-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OzUfIrs5rtxLxOgjcI8CXTMhB7/k+JIKp/f3TSUpgMB1zNSvPzhDmGPtbfG1HRAh dJw9h6LtVSM+IO4NW1bIVg== 0001047469-98-001322.txt : 19980119 0001047469-98-001322.hdr.sgml : 19980119 ACCESSION NUMBER: 0001047469-98-001322 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980115 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980116 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: US BANCORP \DE\ CENTRAL INDEX KEY: 0000036104 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 410255900 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22363 FILM NUMBER: 98508242 BUSINESS ADDRESS: STREET 1: FIRST BANK PL STREET 2: 601 SECOND AVE S CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4302 BUSINESS PHONE: 6129731111 MAIL ADDRESS: STREET 1: 601 2ND AVENUE SOUTH-FIRST BANK PLACE STREET 2: 601 2ND AVENUE SOUTH-FIRST BANK PLACE CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4302 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BANK SYSTEM INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BANK STOCK CORP DATE OF NAME CHANGE: 19720317 8-K 1 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): JANUARY 15, 1998 ---------------- U.S. BANCORP ------------ (Exact name of registrant as specified in its charter) DELAWARE 1-6880 41-0255900 -------- ------ ---------- (State or other jurisdiction (Commission (I.R.S Employer of Incorporation) File Number) Identification No.) 601 SECOND AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55402 -------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 612-973-1111 ------------ NOT APPLICABLE -------------- (Former name or former address, if changed since last report) Item 5. OTHER EVENTS On January 15, 1998, U.S. Bancorp (the "Company") released its fourth quarter and full year 1997 earnings summary to the public. The Company's press release, dated January 15, 1998, announcing such earnings summary is included as Exhibit 99 hereto and is incorporated herein by reference. Item 7. FINANCIAL STATEMENTS AND EXHIBITS (c.) Exhibits (filed herewith) Exhibit 99 Press release of U.S. Bancorp dated January 15, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. U.S. BANCORP By /s/ David J. Parrin ------------------- David J. Parrin Senior Vice President & Controller DATE: January 16, 1998 ---------------- EX-99 2 EXHIBIT 99 News Release - ------------------------------------------------------------------------------- [LETTERHEAD] CONTACT: Wendy L. Raway John R. Danielson Judith T. Murphy Media Relations Investor Relations Investor Relations (612) 973-2429 (612) 973-2261 (612) 973-2264 U.S. BANCORP REPORTS RECORD OPERATING EARNINGS FOR 4TH QUARTER AND FULL YEAR 1997
- --------------------------------------------------------------------------------------------------------------------------- 4Q 4Q PERCENT FULL YEAR FULL YEAR PERCENT EARNINGS SUMMARY 1997 1996 CHANGE 1997 1996 CHANGE - --------------------------------------------------------------------------------------------------------------------------- ($ in millions, except per-share data) Before nonrecurring items*: Operating earnings $335.5 $291.8 15.0 $1,255.2 $1,142.1 9.9 Operating earnings to common 334.1 287.4 16.2 1,244.6 1,123.7 10.8 Earnings per common share (diluted) 1.34 1.15 16.5 5.03 4.42 13.8 Net income 288.9 292.1 (1.1) 838.5 1,218.7 (31.2) Earnings per common share (diluted) 1.16 1.15 0.9 3.34 4.72 (29.2) Dividends paid per common share 0.4650 0.4125 12.7 1.8600 1.6500 12.7 Book value per common share (period-end) 23.88 22.82 4.6 Return on average common equity** (%) 23.3 20.1 22.0 19.8 Return on average assets** (%) 1.91 1.70 1.83 1.69 Net interest margin (%) 4.99 5.09 5.04 5.04 Efficiency ratio** (%) 47.5 51.6 48.9 52.2
* Net nonrecurring items totaled $(71.4) million, or $(46.6) million, after-tax, in 4Q97 and $0.5 million, or $0.3 million, after tax, in 4Q96. Net nonrecurring items totaled $(593.6) million, or $(416.7) million, after tax, full year 1997 and $145.1 million, or $76.6 million, after tax, full year 1996. ** before nonrecurring items - -------------------------------------------------------------------------------- MINNEAPOLIS, January 15, 1998 -- U.S. Bancorp (NYSE: USB) today reported record operating earnings of $335.5 million, or $1.34 per diluted share, for the fourth quarter of 1997, compared with $291.8 million, or $1.15 per diluted share, in the fourth quarter of 1996. Return on average assets and return on average common equity, excluding nonrecurring items, were 1.91 percent and 23.3 percent, respectively, in the fourth quarter of 1997, compared with returns, excluding nonrecurring items, of 1.70 percent and 20.1 percent in the fourth quarter of 1996. Page 2 U.S. Bancorp, formerly known as First Bank System, Inc., (the "Company") is the organization created by the acquisition of U.S. Bancorp ("USBC") of Portland, Oregon by the Company. The acquisition was completed on August 1, 1997, as a pooling-of-interests, and prior periods have been restated. Including nonrecurring items related to the acquisition, the Company recorded net income for the fourth quarter of 1997 of $288.9 million, or $1.16 per diluted share, compared to net income of $292.1 million, or $1.15 per diluted share, in the fourth quarter of 1996. Operating earnings for full year 1997 were $1,255.2 million, or $5.03 per diluted share, compared to $1,142.1 million, or $4.42 per diluted share, for full year 1996. The positive year-over-year results were driven by growth in fee income and lower noninterest expense. Noninterest income, before nonrecurring items, increased by $170.5 million, or 11.9 percent. Excluding the reduction in fees related to the 1997 corporate card securitization, noninterest income, before nonrecurring items, increased by $187.0 million, or 13.1 percent. Full year 1997 noninterest expense, before nonrecurring items, was lower than 1996 by $31.1 million, or 1.3 percent. Including nonrecurring items, the Company recorded net income for full year 1997 of $838.5 million, or $3.34 per diluted share, compared to net income of $1,218.7 million, or $4.72 per diluted share, in 1996. U.S. Bancorp's President and Chief Executive Officer, John F. Grundhofer, said, "Our fourth quarter and full year results as the new U.S. Bancorp reflect our success in achieving our goals of meeting customers' needs and creating value for our shareholders. Strong revenue growth, coupled with effective cost management and prudent capital allocation, have led to operating returns that are among the best in our industry. Our employees experienced and embraced tremendous change during 1997, as we acquired the former U.S. Bancorp of Portland, Oregon, began the integration process and, most recently, announced the acquisition of Piper Jaffray Companies, Inc., a Minneapolis-based securities firm. Our strong performance sets high expectations for 1998 and beyond -- expectations that we are committed to achieve." Page 3 During the fourth quarter, senior management and employees continued to focus on the goal of successfully completing the integration of the former FBS and former USBC into the new U.S. Bancorp. The credit card system conversion was completed in October, 1997. Most of the remaining systems conversions are scheduled for the first and second quarters of 1998. The planned cost take-outs of $340 million, or 28 percent of the former USBC's expense base, are expected to be substantially achieved on a run-rate basis by the third quarter of 1998. Earnings in the fourth quarter of 1997 included nonrecurring charges of $71.4 million. The merger-related expenses incurred included $45.6 million of conversion expense and $25.8 million of other merger-related charges. Approximately $125.0 million ($79.0 million after-tax) of additional merger-related expenses are expected to be incurred over the next three quarters. The strong operating earnings for the fourth quarter reflected growth in both net interest income and noninterest income and a decrease in noninterest expense from the fourth quarter of 1996. The growth in net interest income was supported by an increase in average loans, excluding residential mortgage loans, of $3.0 billion, or 6.3 percent. Noninterest income, before nonrecurring items, for the quarter increased $60.2 million, or 16.7 percent, from the fourth quarter of 1996, while noninterest expense, before nonrecurring items, declined by $14.1 million, or 2.4 percent. The combination of growing revenues and declining expense led to an efficiency ratio (ratio of expenses to revenues), before nonrecurring items, of 47.5 percent in the fourth quarter of 1997, compared with 51.6 percent in the fourth quarter of 1996. Net charge-offs were .75 percent of average loans in the fourth quarter of 1997, compared with .76 percent, excluding merger-related charge-offs, in the third quarter of 1997 and .54 percent in same period of last year. Consumer loans (excluding first mortgage loans) 30 days or more past due were 2.36 percent of loans outstanding in the fourth quarter of 1997, above the 2.17 percent in the third quarter of 1997 and 2.28 percent in the same period of last year. The ratio of allowance for credit losses to nonperforming loans continued to indicate strong reserve coverage of 340 percent at December 31, 1997. Page 4 The Company's quarterly and full year earnings per share reflect the adoption of the Statement of Financial Accounting Standards No. 128, which replaces the method previously used to compute earnings per share with basic and diluted earnings per share. All prior period earnings per share data have been restated to conform to the provisions of this statement. The reported operating earnings per share for the fourth quarter of 1997 did not change under the new methodology, while the full year 1997 diluted earnings per share increased by three cents. On December 15, 1997, U.S. Bancorp announced the acquisition of Piper Jaffray Companies Inc. (NYSE: PJC), a full service investment banking and securities brokerage company, in a cash transaction for $730 million or $37.25 per Piper Jaffray common share. The acquisition will allow U.S. Bancorp to offer investment banking and institutional and retail brokerage services through a new subsidiary which will be known as U.S. Bancorp Piper Jaffray Inc. The acquisition, which is subject to approval by Piper Jaffray shareholders and regulators, is expected to close in the second quarter of 1998. On December 12, 1997, U.S. Bancorp completed the acquisition of Zappco, Inc., a bank holding company headquartered in St. Cloud, Minnesota, with six banking locations and total assets of $360 million. Page 5
- --------------------------------------------------------------------------------------------------------------------------- INCOME STATEMENT HIGHLIGHTS - --------------------------------------------------------------------------------------------------------------------------- (Taxable-equivalent basis, $ in millions, except per-share data) 4Q 4Q PERCENT FULL YEAR FULL YEAR PERCENT 1997 1996 CHANGE 1997 1996 CHANGE ------------------------------------------------------------------------------------ Net interest income $784.7 $778.1 0.8 $3,106.0 $3,034.7 2.3 Provision for credit losses* 90.0 75.5 19.2 365.3 271.2 34.7 Noninterest income* 420.5 360.3 16.7 1,602.2 1,431.7 11.9 Noninterest expense* 572.8 586.9 (2.4) 2,300.7 2,331.8 (1.3) --------------------- ----------------------- Income before taxes and nonrecurring items 542.4 476.0 13.9 2,042.2 1,863.4 9.6 Taxable-equivalent adjustment 13.7 15.9 (13.8) 57.9 64.1 (9.7) Income taxes* 193.2 168.3 14.8 729.1 657.2 10.9 --------------------- ----------------------- Income before nonrecurring items 335.5 291.8 15.0 1,255.2 1,142.1 9.9 Net nonrecurring items (after-tax) (46.6) 0.3 nm (416.7) 76.6 nm --------------------- ----------------------- Net income $288.9 $292.1 (1.1) $838.5 $1,218.7 (31.2) --------------------- ----------------------- --------------------- ----------------------- Net income to common $287.5 $287.7 (0.1) $827.9 $1,200.3 (31.0) --------------------- ----------------------- --------------------- ----------------------- Per diluted common share:** Earnings, before nonrecurring items $1.34 $1.15 16.5 $5.03 $4.42 13.8 --------------------- ----------------------- --------------------- ----------------------- Earnings on a cash basis, before nonrecurring items*** $1.47 $1.26 16.7 $5.48 $4.82 13.7 --------------------- ----------------------- --------------------- ----------------------- Net income $1.16 $1.15 0.9 $3.34 $4.72 (29.2) --------------------- ----------------------- --------------------- ----------------------- Earnings on a cash basis*** $1.28 $1.26 1.6 $3.80 $5.23 (27.3) --------------------- ----------------------- --------------------- -----------------------
* before effect of nonrecurring items ** nonrecurring items reduced earnings by $0.18 in 4Q97 and $1.69 full year 1997 and added $0.30 full year 1996; nonrecurring items reduced cash basis earnings by $0.19 in 4Q97 and $1.68 full year 1997 and added $0.41 full year 1996 *** calculated by adding amortization of goodwill and other intangible assets to net income - ------------------------------------------------------------------------------- NET INTEREST INCOME Fourth quarter net interest income on a taxable-equivalent basis was $784.7 million, which was higher by $6.6 million, or .8 percent, than the fourth quarter of 1996. The increase was primarily the result of an increase in earning assets of $1.5 billion over the fourth quarter of 1996, driven by core commercial and consumer loan production, partially offset by reductions in investment securities and residential mortgages. Average loans were up $2.3 billion, or 4.4 percent, from the fourth quarter of 1996. Excluding residential mortgage loans and the effect of the $420 million first quarter corporate card securitization, average loans for the fourth quarter were higher by $3.4 billion, or 7.2 percent, than fourth quarter of 1996, reflecting growth in the commercial, home Page 6 equity and second mortgages and credit card portfolios. Other consumer loans were lower on average than the fourth quarter of 1996, primarily due to reductions in installment loans in the northwest region. Average securities for the fourth quarter were lower by $608 million than the fourth quarter of 1996, primarily reflecting both maturities and sales of securities, partially offset by purchases of mortgage-backed and state and political securities during the fourth quarter of 1997. The net interest margin in the fourth quarter of 1997 of 4.99 percent was below the 1996 margin of 5.09 percent and the third quarter margin of 5.03 percent, primarily due to growth in Payment Systems' noninterest-bearing assets, including corporate and purchasing card loan balances. - ------------------------------------------------------------------------------- AVERAGE LOANS - ------------------------------------------------------------------------------- ($ in millions) 4Q 4Q PERCENT 1997 1996 CHANGE --------------------------------------- Commercial* $23,276 $21,420 8.7 Commercial real estate 10,407 9,911 5.0 ---------------------- Total commercial 33,683 31,331 7.5 Home equity and second mortgage 5,335 4,682 13.9 Credit card 3,964 3,607 9.9 Other 6,660 7,059 (5.7) ---------------------- Total consumer, excl. residential 15,959 15,348 4.0 Residential mortgage 4,744 5,429 (12.6) ---------------------- Total loans $54,386 $52,108 4.4 ---------------------- ---------------------- Total loans, excluding residential mortgages $49,642 $46,679 6.3 ---------------------- ---------------------- * $420 million of corporate charge card receivables were securitized and removed from the loan portfolio during the 1Q 1997. Excluding the securitization, commercial loans would have increased by $2.3 billion, or 10.6%, and, excluding residential mortgage loans, total loans would have increased by $3.4 billion, or 7.2%. - ------------------------------------------------------------------------------- Page 7
- ------------------------------------------------------------------------------------------------------------------------ NONINTEREST INCOME - ------------------------------------------------------------------------------------------------------------------------ ($ in millions) 4Q 4Q PERCENT FULL YEAR FULL YEAR PERCENT 1997 1996 CHANGE 1997 1996 CHANGE --------------------------------------------------------------------------------- Credit card fee revenue* $123.1 $91.3 34.8 $418.8 $351.5 19.1 Service charges on deposit accounts 101.2 97.4 3.9 396.2 377.2 5.0 Trust and investment management fees 88.8 77.3 14.9 348.0 302.3 15.1 Investment products fees and commissions 16.7 14.8 12.8 65.7 59.7 10.1 Other 90.7 79.5 14.1 373.5 341.0 9.5 --------------------- ----------------------- Subtotal 420.5 360.3 16.7 1,602.2 1,431.7 11.9 Termination fee, net of transaction costs -- -- -- 190.0 State income tax refund -- -- -- 65.0 Gain on sale of mortgage banking operations -- -- -- 45.8 Gain on sale of operations and loans -- -- 9.4 25.6 Net securities gains -- 0.5 3.6 20.8 Other -- -- -- 4.2 --------------------- ----------------------- Nonrecurring gains -- 0.5 13.0 351.4 --------------------- ----------------------- Total noninterest income $420.5 $360.8 $1,615.2 $1,783.1 --------------------- ----------------------- --------------------- -----------------------
* Excluding the effect of the 1Q 1997 corporate card securitization, credit card fee income would have increased by $36.6 million, or 40.1%, over 4Q 1996 and $83.8 million, or 23.8% over full year 1996. - ------------------------------------------------------------------------------- NONINTEREST INCOME Fourth quarter noninterest income, before nonrecurring items, was $420.5 million, an increase of $60.2 million, or 16.7 percent, from the same quarter of 1996. The increase for the quarter resulted from growth in all categories of fee revenue. Credit card fee revenue increased by $31.8 million, or 34.8 percent, as a result of higher volumes for purchasing and corporate cards and the Northwest Airlines WorldPerks credit card, partially offset by the effect of the first quarter corporate card securitization. Fourth quarter credit card fees were also enhanced by the renewal of the Northwest Airlines WorldPerks program, which extended the program for five years. The terms of the new agreement accounted for approximately $6.0 million of the increase in credit card fees over the fourth quarter of 1996, offset by a similar decrease in net interest income. Trust and investment management fees were up over the fourth quarter of 1996 by $11.5 million, or 14.9 percent, due to growth in the corporate, institutional and personal trust businesses. Investment products fees and Page 8 commissions, service charges on deposit accounts and other noninterest income were higher by 12.8 percent, 3.9 percent and 14.1 percent, respectively, than the fourth quarter of 1996.
- -------------------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE - -------------------------------------------------------------------------------------------------------------------------- ($ in millions) 4Q 4Q PERCENT FULL YEAR FULL YEAR PERCENT 1997 1996 CHANGE 1997 1996 CHANGE ------------------------------------------------------------------------------------ Salaries* $239.6 $240.0 (0.2) $969.3 $955.3 1.5 Employee benefits* 49.9 52.2 (4.4) 217.4 219.4 (0.9) Net occupancy 45.7 45.5 0.4 182.0 179.4 1.4 Furniture and equipment 38.0 43.8 (13.2) 165.4 175.2 (5.6) Goodwill and intangibles* 31.0 27.4 13.1 113.3 100.6 12.6 Professional services* 22.8 17.4 31.0 70.3 58.0 21.2 Other personnel costs 19.5 22.3 (12.6) 66.6 83.4 (20.1) Telephone 14.9 15.5 (3.9) 59.7 60.2 (0.8) Advertising and marketing 14.4 14.9 (3.4) 56.6 61.2 (7.5) FDIC insurance 2.1 0.5 nm 9.0 11.9 (24.4) Other* 94.9 107.4 (11.6) 391.1 427.2 (8.5) ---------------------- ------------------------ Subtotal 572.8 586.9 (2.4) 2,300.7 2,331.8 (1.3) Merger-related 71.4 -- 511.6 49.5 SAIF special assessment -- -- -- 61.3 Branch distribution resizing -- -- -- 38.6 Goodwill and intangibles -- -- -- 29.5 Salaries and employee benefits -- -- -- 10.1 Other -- -- -- 17.3 ---------------------- ------------------------ Nonrecurring charges 71.4 -- 511.6 206.3 ---------------------- ------------------------ Total noninterest expense $644.2 $586.9 $2,812.3 $2,538.1 ---------------------- ------------------------ ---------------------- ------------------------
* before effect of nonrecurring items in 1996 - ------------------------------------------------------------------------------- NONINTEREST EXPENSE Fourth quarter noninterest expense, before nonrecurring items, totaled $572.8 million, a decrease of $14.1 million, or 2.4 percent, from the fourth quarter of 1996. Expense reductions in a number of categories reflected benefits of the merger, partially offset by incremental expense related to revenue increases. The reduction in other personnel reflected lower contract labor expense associated with 1996 technology projects that are now complete. Offsetting the favorable variance Page 9 in contract labor was an increase in professional services, which were $5.4 million higher than the fourth quarter of 1996, primarily due to several 1997 technology initiatives which involve third party consulting arrangements. Goodwill and other intangible expense was higher than the fourth quarter of 1996 by $3.6 million, or 13.1 percent, as a result of several small bank and portfolio purchases during 1997. The $71.4 million of nonrecurring expenses incurred in the fourth quarter of 1997 were merger-related, including $45.6 million of conversion expense, $11.4 million of occupancy/equipment write-downs and all other merger-related expenses of $14.4 million. Additional merger-related charges of approximately $125.0 million are expected to be incurred over the next three quarters.
- ---------------------------------------------------------------------------------------------------------- ALLOWANCE FOR CREDIT LOSSES - ---------------------------------------------------------------------------------------------------------- ($ in millions) 4Q 3Q 2Q 1Q 4Q 1997 1997 1997 1997 1996 --------------------------------------------------------------------- Balance, beginning of period $1,019.9 $999.4 $993.4 $992.5 $987.4 Net charge-offs (recoveries)* Commercial 14.7 83.8 25.2 9.2 8.1 Consumer 88.6 80.7 72.8 74.7 63.1 -------------------------------------------------------------------- Total 103.3 164.5 98.0 83.9 71.2 Provision for credit losses 90.0 90.0 101.1 84.2 75.5 Merger-related provision for credit losses -- 95.0 -- -- -- Acquisitions and other additions 2.1 -- 2.9 0.6 0.8 -------------------------------------------------------------------- Balance, end of period $1,008.7 $1,019.9 $999.4 $993.4 $992.5 -------------------------------------------------------------------- -------------------------------------------------------------------- Net charge-offs to average loans (%) 0.75 1.22 0.73 0.65 0.54 Allowance for credit losses to period-end loans (%) 1.84 1.88 1.85 1.88 1.90
* 3Q 1997 includes merger-related commercial charge-offs of $55.3 million and consumer charge-offs of $7.0 million - ------------------------------------------------------------------------------- CREDIT QUALITY Total net charge-offs in the fourth quarter were $103.3 million. Consumer loan net charge-offs of $88.6 million were higher than the third quarter by $7.9 million, or 9.8 percent. Excluding the third quarter merger-related charge-offs, total consumer charge-offs were $14.9 million, or 20.2 Page 10 percent, higher in the fourth quarter. A portion of the increase was due to higher charge-offs in the northwest region's portfolio of installment loans originated in 1995 and 1996. Credit standards on the portfolio's new originations were tightened in 1997. The higher level of charge-offs also reflected an increase in bankruptcies for the quarter and growth in the credit card loan portfolio. Credit card loan net charge-offs of 3.87 percent of loans outstanding for the fourth quarter of 1997 were lower than the fourth quarter of 1996 ratio of 4.00 percent. Consumer loans (excluding first mortgage loans) 30 days or more past due were 2.36 percent of the portfolio at December 31, 1997, compared with 2.17 percent in the third quarter and 2.28 percent in the fourth quarter of 1996. The increase can be attributed to the northwest region's portfolio of installment loans and normal seasonality. Commercial loan net charge-offs were $14.7 million for the fourth quarter, compared with net charge-offs, excluding merger-related charge-offs, of $28.5 million in the third quarter of 1997 and $8.1 million in the fourth quarter of 1996.
- ---------------------------------------------------------------------------------------------------------- CONSUMER CREDIT - ---------------------------------------------------------------------------------------------------------- (Percent) DEC 31 SEP 30 JUN 30 MAR 31 DEC 31 1997 1997 1997 1997 1996 ------------------------------------------------------------------ Net Charge-off Ratios:* Credit cards 3.87 4.23 4.03 4.35 4.00 Other consumer 1.59 1.28 1.21 1.22 0.83 Subtotal, excl. first mortgage 2.16 1.98 1.85 1.93 1.58 First mortgage 0.16 0.13 0.05 0.09 0.16 Total consumer 1.70 1.54 1.40 1.46 1.21 Delinquency Ratios (including NPLs): Total consumer, excl. first mortgage Past due 30+ days 2.36 2.17 2.26 2.30 2.28 Past due 90+ days 0.49 0.43 0.42 0.48 0.48 Total consumer Past due 30+ days 2.76 2.57 2.47 2.67 2.55 Past due 90+ days 0.70 0.66 0.67 0.69 0.70
* annualized and calculated on average loan balances - ------------------------------------------------------------------------------- Page 11 The allowance for credit losses was $1,008.7 million at December 31, 1997, up from $992.5 million at December 31, 1996. The ratio of allowance for credit losses to nonperforming loans was 340 percent at December 31, 1997, compared with 343 percent at September 30, 1997, and 369 percent at December 31, 1996.
ASSET QUALITY ($ in millions) DEC 31 SEP 30 JUN 30 MAR 31 DEC 31 1997 1997 1997 1997 1996 ------------------------------------------------------------------ Nonperforming loans Commercial $179.1 $176.2 $199.4 $194.8 $143.7 Commercial real estate 60.3 62.4 59.4 63.3 63.2 Consumer 57.7 58.5 63.2 64.5 62.4 ------------------------------------------------------------------ Total 297.1 297.1 322.0 322.6 269.3 Other real estate 30.1 29.0 22.7 30.3 43.2 Other nonperforming assets 12.3 12.1 8.1 9.8 7.5 ------------------------------------------------------------------ Total nonperforming assets* $339.5 $338.2 $352.8 $362.7 $320.0 ------------------------------------------------------------------ ------------------------------------------------------------------ Accruing loans 90 days past due $93.8 $79.5 $86.0 $85.0 $90.6 ------------------------------------------------------------------ ------------------------------------------------------------------ Allowance to nonperforming loans (%) 340 343 310 308 369 Allowance to nonperforming assets (%) 297 302 283 274 310 Nonperforming assets to loans plus ORE (%) 0.62 0.62 0.65 0.69 0.61
* does not include accruing loans 90 days past due Nonperforming assets at December 31, 1997, totaled $339.5 million, higher by $1.3 million, or 0.4 percent, than September 30, 1997. The ratio of nonperforming assets to loans and other real estate was .62 percent at December 31, 1997, equal to the ratio at September 30, 1997. Page 12
CAPITAL POSITION (Percent) DEC 31 SEP 30 JUN 30 MAR 31 DEC 31 1997 1997 1997 1997 1996 ------------------------------------------------ Common equity to assets 8.3 8.0 8.0 8.1 8.0 Total shareholders' equity to assets 8.3 8.2 8.2 8.3 8.3 Tangible common equity to assets* 7.0 6.7 6.7 6.8 6.7 Tier 1 capital ratio 7.4 7.2 7.6 7.7 7.6 Total risk-based capital ratio 11.6 11.4 11.9 12.0 11.9 Leverage ratio 7.3 7.3 7.5 7.6 7.5
* calculated by deducting goodwill from common equity and assets CAPITAL At December 31, 1997, the common-equity-to-assets ratio was 8.3 percent, compared with a ratio of 8.0 percent at December 31, 1996, and the regional bank peer group average of 8.0 percent at September 30, 1997. Minneapolis-based U.S. Bancorp ("USB"), is the result of the acquisition by First Bank System, Inc. of Minneapolis of U.S. Bancorp, formerly headquartered in Portland, Oregon. With over $70 billion in assets, USB is the 15th largest bank holding company in the nation operating almost 1,000 banking offices in 17 states: Minnesota, Oregon, Washington, Colorado, California, Idaho, Nebraska, North Dakota, Nevada, South Dakota, Montana, Iowa, Illinois, Utah, Wisconsin, Kansas, and Wyoming. The company provides comprehensive banking, trust, investment and payment systems products and services to consumers, businesses and institutions. It operates a network of 4,500 ATMs throughout the U.S. and 24 hour, seven days a week telephone customer service centers. The company is the largest provider of Visa corporate and purchasing cards in the world and one of the largest providers of corporate trust services in the U.S. Page 13 FORWARD-LOOKING STATEMENTS This press release includes forward-looking statements that involve inherent risks and uncertainties. U.S. Bancorp cautions readers that a number of important factors could cause actual results to differ materially from those in the forward-looking statements. These factors include economic conditions and competition in the geographic and business areas in which the Company operates, inflation, fluctuations in interest rates, legislation and governmental regulation and the progress of integrating former U.S. Bancorp. ###
CONSOLIDATED STATEMENT OF INCOME Three Months Ended Year Ended ------------------------------------------------------- December 31 December 31 December 31 December 31 (In Millions, Except Per-Share Data) 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------------- INTEREST INCOME Loans $1,222.6 $1,167.4 $4,784.5 $4,537.7 Securities: Taxable 90.5 101.1 371.5 420.5 Exempt from federal income taxes 16.6 17.5 68.1 71.0 Other interest income 18.8 17.2 69.5 85.2 ----------------------------------------------------- Total interest income 1,348.5 1,303.2 5,293.6 5,114.4 INTEREST EXPENSE Deposits 359.1 362.6 1,436.8 1,441.3 Federal funds purchased and repurchase agreements 42.4 47.7 183.0 197.9 Other short-term funds borrowed 19.4 48.8 117.6 198.0 Long-term debt 144.4 79.1 459.0 303.8 Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely the junior subordinated debentures of the parent company 12.2 2.8 49.1 2.8 ------------------------------------------------------ Total interest expense 577.5 541.0 2,245.5 2,143.8 ------------------------------------------------------ Net interest income 771.0 762.2 3,048.1 2,970.6 Provision for credit losses 90.0 75.5 460.3 271.2 ------------------------------------------------------- Net interest income after provision for credit losses 681.0 686.7 2,587.8 2,699.4 NONINTEREST INCOME Credit card fee revenue 123.1 91.3 418.8 351.5 Service charges on deposit accounts 101.2 97.4 396.2 377.2 Trust and investment management fees 88.8 77.3 348.0 302.3 Investment products fees and commissions 16.7 14.8 65.7 59.7 Securities gains -- .5 3.6 20.8 Termination fee -- -- -- 190.0 State income tax refund -- -- -- 65.0 Gain on sale of mortgage banking operations, branches and other assets -- -- 9.4 71.4 Other 90.7 79.5 373.5 345.2 ------------------------------------------------------ Total noninterest income 420.5 360.8 1,615.2 1,783.1 NONINTEREST EXPENSE Salaries 239.6 240.0 969.3 964.5 Employee benefits 49.9 52.2 217.4 220.3 Net occupancy 45.7 45.5 182.0 179.4 Furniture and equipment 38.0 43.8 165.4 175.2 Goodwill and other intangible assets 31.0 27.4 113.3 130.1 Professional services 22.8 17.4 70.3 58.0 Other personnel costs 19.5 22.3 66.6 83.4 Telephone 14.9 15.5 59.7 60.2 Advertising and marketing 14.4 14.9 56.6 61.2 FDIC insurance 2.1 .5 9.0 11.9 Merger, integration, and resizing 71.4 -- 511.6 88.1 SAIF special assessment -- -- -- 61.3 Other 94.9 107.4 391.1 444.5 ------------------------------------------------------ Total noninterest expense 644.2 586.9 2,812.3 2,538.1 ------------------------------------------------------ Income before income taxes 457.3 460.6 1,390.7 1,944.4 Applicable income taxes 168.4 168.5 552.2 725.7 ------------------------------------------------------ Net income $288.9 $292.1 $838.5 $1,218.7 ------------------------------------------------------ ------------------------------------------------------ Net income applicable to common equity $287.5 $287.7 $827.9 $1,200.3 ------------------------------------------------------ ------------------------------------------------------ EARNINGS PER COMMON SHARE Average shares outstanding 244,921,376 246,576,460 244,516,964 249,726,158 Net income $1.17 $1.17 $3.39 $4.81 -------------------------------------------------------- -------------------------------------------------------- Diluted average shares outstanding 248,618,088 251,763,516 247,637,912 255,390,668 Diluted net income $1.16 $1.15 $3.34 $4.72 -------------------------------------------------------- --------------------------------------------------------
U.S. Bancorp CONSOLIDATED BALANCE SHEET
December 31 December 31 (In Millions) 1997 1996 - ------------------------------------------------------------------------------------------ ASSETS Cash and due from banks $4,739 $4,813 Federal funds sold 62 95 Securities purchased under agreements to resell 630 803 Trading account securities 195 231 Available-for-sale securities 6,885 6,473 Held-to-maturity securities (fair value: 1996 - $811) -- 797 Loans 54,708 52,355 Less allowance for credit losses 1,009 993 ------------------------ Net loans 53,699 51,362 Bank premises and equipment 860 1,018 Interest receivable 405 377 Customers' liability on acceptances 535 497 Other assets 3,285 3,283 ------------------------ Total assets $71,295 $69,749 ------------------------ ------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing $14,544 $14,344 Interest-bearing 34,483 35,012 ------------------------ Total deposits 49,027 49,356 Federal funds purchased 800 1,672 Securities sold under agreements to repurchase 1,518 1,729 Other short-term funds borrowed 974 3,191 Long-term debt 10,247 5,369 Company-obligated mandatorily redeemable preferred securities of subsidiar trusts holding solely the junior subordinated debentures of the parent company 600 600 Acceptances outstanding 535 497 Other liabilities 1,704 1,572 ------------------------ Total liabilities 65,405 63,986 Shareholders' equity: Preferred stock -- 150 Common stock 308 316 Capital surplus 1,878 1,929 Retained earnings 3,645 3,809 Unrealized gain on securities, net of tax 59 5 Treasury stock -- (446) ------------------------ Total shareholders' equity 5,890 5,763 ------------------------ Total liabilities and shareholders' equity $71,295 $69,749 ------------------------ ------------------------
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