel III. Prior to 2018, the Company's capital ratios reflected
certain transitional adjustments. 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.
(b) See Non-GAAP Financial Measures
reconciliation on page 16
Total U.S. Bancorp shareholders’ equity was $51.0 billion at
December 31, 2018, compared with $50.4 billion at September 30,
2018, and $49.0 billion at December 31, 2017. During the fourth
quarter, the Company returned 80 percent of earnings to
shareholders through dividends and share buybacks.
All regulatory ratios continue to be in excess of
“well-capitalized” requirements. The common equity tier 1 capital
to risk-weighted assets ratio using the Basel III standardized
approach was 9.1 percent at December 31, 2018, compared with 9.0
percent at September 30, 2018, and 9.3 percent at December 31,
2017. The common equity tier 1 capital to risk-weighted assets
ratio using the Basel III advanced approaches method was 11.8
percent at December 31, 2018, and at September 30, 2018, compared
with 12.0 percent at December 31, 2017.
Investor Conference Call
On Wednesday, January 16, 2019, at 8:00 a.m. CST, Andy Cecere,
chairman, 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, visit U.S. Bancorp’s website at usbank.com and click
on “About US”, “Investor Relations” and “Webcasts &
Presentations.” 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 1486427. For those unable to participate during the
live call, a recording will be available at approximately 11:00
a.m. CST on Wednesday, January 16 and will be accessible until
Wednesday, January 23 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 1486427.
About U.S. Bancorp
U.S. Bancorp, with 74,000 employees and $467 billion in assets
as of December 31, 2018, is the parent company of U.S. Bank, the
fifth-largest commercial bank in the United States. The
Minneapolis-based bank blends its relationship teams, branches and
ATM network with mobile and online tools that allow customers to
bank how, when and where they prefer. U.S. Bank is committed to
serving its millions of retail, business, wealth management,
payment, commercial and corporate, and investment services
customers across the country and around the world as a trusted
financial partner, a commitment recognized by the Ethisphere
Institute naming the bank a 2018 World’s Most Ethical Company.
Visit U.S. Bank at www.usbank.com or follow on social media to stay
up to date with company news.
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. Deterioration in general business and economic
conditions or turbulence in domestic or global financial markets
could adversely affect U.S. Bancorp’s revenues and the values of
its assets and liabilities, reduce the availability of funding to
certain financial institutions, lead to a tightening of credit, and
increase stock price 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 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 its investment securities; legal and regulatory
developments; litigation; increased competition from both banks and
non-banks; changes in the level of tariffs and other trade policies
of the United States and its global trading partners; changes in
customer behavior and preferences; breaches in data security;
failures to safeguard personal information; 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, 2017, on file
with the Securities and Exchange Commission, including the sections
entitled “Corporate Risk Profile” and “Risk Factors” 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
- Return on tangible common equity
These capital measures are viewed by management as useful
additional methods of evaluating the Company’s utilization of its
capital held and 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 capital
measures are not defined in generally accepted accounting
principles (“GAAP”), or are not defined in banking regulations. As
a result, these capital measures disclosed by the Company may be
considered non-GAAP financial measures. In addition, certain
capital measures related to prior periods are presented on the same
basis as those capital measures in the current period. The
effective capital ratios defined by banking regulations for these
periods were subject to certain transitional provisions. Management
believes this information helps investors assess trends in the
Company’s capital adequacy.
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.
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.
CONSOLIDATED STATEMENT OF INCOME
(Dollars and Shares in Millions, Except
Per Share Data)
Three Months Ended Year Ended December 31,
December 31, (Unaudited) 2018 2017 2018
2017
Interest Income Loans $3,475 $3,060
$13,120 $11,788 Loans held for sale 57 40 165 144 Investment
securities 689 579 2,616 2,232 Other interest income 90
51 272 182 Total interest
income 4,311 3,730 16,173 14,346
Interest Expense Deposits
606 311 1,869 1,041 Short-term borrowings 113 45 378 141 Long-term
debt 289 199 1,007 784
Total interest expense 1,008 555
3,254 1,966 Net interest income 3,303 3,175
12,919 12,380 Provision for credit losses 368 335
1,379 1,390 Net interest income
after provision for credit losses 2,935 2,840 11,540 10,990
Noninterest Income Credit and debit card revenue 382 342
1,401 1,289 Corporate payment products revenue 163 148 644 575
Merchant processing services 389 374 1,531 1,486 ATM processing
services 54 80 308 303 Trust and investment management fees 409 394
1,619 1,522 Deposit service charges 199 194 762 732 Treasury
management fees 143 152 594 618 Commercial products revenue 225 224
895 954 Mortgage banking revenue 171 202 720 834 Investment
products fees 48 45 188 173 Securities gains (losses), net 5 10 30
57 Other 310 205 910 774
Total noninterest income 2,498 2,370 9,602 9,317
Noninterest Expense Compensation 1,568 1,499 6,162 5,746
Employee benefits 308 291 1,231 1,134 Net occupancy and equipment
266 259 1,063 1,019 Professional services 133 114 407 419 Marketing
and business development 115 251 429 542 Technology and
communications 254 236 978 903 Postage, printing and supplies 80 79
324 323 Other intangibles 41 44 161 175 Other 515
1,126 1,709 2,529 Total
noninterest expense 3,280 3,899 12,464
12,790 Income before income taxes 2,153 1,311
8,678 7,517 Applicable income taxes 291 (375 )
1,554 1,264 Net income 1,862 1,686 7,124 6,253
Net (income) loss attributable to noncontrolling interests (6 )
(4 ) (28 ) (35 ) Net income attributable to
U.S. Bancorp $1,856 $1,682 $7,096
$6,218 Net income applicable to U.S. Bancorp
common shareholders $1,777 $1,611
$6,784 $5,913 Earnings per common share
$1.10 $.97 $4.15 $3.53 Diluted earnings per common share $1.10 $.97
$4.14 $3.51 Dividends declared per common share $.37 $.30 $1.34
$1.16 Average common shares outstanding 1,615 1,659 1,634 1,677
Average diluted common shares outstanding 1,618
1,664 1,638 1,683
CONSOLIDATED ENDING BALANCE SHEET
December 31, December 31, (Dollars in Millions) 2018
2017
Assets Cash and due from banks $21,453 $19,505
Investment securities Held-to-maturity 46,050 44,362
Available-for-sale 66,115 68,137 Loans held for sale 2,056 3,554
Loans Commercial 102,444 97,561 Commercial real estate 39,539
40,463 Residential mortgages 65,034 59,783 Credit card 23,363
22,180 Other retail 56,430 57,324 Covered loans --
3,121 Total loans 286,810 280,432 Less allowance for loan
losses (3,973 ) (3,925 ) Net loans 282,837 276,507 Premises
and equipment 2,457 2,432 Goodwill 9,369 9,434 Other intangible
assets 3,392 3,228 Other assets 33,645 34,881
Total assets $467,374 $462,040
Liabilities and Shareholders' Equity Deposits
Noninterest-bearing $81,811 $87,557 Interest-bearing 263,664
259,658 Total deposits 345,475 347,215 Short-term
borrowings 14,139 16,651 Long-term debt 41,340 32,259 Other
liabilities 14,763 16,249 Total liabilities
415,717 412,374 Shareholders' equity Preferred stock 5,984 5,419
Common stock 21 21 Capital surplus 8,469 8,464 Retained earnings
59,065 54,142 Less treasury stock (20,188 ) (17,602 ) Accumulated
other comprehensive income (loss) (2,322 ) (1,404 ) Total
U.S. Bancorp shareholders' equity 51,029 49,040 Noncontrolling
interests 628 626 Total equity 51,657
49,666 Total liabilities and equity $467,374
$462,040
NON-GAAP
FINANCIAL MEASURES December
31, September 30, June 30, March 31, December 31, (Dollars in
Millions, Unaudited) 2018 2018 2018
2018 2017 Total equity $51,657 $51,007 $50,257 $49,812
$49,666 Preferred stock (5,984 ) (5,984 ) (5,419 ) (5,419 ) (5,419
) Noncontrolling interests (628 ) (632 ) (629 ) (625 ) (626 )
Goodwill (net of deferred tax liability) (1) (8,549 ) (8,682 )
(8,585 ) (8,609 ) (8,613 ) Intangible assets, other than mortgage
servicing rights (601 ) (627 ) (571 ) (608 )
(583 ) Tangible common equity (a) 35,895 35,082 35,053
34,551 34,425 Total assets 467,374 464,607 461,329 460,119
462,040 Goodwill (net of deferred tax liability) (1) (8,549 )
(8,682 ) (8,585 ) (8,609 ) (8,613 ) Intangible assets, other than
mortgage servicing rights (601 ) (627 ) (571 )
(608 ) (583 ) Tangible assets (b) 458,224 455,298 452,173
450,902 452,844
Risk-weighted assets, determined in
accordance with the Basel III standardized approach (c)
381,661
*
377,713 375,466 373,141 367,771 Tangible common equity (as
calculated above) 34,425 Adjustments (2) (550 )
Common equity tier 1 capital estimated for
the Basel III fully implemented standardized and advanced
approaches (d)
33,875
Risk-weighted assets, determined in
accordance with prescribed transitional standardized approach
regulatory requirements
367,771 Adjustments (3) 4,473
Risk-weighted assets estimated for the
Basel III fully implemented standardized approach (e)
372,244
Risk-weighted assets, determined in
accordance with prescribed transitional advanced approaches
regulatory requirements
287,211 Adjustments (4) 4,769
Risk-weighted assets estimated for the
Basel III fully implemented advanced approaches (f)
291,980
Ratios * Tangible common equity to tangible
assets (a)/(b) 7.8 % 7.7 % 7.8 % 7.7 % 7.6 % Tangible common equity
to risk-weighted assets (a)/(c) 9.4 9.3 9.3 9.3 9.4
Common equity tier 1 capital to
risk-weighted assets estimated for the Basel III fully implemented
standardized approach (d)/(e)
9.1
Common equity tier 1 capital to
risk-weighted assets estimated for the Basel III fully implemented
advanced approaches (d)/(f)
11.6 Three Months Ended December 31, September 30,
June 30, March 31, December 31, 2018 2018 2018
2018 2017 Net income applicable to U.S. Bancorp common
shareholders $1,777 $1,732 $1,678 $1,597 $1,611 Intangibles
amortization (net-of-tax) 32 32 32
31 28
Net income applicable to U.S. Bancorp
common shareholders, excluding intangibles amortization
1,809 1,764 1,710 1,628 1,639
Annualized net income applicable to U.S.
Bancorp common shareholders, excluding intangibles amortization
(g)
7,177 6,998 6,859 6,602 6,503 Average total equity 51,370
50,768 49,950 49,450 49,461 Less: Average preferred stock 5,984
5,714 5,419 5,419 5,419 Less: Average noncontrolling interests 630
630 628 625 627 Less: Average goodwill (net of deferred tax
liability) (1) 8,574 8,620 8,602 8,627 8,154 Less: Average
intangible assets, other than mortgage servicing rights 605
584 588 603 591
Average U.S. Bancorp common shareholders'
equity, excluding intangible assets (h)
35,577 35,220 34,713 34,176 34,670 Return on tangible common
equity (g)/(h) 20.2 % 19.9 % 19.8 %
19.3 % 18.8 %
* 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.
NON-GAAP FINANCIAL MEASURES
(Dollars in Millions, Unaudited)
Three Months Ended Year Ended December 31,
September 30, June 30, March 31,
December 31, December 31, December 31,
2018 2018 2018 2018 2017
2018 2017 Net interest income $3,303 $3,251 $3,197 $3,168
$3,175 $12,919 $12,380 Taxable-equivalent adjustment (1) 28
30 29 29 53
116 205 Net interest income, on
a taxable-equivalent basis 3,331 3,281 3,226 3,197 3,228 13,035
12,585 Net interest income, on a taxable-equivalent basis
(as calculated above) 3,331 3,281 3,226 3,197 3,228 13,035 12,585
Noninterest income 2,498 2,418 2,414 2,272 2,370 9,602 9,317 Less:
Securities gains (losses), net 5 10 10
5 10 30
57 Total net revenue, excluding net securities gains
(losses) (a) 5,824 5,689 5,630 5,464 5,588 22,607 21,845
Noninterest expense (b) 3,280 3,044 3,085 3,055 3,899 12,464 12,790
Less: Intangible amortization 41 41 40
39 44 161
175 Noninterest expense, excluding intangible
amortization (c) 3,239 3,003 3,045 3,016 3,855 12,303 12,615
Efficiency ratio (b)/(a) 56.3 % 53.5 % 54.8 % 55.9 % 69.8 % 55.1 %
58.5 % Tangible efficiency ratio (c)/(a) 55.6
52.8 54.1 55.2 69.0
54.4 57.7 (1)
Interest and rates are presented on a fully taxable-equivalent
basis based on a federal income tax rate of 21 percent for 2018 and
35 percent for 2017.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190116005079/en/
Investor contact: Jennifer Thompson, 612.303.0778Media contact:
Rebekah Fawcett, 612.303.9986
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