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): July 17, 2013
U.S. BANCORP
(Exact name of registrant as specified in its charter)
1-6880
(Commission File Number)
DELAWARE | 41-0255900 | |
(State or other jurisdiction | (I.R.S. Employer Identification | |
of incorporation) | Number) |
800 Nicollet Mall
Minneapolis, Minnesota 55402
(Address of principal executive offices and zip code)
(651) 466-3000
(Registrants telephone number, including area code)
(not applicable)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 Under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 17, 2013, U.S. Bancorp (the Company) issued a press release reporting quarter ended June 30, 2013 results, and posted on its website its 2Q13 Earnings Conference Call Presentation, which contains certain additional historical and forward-looking information relating to the Company. The press release is included as Exhibit 99.1 hereto and is incorporated herein by reference. The information included in the press release is considered to be furnished under the Securities Exchange Act of 1934. The 2Q13 Earnings Conference Call Presentation is included as Exhibit 99.2 hereto and is incorporated herein by reference. The information included in the 2Q13 Earnings Conference Call Presentation is considered to be furnished under the Securities Exchange Act of 1934. The press release and 2Q13 Earnings Conference Call Presentation contain forward-looking statements regarding the Company and each includes a cautionary statement identifying important factors that could cause actual results to differ materially from those anticipated.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 | Press Release issued by U.S. Bancorp on July 17, 2013, deemed furnished under the Securities Exchange Act of 1934. |
99.2 | 2Q13 Earnings Conference Call Presentation, deemed furnished under the Securities Exchange Act of 1934. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
U.S. BANCORP |
By /s/ Craig E. Gifford |
Craig E. Gifford |
Executive Vice President and Controller |
DATE: July 17, 2013
Exhibit 99.1
News Release | ||||
Contacts: | ||||
Thomas Joyce | Judith T. Murphy | |||
Media | Investors/Analysts | |||
(612) 303-3167 | (612) 303-0783 |
U.S. BANCORP REPORTS RECORD EARNINGS FOR THE SECOND QUARTER OF 2013
MINNEAPOLIS, July 17, 2013 U.S. Bancorp (NYSE: USB) today reported net income of $1,484 million for the second quarter of 2013, or $.76 per diluted common share. Earnings for the second quarter of 2013 were driven by a year-over-year reduction in noninterest expense and a lower provision for credit losses. Highlights for the second quarter of 2013 included:
| Industry-leading performance ratios, including: |
| Return on average assets of 1.70 percent |
| Return on average common equity of 16.1 percent |
| Efficiency ratio of 51.7 percent |
| Strong new lending activity of $65.7 billion during the second quarter, including: |
| $37.6 billion of new and renewed commercial and commercial real estate commitments |
| $2.6 billion of lines related to new credit card accounts |
| $25.5 billion of mortgage and other retail loan originations |
| Growth in average total loans of 5.2 percent over the second quarter of 2012 (7.2 percent excluding covered loans) and 1.2 percent on a linked quarter basis (1.6 percent excluding covered loans) |
| Growth in average total commercial loans of 11.2 percent over the second quarter of 2012 and 2.2 percent over the first quarter of 2013 |
| Growth in average total commercial real estate loans of 3.7 percent over the second quarter of 2012 and 1.8 percent over the first quarter of 2013 |
| Growth in average commercial and commercial real estate commitments of 10.2 percent year-over-year and 2.2 percent over the prior quarter |
| Continued strong growth in average deposits of 7.0 percent over the second quarter of 2012 |
| Average noninterest-bearing deposits growth of 3.6 percent and average total savings deposits growth of 13.1 percent year-over-year |
| Growth in average total savings deposits of 2.1 percent over the linked quarter, while noninterest-bearing deposits remained relatively stable with an increase of .7 percent |
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 2
| Lower net charge-offs on both a linked quarter and year-over-year basis. Provision for credit losses was $30 million less than net charge-offs |
| Net charge-offs were $41 million lower than the first quarter of 2013 |
| Annualized net charge-offs to average total loans ratio declined to .70 percent |
| Allowance to period-end loans of 2.02 percent at June 30, 2013 |
| Nonperforming assets declined on both a linked quarter and year-over-year basis |
| Nonperforming assets (excluding covered assets) decreased 5.3 percent from the first quarter of 2013 |
| Allowance to nonperforming assets (excluding covered assets) was 231 percent at June 30, 2013, compared with 221 percent at March 31, 2013, and 210 percent at June 30, 2012 |
| Capital generation continues to reinforce capital position. Ratios at June 30, 2013 were: |
| Tier 1 capital ratio of 11.1 percent |
| Total risk based capital ratio of 13.3 percent |
| Tier 1 common equity to risk-weighted assets ratio of 9.2 percent |
| Tier 1 common equity ratio of approximately 8.3 percent using proposed rules for the Basel III standardized approach released June 2012 and 8.6 percent estimated using final rules released July 2013 |
| Returned 73 percent of second quarter earnings to shareholders through dividends and share buybacks |
| Repurchased 18 million shares of common stock during the second quarter |
| Annual dividend raised from $.78 to $.92, an 18 percent increase |
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 3
EARNINGS SUMMARY |
Table 1 | |||||||||||||||||||||||||||||||
($ in millions, except per-share data) |
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2Q 2013 |
1Q 2013 |
2Q 2012 |
Percent Change 2Q13 vs 1Q13 |
Percent Change 2Q13 vs 2Q12 |
YTD 2013 |
YTD 2012 |
Percent Change |
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Net income attributable to U.S. Bancorp |
$ | 1,484 | $ | 1,428 | $ | 1,415 | 3.9 | 4.9 | $ | 2,912 | $ | 2,753 | 5.8 | |||||||||||||||||||
Diluted earnings per common share |
$ | .76 | $ | .73 | $ | .71 | 4.1 | 7.0 | $ | 1.49 | $ | 1.38 | 8.0 | |||||||||||||||||||
Return on average assets (%) |
1.70 | 1.65 | 1.67 | 1.68 | 1.64 | |||||||||||||||||||||||||||
Return on average common equity (%) |
16.1 | 16.0 | 16.5 | 16.1 | 16.3 | |||||||||||||||||||||||||||
Net interest margin (%) |
3.43 | 3.48 | 3.58 | 3.46 | 3.59 | |||||||||||||||||||||||||||
Efficiency ratio (%) |
51.7 | 50.7 | 51.1 | 51.2 | 51.5 | |||||||||||||||||||||||||||
Tangible efficiency ratio (%) (a) |
50.6 | 49.6 | 49.8 | 50.1 | 50.1 | |||||||||||||||||||||||||||
Dividends declared per common share |
$ | .230 | $ | .195 | $ | .195 | 17.9 | 17.9 | $ | .425 | $ | .390 | 9.0 | |||||||||||||||||||
Book value per common share (period-end) |
$ | 18.94 | $ | 18.71 | $ | 17.45 | 1.2 | 8.5 |
(a) | Computed as noninterest expense divided by the sum of net interest income on a taxable-equivalent basis and noninterest income excluding net securities gains (losses) and intangible amortization. |
Net income attributable to U.S. Bancorp was $1,484 million for the second quarter of 2013, 4.9 percent higher than the $1,415 million for the second quarter of 2012, and 3.9 percent higher than the $1,428 million for the first quarter of 2013. Diluted earnings per common share of $.76 in the second quarter of 2013 were $.05 higher than the second quarter of 2012 and $.03 higher than the previous quarter. Return on average assets and return on average common equity were 1.70 percent and 16.1 percent, respectively, for the second quarter of 2013, compared with 1.67 percent and 16.5 percent, respectively, for the second quarter of 2012. The provision for credit losses was lower than net charge-offs by $30 million in the second quarter and first quarter of 2013 and $50 million lower in the second quarter of 2012.
U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis said, Our Company earned record net income of $1,484 million in the second quarter, or $.76 per diluted common share. In addition, we achieved profitability metrics that remain among the very best in our industry, including a return on average assets of 1.70 percent, return on average common equity of 16.1 percent and an efficiency ratio of 51.7 percent. I take great pride in our Companys ability to attain these record results, particularly given the current slow, albeit steady, growth we have seen in the markets we serve.
The second quarter of each year is one of our Companys strongest from a fee revenue growth perspective, and this year was no exception, as we experienced linked quarter growth in virtually all categories of fee income. We also experienced solid average loan and deposit growth year-over-year of 5.2
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 4
percent and 7.0 percent, respectively. Importantly, average total loans grew by 1.2 percent linked quarter, accelerating from the 1.0 percent linked quarter growth we experienced in the first quarter. Given early industry indicators, our linked quarter loan growth shows that we are continuing to gain market share. Average deposits increased by 1.0 percent over the first quarter - a rate fairly comparable to the growth in average loans. Commercial and commercial real estate utilization rates remain, however, fairly flat at approximately 25 percent.
Credit quality remains strong, as the ratio of net charge-offs to average total loans fell to .70 percent this quarter from .79 percent in the prior quarter. Nonperforming assets declined by over 5 percent and late stage delinquencies also improved. Our provision for credit losses was $30 million less than net charge-offs for the quarter, reflecting the improvement in the credit metrics and overall quality of the Companys loan portfolio.
We continue to generate significant capital each quarter. At June 30th, the Companys Tier 1 capital ratio was 11.1 percent, while the Tier 1 common equity ratio was 8.6 percent as estimated under the final Basel III rules released earlier this month. As anticipated, in June we announced an 18 percent increase in the dividend rate on our common stock, raising the rate to $.92 on an annualized basis. This higher dividend, combined with the repurchase of 18 million shares during the quarter, resulted in a 73 percent return of earnings to shareholders in-line with our goal of returning 60-80 percent of our earnings to shareholders each year. The Companys capital position remains strong and, importantly, has allowed us to return to a normal capital distribution mode.
Last Friday, I had the privilege of joining a small group of our employees on stage at the NYSE to ring The Closing Bell in celebration of the 150th anniversary of the signing of our national bank charter. I want to thank employees who traveled to New York City to represent their co-workers as we commemorated this milestone, and also want to take this opportunity to thank all of our 66,000 employees whose hard work and dedication have contributed to the success of our Company. We have a rich 150 year heritage upon which we will build a very strong future for the benefit of our customers, our employees, our communities and our shareholders.
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 5
INCOME STATEMENT HIGHLIGHTS |
Table 2 | |
(Taxable-equivalent basis, $ in millions, |
2Q 2013 |
1Q 2013 |
2Q 2012 |
Percent Change 2Q13 vs 1Q13 |
Percent Change 2Q13 vs 2Q12 |
YTD 2013 |
YTD 2012 |
Percent Change |
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Net interest income |
$ | 2,672 | $ | 2,709 | $ | 2,713 | (1.4 | ) | (1.5 | ) | $ | 5,381 | $ | 5,403 | (.4 | ) | ||||||||||||||||
Noninterest income |
2,276 | 2,165 | 2,355 | 5.1 | (3.4 | ) | 4,441 | 4,594 | (3.3 | ) | ||||||||||||||||||||||
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Total net revenue |
4,948 | 4,874 | 5,068 | 1.5 | (2.4 | ) | 9,822 | 9,997 | (1.8 | ) | ||||||||||||||||||||||
Noninterest expense |
2,557 | 2,470 | 2,601 | 3.5 | (1.7 | ) | 5,027 | 5,161 | (2.6 | ) | ||||||||||||||||||||||
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Income before provision and taxes |
2,391 | 2,404 | 2,467 | (.5 | ) | (3.1 | ) | 4,795 | 4,836 | (.8 | ) | |||||||||||||||||||||
Provision for credit losses |
362 | 403 | 470 | (10.2 | ) | (23.0 | ) | 765 | 951 | (19.6 | ) | |||||||||||||||||||||
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Income before taxes |
2,029 | 2,001 | 1,997 | 1.4 | 1.6 | 4,030 | 3,885 | 3.7 | ||||||||||||||||||||||||
Taxable-equivalent adjustment |
56 | 56 | 55 | | 1.8 | 112 | 111 | .9 | ||||||||||||||||||||||||
Applicable income taxes |
529 | 558 | 564 | (5.2 | ) | (6.2 | ) | 1,087 | 1,091 | (.4 | ) | |||||||||||||||||||||
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Net income |
1,444 | 1,387 | 1,378 | 4.1 | 4.8 | 2,831 | 2,683 | 5.5 | ||||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
40 | 41 | 37 | (2.4 | ) | 8.1 | 81 | 70 | 15.7 | |||||||||||||||||||||||
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Net income attributable to U.S. Bancorp |
$ | 1,484 | $ | 1,428 | $ | 1,415 | 3.9 | 4.9 | $ | 2,912 | $ | 2,753 | 5.8 | |||||||||||||||||||
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Net income applicable to U.S. Bancorp common shareholders |
$ | 1,405 | $ | 1,358 | $ | 1,345 | 3.5 | 4.5 | $ | 2,763 | $ | 2,630 | 5.1 | |||||||||||||||||||
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Diluted earnings per common share |
$ | .76 | $ | .73 | $ | .71 | 4.1 | 7.0 | $ | 1.49 | $ | 1.38 | 8.0 | |||||||||||||||||||
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Net income attributable to U.S. Bancorp for the second quarter of 2013 was $69 million (4.9 percent) higher than the second quarter of 2012, and $56 million (3.9 percent) higher than the first quarter of 2013. The increase in net income year-over-year was principally due to a reduction in noninterest expense and a lower provision for credit losses. On a linked quarter basis the increase in net income was due to growth in noninterest income and a reduction in the provision for credit losses.
Total net revenue on a taxable-equivalent basis for the second quarter of 2013 was $4,948 million; $120 million (2.4 percent) lower than the second quarter of 2012, reflecting a 1.5 percent decrease in net interest income and a 3.4 percent decrease in noninterest income. The decrease in net interest income year-over-year was the result of a decline in loan and investment portfolio rates, partially offset by higher average earning assets, continued growth in lower cost core deposit funding and the positive impact from maturities of higher-rate long-term debt during 2012. Noninterest income decreased year-over-year, primarily due to lower mortgage banking revenue. Total net revenue on a taxable-equivalent basis was $74 million (1.5 percent) higher on a linked quarter basis due to a 5.1 percent increase in noninterest income driven by seasonally higher payments-related revenue and increases in the majority of other revenue categories,
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 6
partially offset by a 1.4 percent decrease in net interest income, the result of declining loan and investment securities portfolio rates and lower average earning assets.
Total noninterest expense in the second quarter of 2013 was $2,557 million; $44 million (1.7 percent) lower than the second quarter of 2012 and $87 million (3.5 percent) higher than the first quarter of 2013. The decrease in total noninterest expense year-over-year was primarily the result of the impact of a second quarter 2012 accrual for the Companys portion of an indemnification obligation associated with Visa Inc. (NYSE: V) litigation matters (Visa accrual) and lower professional services expense, partially offset by higher compensation and employee benefits expense. The increase in total noninterest expense on a linked quarter basis was primarily due to higher insurance and regulatory expense relative to the prior quarter and seasonally higher professional services and marketing and business development costs.
The Companys provision for credit losses for the second quarter of 2013 was $362 million, $41 million lower than the prior quarter and $108 million lower than the second quarter of 2012. The provision for credit losses was lower than net charge-offs by $30 million in the second quarter and first quarter of 2013 and $50 million lower in the second quarter of 2012. Net charge-offs in the second quarter of 2013 were $392 million, compared with $433 million in the first quarter of 2013, and $520 million in the second quarter of 2012. Given current economic conditions, the Company expects the level of net charge-offs to be relatively stable in the third quarter of 2013.
Nonperforming assets include assets originated or acquired by the Company, as well as loans and other real estate acquired under FDIC loss sharing agreements that substantially reduce the risk of credit losses to the Company (covered assets). Excluding covered assets, nonperforming assets were $1,921 million at June 30, 2013, compared with $2,029 million at March 31, 2013, and $2,256 million at June 30, 2012. The decrease in nonperforming assets, excluding covered assets, compared with a year ago was driven primarily by reductions in the construction and development portfolio, as well as by improvement in commercial mortgages, total commercial and credit card loans. Covered nonperforming assets were $355 million at June 30, 2013, compared with $377 million at March 31, 2013, and $773 million at June 30, 2012. The ratio of the allowance for credit losses to period-end loans, including covered loans, was 2.02 percent at June 30, 2013, compared with 2.11 percent at March 31, 2013, and 2.25 percent at March 31, 2012. The Company expects total nonperforming assets to remain relatively stable in the third quarter of 2013.
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 7
NET INTEREST INCOME |
Table 3 | |
(Taxable-equivalent basis; $ in millions) |
2Q 2013 |
1Q 2013 |
2Q 2012 |
Change 2Q13 vs 1Q13 |
Change 2Q13 vs 2Q12 |
YTD 2013 |
YTD 2012 |
Change | |||||||||||||||||||||||||
Components of net interest income |
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Income on earning assets |
$ | 3,095 | $ | 3,168 | $ | 3,285 | $ | (73 | ) | $ | (190 | ) | $ | 6,263 | $ | 6,574 | $ | (311 | ) | |||||||||||||
Expense on interest-bearing liabilities |
423 | 459 | 572 | (36 | ) | (149 | ) | 882 | 1,171 | (289 | ) | |||||||||||||||||||||
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Net interest income |
$ | 2,672 | $ | 2,709 | $ | 2,713 | $ | (37 | ) | $ | (41 | ) | $ | 5,381 | $ | 5,403 | $ | (22 | ) | |||||||||||||
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Average yields and rates paid |
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Earning assets yield |
3.98 | % | 4.07 | % | 4.34 | % | (.09 | )% | (.36 | )% | 4.02 | % | 4.37 | % | (.35 | )% | ||||||||||||||||
Rate paid on interest-bearing liabilities |
.74 | .80 | 1.02 | (.06 | ) | (.28 | ) | .77 | 1.04 | (.27 | ) | |||||||||||||||||||||
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Gross interest margin |
3.24 | % | 3.27 | % | 3.32 | % | (.03 | )% | (.08 | )% | 3.25 | % | 3.33 | % | (.08 | )% | ||||||||||||||||
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Net interest margin |
3.43 | % | 3.48 | % | 3.58 | % | (.05 | )% | (.15 | )% | 3.46 | % | 3.59 | % | (.13 | )% | ||||||||||||||||
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Average balances |
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Investment securities (a) |
$ | 74,438 | $ | 73,467 | $ | 73,181 | $ | 971 | $ | 1,257 | $ | 73,955 | $ | 72,329 | $ | 1,626 | ||||||||||||||||
Loans |
225,186 | 222,421 | 214,069 | 2,765 | 11,117 | 223,811 | 212,115 | 11,696 | ||||||||||||||||||||||||
Earning assets |
311,927 | 313,992 | 303,754 | (2,065 | ) | 8,173 | 312,954 | 301,899 | 11,055 | |||||||||||||||||||||||
Interest-bearing liabilities |
229,419 | 232,186 | 226,229 | (2,767 | ) | 3,190 | 230,795 | 225,771 | 5,024 |
(a) | Excludes unrealized gain (loss) |
Net Interest Income
Net interest income on a taxable-equivalent basis in the second quarter of 2013 was $2,672 million, a decrease of $41 million (1.5 percent) from the second quarter of 2012. The decrease was the result of lower loan and investment portfolio rates, partially offset by higher average earning assets, continued growth in lower cost core deposit funding and the positive impact from maturities of higher-rate long-term debt during 2012. Average earning assets were $8.2 billion (2.7 percent) higher than the second quarter of 2012, driven by increases of $11.1 billion (5.2 percent) in average total loans and $1.3 billion (1.7 percent) in average investment securities, partially offset by decreases of $1.1 billion (14.4 percent) in average loans held for sale and $3.1 billion (34.3 percent) in other earning assets, principally due to the deconsolidation of certain community development and tax-advantaged investment variable interest entities (VIEs) during the current quarter. Net interest income decreased $37 million (1.4 percent) on a linked quarter basis, driven by a 5 basis point decline in the net interest margin and a $2.1 billion decrease in average earning assets, as growth in average loans was more than offset by declines in average loans held for sale and other earning assets. The net interest margin in the second quarter of 2013 was 3.43 percent, compared with 3.58 percent in the second quarter of 2012, and 3.48 percent in the first quarter of 2013. The decline in the net interest margin
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 8
on a year-over-year and linked quarter basis primarily reflected lower rates on investment securities and loans. On a year-over-year basis, this impact was partially offset by lower rates on deposits and long-term debt.
AVERAGE LOANS |
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($ in millions) | Table 4 |
2Q 2013 |
1Q 2013 |
2Q 2012 |
Percent Change 2Q13 vs 1Q13 |
Percent Change 2Q13 vs 2Q12 |
YTD 2013 |
YTD 2012 |
Percent Change |
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Commercial |
$ | 61,507 | $ | 59,921 | $ | 54,362 | 2.6 | 13.1 | $ | 60,718 | $ | 52,836 | 14.9 | |||||||||||||||||||
Lease financing |
5,255 | 5,378 | 5,658 | (2.3 | ) | (7.1 | ) | 5,316 | 5,740 | (7.4 | ) | |||||||||||||||||||||
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Total commercial |
66,762 | 65,299 | 60,020 | 2.2 | 11.2 | 66,034 | 58,576 | 12.7 | ||||||||||||||||||||||||
Commercial mortgages |
31,371 | 31,011 | 30,624 | 1.2 | 2.4 | 31,192 | 30,259 | 3.1 | ||||||||||||||||||||||||
Construction and development |
6,513 | 6,207 | 5,925 | 4.9 | 9.9 | 6,361 | 6,008 | 5.9 | ||||||||||||||||||||||||
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Total commercial real estate |
37,884 | 37,218 | 36,549 | 1.8 | 3.7 | 37,553 | 36,267 | 3.5 | ||||||||||||||||||||||||
Residential mortgages |
46,873 | 45,109 | 39,166 | 3.9 | 19.7 | 45,996 | 38,498 | 19.5 | ||||||||||||||||||||||||
Credit card |
16,416 | 16,528 | 16,696 | (.7 | ) | (1.7 | ) | 16,472 | 16,737 | (1.6 | ) | |||||||||||||||||||||
Retail leasing |
5,653 | 5,448 | 5,151 | 3.8 | 9.7 | 5,551 | 5,123 | 8.4 | ||||||||||||||||||||||||
Home equity and second mortgages |
15,989 | 16,434 | 17,598 | (2.7 | ) | (9.1 | ) | 16,210 | 17,765 | (8.8 | ) | |||||||||||||||||||||
Other |
25,224 | 25,364 | 25,151 | (.6 | ) | .3 | 25,294 | 25,027 | 1.1 | |||||||||||||||||||||||
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Total other retail |
46,866 | 47,246 | 47,900 | (.8 | ) | (2.2 | ) | 47,055 | 47,915 | (1.8 | ) | |||||||||||||||||||||
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Total loans, excluding covered loans |
214,801 | 211,400 | 200,331 | 1.6 | 7.2 | 213,110 | 197,993 | 7.6 | ||||||||||||||||||||||||
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Covered loans |
10,385 | 11,021 | 13,738 | (5.8 | ) | (24.4 | ) | 10,701 | 14,122 | (24.2 | ) | |||||||||||||||||||||
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Total loans |
$ | 225,186 | $ | 222,421 | $ | 214,069 | 1.2 | 5.2 | $ | 223,811 | $ | 212,115 | 5.5 | |||||||||||||||||||
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Average total loans were $11.1 billion (5.2 percent) higher in the second quarter of 2013 than the second quarter of 2012, driven by growth in residential mortgages (19.7 percent), commercial loans (13.1 percent), retail leasing (9.7 percent), total commercial real estate (3.7 percent) and other retail loans (.3 percent). These increases were partially offset by declines in home equity and second mortgages (9.1 percent), lease financing (7.1 percent), credit card loans (1.7 percent) and covered loans (24.4 percent). Average total loans, excluding covered loans, were higher by 7.2 percent year-over-year. Average total loans were $2.8 billion (1.2 percent) higher in the second quarter of 2013 than the first quarter of 2013, driven by increases in residential mortgages (3.9 percent), retail leasing (3.8 percent), commercial loans (2.6 percent) and total commercial real estate (1.8 percent), partially offset by decreases in home equity and second mortgages (2.7 percent), lease financing (2.3 percent), credit card loans (.7 percent), other retail loans
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 9
(.6 percent) and covered loans (5.8 percent). Excluding covered loans, average total loans grew by 1.6 percent on a linked quarter basis.
Average investment securities in the second quarter of 2013 were $1.3 billion (1.7 percent) higher year-over-year and $1.0 billion (1.3 percent) higher than the prior quarter. The increases were primarily due to purchases of U.S. government agency-backed securities, net of prepayments and maturities.
AVERAGE DEPOSITS |
||
($ in millions) | Table 5 |
2Q 2013 |
1Q 2013 |
2Q 2012 |
Percent Change 2Q13 vs 1Q13 |
Percent Change 2Q13 vs 2Q12 |
YTD 2013 |
YTD 2012 |
Percent Change |
|||||||||||||||||||||||||
Noninterest-bearing deposits |
$ | 66,866 | $ | 66,400 | $ | 64,531 | .7 | 3.6 | $ | 66,634 | $ | 64,057 | 4.0 | |||||||||||||||||||
Interest-bearing savings deposits |
||||||||||||||||||||||||||||||||
Interest checking |
48,403 | 48,404 | 45,928 | | 5.4 | 48,404 | 46,693 | 3.7 | ||||||||||||||||||||||||
Money market savings |
55,368 | 53,096 | 44,456 | 4.3 | 24.5 | 54,238 | 45,191 | 20.0 | ||||||||||||||||||||||||
Savings accounts |
31,929 | 31,409 | 29,556 | 1.7 | 8.0 | 31,670 | 29,201 | 8.5 | ||||||||||||||||||||||||
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Total of savings deposits |
135,700 | 132,909 | 119,940 | 2.1 | 13.1 | 134,312 | 121,085 | 10.9 | ||||||||||||||||||||||||
Time certificates of deposit less than $100,000 |
13,152 | 13,610 | 14,768 | (3.4 | ) | (10.9 | ) | 13,380 | 14,862 | (10.0 | ) | |||||||||||||||||||||
Time deposits greater than $100,000 |
31,667 | 32,099 | 32,062 | (1.3 | ) | (1.2 | ) | 31,882 | 29,788 | 7.0 | ||||||||||||||||||||||
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Total interest-bearing deposits |
180,519 | 178,618 | 166,770 | 1.1 | 8.2 | 179,574 | 165,735 | 8.4 | ||||||||||||||||||||||||
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Total deposits |
$ | 247,385 | $ | 245,018 | $ | 231,301 | 1.0 | 7.0 | $ | 246,208 | $ | 229,792 | 7.1 | |||||||||||||||||||
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Average total deposits for the second quarter of 2013 were $16.1 billion (7.0 percent) higher than the second quarter of 2012. Average noninterest-bearing deposits increased $2.3 billion (3.6 percent) year-over-year, driven by growth in Consumer and Small Business Banking. Average total savings deposits were $15.8 billion (13.1 percent) higher year-over-year, the result of growth in Consumer and Small Business Banking, as well as in corporate trust and broker-dealer balances. Average time certificates of deposit less than $100,000 were $1.6 billion (10.9 percent) lower due to maturities, while time deposits greater than $100,000 were relatively stable, decreasing $.4 billion (1.2 percent). Time deposits greater than $100,000 are managed as an alternative to other funding sources, such as wholesale borrowing, based largely on relative pricing.
Average total deposits increased $2.4 billion (1.0 percent) over the first quarter of 2013. Average noninterest-bearing deposits increased modestly by $.5 billion (.7 percent) on a linked quarter basis, mainly in Consumer and Small Business Banking. Average total savings deposits increased $2.8 billion (2.1 percent) due to higher Consumer and Small Business Banking, Wholesale Banking and Commercial Real
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 10
Estate and corporate trust balances. Compared with the first quarter of 2013, average time certificates of deposit less than $100,000 and average time deposits greater than $100,000 were relatively stable, declining $.9 billion (1.9 percent).
NONINTEREST INCOME |
||
($ in millions) | Table 6 |
2Q 2013 |
1Q 2013 |
2Q 2012 |
Percent Change 2Q13 vs 1Q13 |
Percent Change 2Q13 vs 2Q12 |
YTD 2013 |
YTD 2012 |
Percent Change |
|||||||||||||||||||||||||
Credit and debit card revenue |
$ | 244 | $ | 214 | $ | 235 | 14.0 | 3.8 | $ | 458 | $ | 437 | 4.8 | |||||||||||||||||||
Corporate payment products revenue |
176 | 172 | 190 | 2.3 | (7.4 | ) | 348 | 365 | (4.7 | ) | ||||||||||||||||||||||
Merchant processing services |
373 | 347 | 359 | 7.5 | 3.9 | 720 | 696 | 3.4 | ||||||||||||||||||||||||
ATM processing services |
83 | 82 | 89 | 1.2 | (6.7 | ) | 165 | 176 | (6.3 | ) | ||||||||||||||||||||||
Trust and investment management fees |
284 | 278 | 262 | 2.2 | 8.4 | 562 | 514 | 9.3 | ||||||||||||||||||||||||
Deposit service charges |
160 | 153 | 156 | 4.6 | 2.6 | 313 | 309 | 1.3 | ||||||||||||||||||||||||
Treasury management fees |
140 | 134 | 142 | 4.5 | (1.4 | ) | 274 | 276 | (.7 | ) | ||||||||||||||||||||||
Commercial products revenue |
209 | 200 | 216 | 4.5 | (3.2 | ) | 409 | 427 | (4.2 | ) | ||||||||||||||||||||||
Mortgage banking revenue |
396 | 401 | 490 | (1.2 | ) | (19.2 | ) | 797 | 942 | (15.4 | ) | |||||||||||||||||||||
Investment products fees |
46 | 41 | 38 | 12.2 | 21.1 | 87 | 73 | 19.2 | ||||||||||||||||||||||||
Securities gains (losses), net |
6 | 5 | (19 | ) | 20.0 | nm | 11 | (19 | ) | nm | ||||||||||||||||||||||
Other |
159 | 138 | 197 | 15.2 | (19.3 | ) | 297 | 398 | (25.4 | ) | ||||||||||||||||||||||
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Total noninterest income |
$ | 2,276 | $ | 2,165 | $ | 2,355 | 5.1 | (3.4 | ) | $ | 4,441 | $ | 4,594 | (3.3 | ) | |||||||||||||||||
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Noninterest Income
Second quarter noninterest income was $2,276 million; $79 million (3.4 percent) lower than the second quarter of 2012 and $111 million (5.1 percent) higher than the first quarter of 2013. The year-over-year decrease in noninterest income was principally due to a $94 million (19.2 percent) reduction in mortgage banking revenue due to lower origination and sales revenue. Credit and debit card revenue increased $9 million (3.8 percent) over the prior year due to higher volumes, including the impact of business expansion, partially offset by the impact of a credit recorded in the second quarter of 2012 related to the final expiration of debit card customer rewards. Merchant processing services revenue was $14 million (3.9 percent) higher as a result of an increase in product fees and higher volumes. Trust and investment management fees increased $22 million (8.4 percent) year-over-year, reflecting improved market conditions and business expansion, while investment products fees increased $8 million (21.1 percent) over the prior year, due to higher sales volumes and fees. In addition, the second quarter of 2013 included a $25 million favorable variance in net securities gains (losses), principally due to impairments recorded in the prior year on a
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 11
number of money center bank securities following rating agency downgrades. In addition to lower mortgage banking revenue, offsetting these positive variances was a $14 million (7.4 percent) decline in corporate payment products revenue, the result of lower government and transportation-related transactions, and a $6 million (6.7 percent) decline in ATM processing services revenue due to lower volumes. Commercial products revenue was $7 million (3.2 percent) lower year-over-year, due to lower standby letters of credit, bond underwriting and syndication fees, partially offset by an increase in other capital markets revenue and commercial loan fees. In addition, other revenue declined by $38 million (19.3 percent), driven by lower equity investment and retail lease revenue.
Noninterest income was $111 million (5.1 percent) higher in the second quarter of 2013 than the first quarter of 2013, driven by seasonally higher payments-related revenue and linked quarter growth in the majority of the fee income categories. Credit and debit card revenue increased $30 million (14.0 percent), corporate payment products revenue increased $4 million (2.3 percent) and merchant processing revenue increased $26 million (7.5 percent) on a linked quarter basis, primarily due to seasonally higher transaction volumes. Trust and investment management fees increased $6 million (2.2 percent) over the first quarter of 2013 due to the impact of improved market conditions and account growth. Deposit service charges increased $7 million (4.6 percent) and treasury management fees increased $6 million (4.5 percent) over the prior quarter, principally due to seasonally higher transaction volumes. Commercial products revenue was $9 million (4.5 percent) higher due to an increase in syndication fees, other commercial loan fees and foreign exchange and other capital markets revenue, partially offset by lower bond underwriting fees. Investment products fees increased $5 million (12.2 percent) due to higher sales volumes and fees. In addition, other revenue increased $21 million (15.2 percent), including higher equity investment and other revenue, partially offset by lower retail lease revenue. Offsetting these positive variances was a $5 million (1.2 percent) decrease in mortgage banking revenue, as higher origination and sales revenue was offset by an unfavorable change in the valuation of mortgage servicing rights (MSRs), net of hedging activities.
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 12
NONINTEREST EXPENSE |
Table 7 | |
($ in millions) |
2Q 2013 |
1Q 2013 |
2Q 2012 |
Percent Change 2Q13 vs 1Q13 |
Percent Change 2Q13 vs 2Q12 |
YTD 2013 |
YTD 2012 |
Percent Change |
|||||||||||||||||||||||||
Compensation |
$ | 1,098 | $ | 1,082 | $ | 1,076 | 1.5 | 2.0 | $ | 2,180 | $ | 2,128 | 2.4 | |||||||||||||||||||
Employee benefits |
277 | 310 | 229 | (10.6 | ) | 21.0 | 587 | 489 | 20.0 | |||||||||||||||||||||||
Net occupancy and equipment |
234 | 235 | 230 | (.4 | ) | 1.7 | 469 | 450 | 4.2 | |||||||||||||||||||||||
Professional services |
91 | 78 | 136 | 16.7 | (33.1 | ) | 169 | 220 | (23.2 | ) | ||||||||||||||||||||||
Marketing and business development |
96 | 73 | 80 | 31.5 | 20.0 | 169 | 189 | (10.6 | ) | |||||||||||||||||||||||
Technology and communications |
214 | 211 | 201 | 1.4 | 6.5 | 425 | 402 | 5.7 | ||||||||||||||||||||||||
Postage, printing and supplies |
78 | 76 | 77 | 2.6 | 1.3 | 154 | 151 | 2.0 | ||||||||||||||||||||||||
Other intangibles |
55 | 57 | 70 | (3.5 | ) | (21.4 | ) | 112 | 141 | (20.6 | ) | |||||||||||||||||||||
Other |
414 | 348 | 502 | 19.0 | (17.5 | ) | 762 | 991 | (23.1 | ) | ||||||||||||||||||||||
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Total noninterest expense |
$ | 2,557 | $ | 2,470 | $ | 2,601 | 3.5 | (1.7 | ) | $ | 5,027 | $ | 5,161 | (2.6 | ) | |||||||||||||||||
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Noninterest Expense
Noninterest expense in the second quarter of 2013 totaled $2,557 million, a decrease of $44 million (1.7 percent) from the second quarter of 2012, and an $87 million (3.5 percent) increase over the first quarter of 2013. The decrease in total noninterest expense year-over-year was primarily the result of the impact of a second quarter 2012 Visa accrual and lower professional services expense, partially offset by higher compensation and employee benefits expense. Other expense decreased by $88 million (17.5 percent) due to the prior year Visa accrual, lower FDIC insurance expense and costs related to other real estate owned, partially offset by higher costs related to investments in affordable housing and other tax-advantaged projects. Professional services expense was $45 million (33.1 percent) lower than the same quarter of last year, due to a reduction in mortgage servicing review-related costs. Other intangible expense decreased $15 million (21.4 percent) year-over-year as a result of the reduction or completion of the amortization of certain intangibles. These reductions were partially offset by higher compensation and employee benefits expense of $22 million (2.0 percent) and $48 million (21.0 percent), respectively. The increase in compensation expense was primarily attributable to the growth in staffing for business initiatives and business expansion, in addition to merit increases. Employee benefits expense increased principally due to higher pension costs and staffing levels. Marketing and business development expense was $16 million (20.0 percent) higher year-over-year, primarily due to payments-related initiatives. Technology and communications expense was $13 million (6.5 percent) higher than last year, reflecting business expansion and technology projects.
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 13
Noninterest expense increased $87 million (3.5 percent) on a linked quarter basis. The majority of the variance was in other expense, which increased $66 million (19.0 percent) due to higher insurance and regulatory expense relative to the prior quarter, partially offset by lower costs related to other real estate owned. In addition, compensation expense was $16 million (1.5 percent) higher, primarily due the impact of merit increases. Professional services expense and marketing and business development expense increased $13 million (16.7 percent) and $23 million (31.5 percent) respectively, driven by the timing of projects and initiatives across a majority of the business lines. Partially offsetting these unfavorable variances was a $33 million (10.6 percent) decrease in employee benefits expense, which was largely due to seasonally lower payroll taxes.
Provision for Income Taxes
The provision for income taxes for the second quarter of 2013 resulted in a tax rate on a taxable-equivalent basis of 28.8 percent (effective tax rate of 26.8 percent), compared with 31.0 percent (effective tax rate of 29.0 percent) in the second quarter of 2012, and 30.7 percent (effective tax rate of 28.7 percent) in the first quarter of 2013.
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 14
ALLOWANCE FOR CREDIT LOSSES | Table 8 | |
($ in millions) |
2Q | 1Q | 4Q | 3Q | 2Q | ||||||||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | ||||||||||||||||
Balance, beginning of period |
$ | 4,708 | $ | 4,733 | $ | 4,771 | $ | 4,864 | $ | 4,919 | ||||||||||
Net charge-offs |
||||||||||||||||||||
Commercial |
34 | 32 | 47 | 59 | 56 | |||||||||||||||
Lease financing |
4 | 3 | 5 | 7 | 15 | |||||||||||||||
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Total commercial |
38 | 35 | 52 | 66 | 71 | |||||||||||||||
Commercial mortgages |
8 | 15 | 12 | 20 | 47 | |||||||||||||||
Construction and development |
(25 | ) | 4 | 5 | 5 | 6 | ||||||||||||||
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Total commercial real estate |
(17 | ) | 19 | 17 | 25 | 53 | ||||||||||||||
Residential mortgages |
74 | 92 | 96 | 121 | 109 | |||||||||||||||
Credit card |
173 | 160 | 161 | 167 | 170 | |||||||||||||||
Retail leasing |
(1 | ) | 1 | 1 | | | ||||||||||||||
Home equity and second mortgages |
58 | 73 | 75 | 89 | 63 | |||||||||||||||
Other |
48 | 52 | 59 | 68 | 54 | |||||||||||||||
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Total other retail |
105 | 126 | 135 | 157 | 117 | |||||||||||||||
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Total net charge-offs, excluding covered loans |
373 | 432 | 461 | 536 | 520 | |||||||||||||||
Covered loans |
19 | 1 | 7 | 2 | | |||||||||||||||
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Total net charge-offs |
392 | 433 | 468 | 538 | 520 | |||||||||||||||
Provision for credit losses |
362 | 403 | 443 | 488 | 470 | |||||||||||||||
Net change for credit losses to be reimbursed by the FDIC |
(38 | ) | 5 | (13 | ) | (10 | ) | (5 | ) | |||||||||||
Other changes (a) |
(28 | ) | | | (33 | ) | | |||||||||||||
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Balance, end of period |
$ | 4,612 | $ | 4,708 | $ | 4,733 | $ | 4,771 | $ | 4,864 | ||||||||||
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Components |
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Allowance for loan losses, excluding losses to be reimbursed by the FDIC |
$ | 4,303 | $ | 4,343 | $ | 4,382 | $ | 4,426 | $ | 4,507 | ||||||||||
Allowance for credit losses to be reimbursed by the FDIC |
9 | 47 | 42 | 55 | 65 | |||||||||||||||
Liability for unfunded credit commitments |
300 | 318 | 309 | 290 | 292 | |||||||||||||||
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Total allowance for credit losses |
$ | 4,612 | $ | 4,708 | $ | 4,733 | $ | 4,771 | $ | 4,864 | ||||||||||
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Gross charge-offs |
$ | 506 | $ | 549 | $ | 576 | $ | 639 | $ | 631 | ||||||||||
Gross recoveries |
$ | 114 | $ | 116 | $ | 108 | $ | 101 | $ | 111 | ||||||||||
Allowance for credit losses as a percentage of |
||||||||||||||||||||
Period-end loans, excluding covered loans |
2.03 | 2.11 | 2.15 | 2.26 | 2.34 | |||||||||||||||
Nonperforming loans, excluding covered loans |
287 | 274 | 269 | 244 | 247 | |||||||||||||||
Nonperforming assets, excluding covered assets |
231 | 221 | 218 | 213 | 210 | |||||||||||||||
Period-end loans |
2.02 | 2.11 | 2.12 | 2.19 | 2.25 | |||||||||||||||
Nonperforming loans |
269 | 255 | 228 | 202 | 196 | |||||||||||||||
Nonperforming assets |
203 | 196 | 177 | 168 | 161 |
(a) | Second quarter 2013 amount represents reductions in the allowance for covered loans where the reversal of provision expense was offset by an associated decrease in the indemnification asset. Third quarter 2012 amount related to the sale of a credit card portfolio. |
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 15
Credit Quality
Net charge-offs and nonperforming assets declined on a linked quarter and year-over-year basis as economic conditions continued to slowly improve. On a linked quarter basis, net charge-offs decreased $41 million (9.5 percent), and nonperforming assets, excluding covered assets, decreased $108 million (5.3 percent). The allowance for credit losses was $4,612 million at June 30, 2013, compared with $4,708 million at March 31, 2013, and $4,864 million at June 30, 2012. Total net charge-offs in the second quarter of 2013 were $392 million, compared with $433 million in the first quarter of 2013, and $520 million in the second quarter of 2012. The decrease in total net charge-offs on a linked quarter basis primarily reflected improvement in the commercial real estate portfolios, which recorded a net recovery in the current quarter, as well as improvement in the residential mortgages and home equity and second mortgages portfolios. The $128 million (24.6 percent) decline in net charge-offs year-over-year was primarily due to improvement in the commercial, commercial real estate and residential mortgages portfolios. The Company recorded $362 million of provision for credit losses, $30 million less than net charge-offs for the second quarter of 2013.
Commercial and commercial real estate loan net charge-offs decreased to $21 million (.08 percent of average loans outstanding) in the second quarter of 2013, compared with $54 million (.21 percent of average loans outstanding) in the first quarter of 2013, and $124 million (.52 percent of average loans outstanding) in the second quarter of 2012.
Residential mortgage loan net charge-offs were $74 million (.63 percent of average loans outstanding) in the second quarter of 2013, compared with $92 million (.83 percent of average loans outstanding) in the first quarter of 2013, and $109 million (1.12 percent of average loans outstanding) in the second quarter of 2012. Credit card loan net charge-offs were $173 million (4.23 percent of average loans outstanding) in the second quarter of 2013, compared with $160 million (3.93 percent of average loans outstanding) in the first quarter of 2013, and $170 million (4.10 percent of average loans outstanding) in the second quarter of 2012. Total other retail loan net charge-offs were $105 million (.90 percent of average loans outstanding) in the second quarter of 2013, compared with $126 million (1.08 percent of average loans outstanding) in the first quarter of 2013, and $117 million (.98 percent of average loans outstanding) in the second quarter of 2012.
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 16
The ratio of the allowance for credit losses to period-end loans was 2.02 percent (2.03 percent excluding covered loans) at June 30, 2013, compared with 2.11 percent (2.11 percent excluding covered loans) at March 31, 2013, and 2.25 percent (2.34 percent excluding covered loans) at June 30, 2012. The ratio of the allowance for credit losses to nonperforming loans was 269 percent (287 percent excluding covered loans) at June 30, 2013, compared with 255 percent (274 percent excluding covered loans) at March 31, 2013, and 196 percent (247 percent excluding covered loans) at June 30, 2012.
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 17
CREDIT RATIOS | Table 9 | |
(Percent) |
2Q | 1Q | 4Q | 3Q | 2Q | ||||||||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | ||||||||||||||||
Net charge-offs ratios (a) |
||||||||||||||||||||
Commercial |
.22 | .22 | .32 | .41 | .41 | |||||||||||||||
Lease financing |
.31 | .23 | .37 | .50 | 1.07 | |||||||||||||||
Total commercial |
.23 | .22 | .32 | .42 | .48 | |||||||||||||||
Commercial mortgages |
.10 | .20 | .16 | .26 | .62 | |||||||||||||||
Construction and development |
(1.54 | ) | .26 | .33 | .33 | .41 | ||||||||||||||
Total commercial real estate |
(.18 | ) | .21 | .18 | .27 | .58 | ||||||||||||||
Residential mortgages |
.63 | .83 | .88 | 1.17 | 1.12 | |||||||||||||||
Credit card (b) |
4.23 | 3.93 | 3.86 | 4.01 | 4.10 | |||||||||||||||
Retail leasing |
(.07 | ) | .07 | .07 | | | ||||||||||||||
Home equity and second mortgages |
1.45 | 1.80 | 1.76 | 2.04 | 1.44 | |||||||||||||||
Other |
.76 | .83 | .92 | 1.06 | .86 | |||||||||||||||
Total other retail |
.90 | 1.08 | 1.12 | 1.30 | .98 | |||||||||||||||
Total net charge-offs, excluding covered loans |
.70 | .83 | .88 | 1.04 | 1.04 | |||||||||||||||
Covered loans |
.73 | .04 | .24 | .06 | | |||||||||||||||
Total net charge-offs |
.70 | .79 | .85 | .99 | .98 | |||||||||||||||
Delinquent loan ratios90 days or more past due excluding nonperforming loans (c) |
||||||||||||||||||||
Commercial |
.09 | .09 | .09 | .06 | .07 | |||||||||||||||
Commercial real estate |
.03 | .02 | .02 | .03 | .03 | |||||||||||||||
Residential mortgages |
.53 | .54 | .64 | .72 | .80 | |||||||||||||||
Credit card |
1.10 | 1.26 | 1.27 | 1.18 | 1.17 | |||||||||||||||
Other retail |
.16 | .18 | .20 | .20 | .19 | |||||||||||||||
Total loans, excluding covered loans |
.27 | .29 | .31 | .31 | .33 | |||||||||||||||
Covered loans |
5.40 | 5.18 | 5.86 | 5.61 | 4.96 | |||||||||||||||
Total loans |
.49 | .52 | .59 | .61 | .61 | |||||||||||||||
Delinquent loan ratios90 days or more past due including nonperforming loans (c) |
||||||||||||||||||||
Commercial |
.24 | .25 | .27 | .31 | .38 | |||||||||||||||
Commercial real estate |
1.13 | 1.38 | 1.50 | 1.75 | 1.92 | |||||||||||||||
Residential mortgages |
1.96 | 2.01 | 2.14 | 2.52 | 2.46 | |||||||||||||||
Credit card |
1.75 | 2.04 | 2.12 | 2.18 | 2.29 | |||||||||||||||
Other retail |
.63 | .67 | .66 | .64 | .57 | |||||||||||||||
Total loans, excluding covered loans |
.97 | 1.06 | 1.11 | 1.24 | 1.27 | |||||||||||||||
Covered loans |
7.08 | 7.13 | 9.28 | 9.30 | 9.30 | |||||||||||||||
Total loans |
1.24 | 1.35 | 1.52 | 1.69 | 1.76 |
(a) | Annualized and calculated on average loan balances |
(b) | Net charge-offs as a percent of average loans outstanding, excluding portfolio purchases where the acquired loans were recorded at fair value at the purchase date were 4.23 percent for the second quarter of 2013, 4.00 percent for the first quarter of 2013, 4.00 percent for the fourth quarter of 2012, 4.17 percent for the third quarter of 2012 and 4.25 percent for the second quarter of 2012. |
(c) | Ratios are expressed as a percent of ending loan balances. |
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 18
ASSET QUALITY | Table 10 | |
($ in millions) |
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | ||||||||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | ||||||||||||||||
Nonperforming loans |
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Commercial |
$ | 91 | $ | 85 | $ | 107 | $ | 133 | $ | 172 | ||||||||||
Lease financing |
14 | 16 | 16 | 19 | 23 | |||||||||||||||
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Total commercial |
105 | 101 | 123 | 152 | 195 | |||||||||||||||
Commercial mortgages |
263 | 289 | 308 | 392 | 376 | |||||||||||||||
Construction and development |
161 | 218 | 238 | 239 | 314 | |||||||||||||||
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Total commercial real estate |
424 | 507 | 546 | 631 | 690 | |||||||||||||||
Residential mortgages |
685 | 673 | 661 | 757 | 660 | |||||||||||||||
Credit card |
109 | 127 | 146 | 163 | 189 | |||||||||||||||
Other retail |
222 | 228 | 217 | 210 | 182 | |||||||||||||||
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Total nonperforming loans, excluding covered loans |
1,545 | 1,636 | 1,693 | 1,913 | 1,916 | |||||||||||||||
Covered loans |
168 | 209 | 386 | 449 | 570 | |||||||||||||||
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Total nonperforming loans |
1,713 | 1,845 | 2,079 | 2,362 | 2,486 | |||||||||||||||
Other real estate (a) |
364 | 379 | 381 | 259 | 324 | |||||||||||||||
Covered other real estate (a) |
187 | 168 | 197 | 198 | 203 | |||||||||||||||
Other nonperforming assets |
12 | 14 | 14 | 16 | 16 | |||||||||||||||
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Total nonperforming assets (b) |
$ | 2,276 | $ | 2,406 | $ | 2,671 | $ | 2,835 | $ | 3,029 | ||||||||||
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Total nonperforming assets, excluding covered assets |
$ | 1,921 | $ | 2,029 | $ | 2,088 | $ | 2,188 | $ | 2,256 | ||||||||||
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Accruing loans 90 days or more past due, excluding covered loans |
$ | 580 | $ | 609 | $ | 660 | $ | 644 | $ | 663 | ||||||||||
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Accruing loans 90 days or more past due |
$ | 1,119 | $ | 1,165 | $ | 1,323 | $ | 1,326 | $ | 1,315 | ||||||||||
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Performing restructured loans, excluding GNMA and covered loans |
$ | 3,311 | $ | 3,318 | $ | 3,421 | $ | 3,387 | $ | 3,310 | ||||||||||
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Performing restructured GNMA and covered loans |
$ | 2,217 | $ | 2,294 | $ | 2,159 | $ | 2,002 | $ | 1,727 | ||||||||||
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Nonperforming assets to loans plus ORE, excluding covered assets (%) |
.88 | .95 | .98 | 1.06 | 1.11 | |||||||||||||||
Nonperforming assets to loans plus ORE (%) |
1.00 | 1.07 | 1.19 | 1.30 | 1.40 |
(a) | Includes equity investments in entities whose only asset is other real estate owned. |
(b) | Does not include accruing loans 90 days or more past due or restructured loans that continue to accrue interest. |
Nonperforming assets at June 30, 2013, totaled $2,276 million, compared with $2,406 million at March 31, 2013, and $3,029 million at June 30, 2012. Total nonperforming assets at June 30, 2013, included $355 million of covered assets. The ratio of nonperforming assets to loans and other real estate was 1.00 percent (.88 percent excluding covered assets) at June 30, 2013, compared with 1.07 percent (.95 percent excluding covered assets) at March 31, 2013, and 1.40 percent (1.11 percent excluding covered assets) at June 30, 2012. Commercial nonperforming assets were $90 million (46.2 percent) lower than a year ago, while
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 19
remaining relatively stable on a linked quarter basis. Commercial mortgage and construction and development nonperforming assets declined by $266 million (38.6 percent) year-over-year and $83 million (16.4 percent) on a linked quarter basis. Credit card nonperforming assets were $80 million (42.3 percent) lower on a year-over-year basis and $18 million (14.2 percent) lower on a linked quarter basis. Residential mortgage nonperforming assets increased $25 million (3.8 percent) from the second quarter of 2012 and $12 million (1.8 percent) from the prior quarter. Other retail nonperforming assets increased $40 million (22.0 percent) year-over-year but decreased slightly (2.6 percent) on a linked quarter basis. Residential mortgage and other retail loan portfolios were impacted by the third quarter of 2012 regulatory clarification in the treatment of consumer borrowers who have had debt discharged through bankruptcy but continue to make payments on their loans.
Accruing loans 90 days or more past due were $1,119 million ($580 million excluding covered loans) at June 30, 2013, lower than the $1,165 million ($609 million excluding covered loans) at March 31, 2013, and the $1,315 million ($663 million excluding covered loans) at June 30, 2012.
CAPITAL POSITION | Table 11 | |
($ in millions) |
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | ||||||||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | ||||||||||||||||
Total U.S. Bancorp shareholders equity |
$ | 39,683 | $ | 39,531 | $ | 38,998 | $ | 38,661 | $ | 37,792 | ||||||||||
Tier 1 capital |
32,219 | 31,774 | 31,203 | 30,766 | 30,044 | |||||||||||||||
Total risk-based capital |
38,378 | 38,099 | 37,780 | 37,559 | 36,429 | |||||||||||||||
Tier 1 capital ratio |
11.1 | % | 11.0 | % | 10.8 | % | 10.9 | % | 10.7 | % | ||||||||||
Total risk-based capital ratio |
13.3 | 13.2 | 13.1 | 13.3 | 13.0 | |||||||||||||||
Leverage ratio |
9.5 | 9.3 | 9.2 | 9.2 | 9.1 | |||||||||||||||
Tangible common equity to tangible assets |
7.5 | 7.4 | 7.2 | 7.2 | 6.9 | |||||||||||||||
Tangible common equity to risk-weighted assets |
8.9 | 8.8 | 8.6 | 8.8 | 8.5 | |||||||||||||||
Tier 1 common equity to risk-weighted assets using Basel I definition |
9.2 | 9.1 | 9.0 | 9.0 | 8.8 | |||||||||||||||
Tier 1 common equity to risk-weighted assets approximated using proposed rules for the Basel III standardized approach released June 2012 |
8.3 | 8.2 | 8.1 | 8.2 | 7.9 | |||||||||||||||
Tier 1 common equity to risk-weighted assets estimated using final rules for the Basel III standardized approach released July 2013 |
8.6 | | | | |
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 20
Total U.S. Bancorp shareholders equity was $39.7 billion at June 30, 2013, compared with $39.5 billion at March 31, 2013, and $37.8 billion at June 30, 2012. On June 18, 2013, the Company announced an 18 percent increase in the dividend rate on common stock to $.92 on an annualized basis, or $.23 on a quarterly basis. During the second quarter, the Company returned 73 percent of second quarter earnings to shareholders, including $425 million in common stock dividends and $610 million of repurchased common stock. The Tier 1 capital ratio was 11.1 percent at June 30, 2013, compared with 11.0 percent at March 31, 2013, and 10.7 percent at June 30, 2012. The tangible common equity to tangible assets ratio was 7.5 percent at June 30, 2013, compared with 7.4 percent at March 31, 2013, and 6.9 percent at June 30, 2012. The Tier 1 common equity to risk-weighted assets ratio was 9.2 percent at June 30, 2013, compared with 9.1 percent at March 31, 2013, and 8.8 percent at June 30, 2012. All regulatory ratios continue to be in excess of well-capitalized requirements. The Tier 1 common equity to risk-weighted assets ratio using proposed rules for the Basel III standardized approach released June 2012 was approximately 8.3 percent at June 30, 2013, compared with 8.2 percent at March 31, 2013. The Tier 1 common equity to risk-weighted assets ratio estimated using final rules for the Basel III standardized approach released July 2013 was approximately 8.6 percent at June 30, 2013.
COMMON SHARES | Table 12 | |
(Millions) |
2Q | 1Q | 4Q | 3Q | 2Q | ||||||||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | ||||||||||||||||
Beginning shares outstanding |
1,858 | 1,869 | 1,880 | 1,892 | 1,901 | |||||||||||||||
Shares issued for stock option and stock purchase plans, acquisitions and other corporate purposes |
4 | 6 | 2 | 5 | 4 | |||||||||||||||
Shares repurchased |
(18 | ) | (17 | ) | (13 | ) | (17 | ) | (13 | ) | ||||||||||
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Ending shares outstanding |
1,844 | 1,858 | 1,869 | 1,880 | 1,892 | |||||||||||||||
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 21
LINE OF BUSINESS FINANCIAL PERFORMANCE (a) | Table 13 | |
($ in millions) |
Net Income Attributable | Net Income Attributable | |||||||||||||||||||||||||||||||||||
to U.S. Bancorp | Percent Change | to U.S. Bancorp | 2Q 2013 | |||||||||||||||||||||||||||||||||
2Q | 1Q | 2Q | 2Q13 vs | 2Q13 vs | YTD | YTD | Percent | Earnings | ||||||||||||||||||||||||||||
Business Line |
2013 | 2013 | 2012 | 1Q13 | 2Q12 | 2013 | 2012 | Change | Composition | |||||||||||||||||||||||||||
Wholesale Banking and |
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Commercial Real Estate |
$ | 323 | $ | 328 | $ | 328 | (1.5 | ) | (1.5 | ) | $ | 651 | $ | 659 | (1.2 | ) | 22 | % | ||||||||||||||||||
Consumer and Small Business |
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Banking |
349 | 317 | 374 | 10.1 | (6.7 | ) | 666 | 754 | (11.7 | ) | 24 | |||||||||||||||||||||||||
Wealth Management and |
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Securities Services |
46 | 35 | 41 | 31.4 | 12.2 | 81 | 86 | (5.8 | ) | 3 | ||||||||||||||||||||||||||
Payment Services |
313 | 256 | 313 | 22.3 | | 569 | 566 | .5 | 21 | |||||||||||||||||||||||||||
Treasury and Corporate Support |
453 | 492 | 359 | (7.9 | ) | 26.2 | 945 | 688 | 37.4 | 30 | ||||||||||||||||||||||||||
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Consolidated Company |
$ | 1,484 | $ | 1,428 | $ | 1,415 | 3.9 | 4.9 | $ | 2,912 | $ | 2,753 | 5.8 | 100 | % | |||||||||||||||||||||
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(a) | preliminary data |
Lines of Business
The Companys major lines of business are Wholesale Banking and Commercial Real Estate, Consumer and Small Business Banking, Wealth Management and Securities Services, Payment Services, and Treasury and Corporate Support. These operating segments are components of the Company about which financial information is prepared and is evaluated regularly by management in deciding how to allocate resources and assess performance. Noninterest expenses incurred by centrally managed operations or business lines that directly support another business lines operations are charged to the applicable business line based on its utilization of those services, primarily measured by the volume of customer activities, number of employees or other relevant factors. These allocated expenses are reported as net shared services expense within noninterest expense. Designations, assignments and allocations change from time to time as management systems are enhanced, methods of evaluating performance or product lines change or business segments are realigned to better respond to the Companys diverse customer base. During 2013, certain organization and methodology changes were made and, accordingly, prior period results were restated and presented on a comparable basis.
Wholesale Banking and Commercial Real Estate offers lending, equipment finance and small-ticket leasing, depository services, treasury management, capital markets, international trade services and other financial services to middle market, large corporate, commercial real estate, financial institution, non-profit and public sector clients. Wholesale Banking and Commercial Real Estate contributed $323 million of the
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 22
Companys net income in the second quarter of 2013, compared with $328 million in the second quarter of 2012 and in the first quarter of 2013. Wholesale Banking and Commercial Real Estates net income decreased $5 million (1.5 percent) from the same quarter of 2012 due to lower total net revenue, partially offset by a lower provision for credit losses and a reduction in total noninterest expense. Total net revenue declined by $49 million (5.8 percent). Net interest income decreased modestly, $2 million (.4 percent) year-over-year, primarily due to lower rates on loans and the impact of lower rates on the margin benefit from deposits, partially offset by higher average loan and deposit balances and higher loan fees. Total noninterest income decreased $47 million (14.7 percent), driven by lower commercial products revenue, including standby letters of credit fees, loan-related fees and bond underwriting fees, partially offset by higher loan syndication fees and other capital markets revenue. In addition, there was a year-over-year decline in equity investment revenue. Total noninterest expense decreased $10 million (3.1 percent) from a year ago, primarily due to lower costs related to other real estate owned and FDIC insurance expense. The provision for credit losses was $30 million lower year-over-year, due to lower net charge-offs, partially offset by an unfavorable change in the reserve allocation.
Wholesale Banking and Commercial Real Estates contribution to net income in the second quarter of 2013 was also $5 million (1.5 percent) lower than the first quarter of 2013. Total net revenue increased modestly, $2 million (.3 percent), compared with the prior quarter. Net interest income increased $8 million (1.6 percent) on a linked quarter basis, primarily due to increased average loan balances and higher loan fees, partially offset by lower loan rates and the impact of lower rates on the margin benefit from deposits. Total noninterest income decreased by $6 million (2.2 percent), primarily due to lower equity investment and trading account revenue and bond underwriting and loan-related fees, partially offset by higher loan syndication fees. Total noninterest expense decreased $4 million (1.3 percent) driven by lower costs related to other real estate owned. The provision for credit losses increased $15 million (33.3 percent) due to an unfavorable change in the reserve allocation, partially offset by lower net charge-offs.
Consumer and Small Business Banking delivers products and services through banking offices, telephone servicing and sales, on-line services, direct mail, ATM processing and over mobile devices, such as mobile phones and tablet computers. It encompasses community banking, metropolitan banking, in-store banking, small business banking, consumer lending, mortgage banking, workplace banking, student banking and 24-hour banking. Consumer and Small Business Banking contributed $349 million of the Companys net income in the second quarter of 2013, a $25 million (6.7 percent) decrease from the second quarter of
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 23
2012, and a $32 million (10.1 percent) increase over the prior quarter. Within Consumer and Small Business Banking, the retail banking division reported a 1.8 percent decrease in its contribution from the same quarter of last year. Retail bankings total net revenue was 4.8 percent lower than the second quarter of 2012. Net interest income decreased 3.5 percent, primarily due to lower loan rates and the impact of lower rates on the margin benefit from deposits, partially offset by higher average loan and deposit balances. Total noninterest income for the retail banking division decreased 7.9 percent from a year ago, principally due to lower retail lease revenue. Total noninterest expense for the retail banking division in the second quarter of 2013 increased 1.0 percent from the same quarter of the prior year, largely due to increases in net shared services and marketing costs, partially offset by a reduction in FDIC insurance expense, costs related to other real estate owned and other intangibles expense. The provision for credit losses for the retail banking division decreased 38.0 percent on a year-over-year basis due to lower net charge-offs and a favorable change in the reserve allocation. The contribution of the mortgage banking division decreased 10.8 percent from the second quarter of 2012 due to a decrease in total net revenue, partially offset by a reduction in total noninterest expense and a lower provision for credit losses. The divisions 16.4 percent decrease in total net revenue was due to a 19.7 percent decrease in total noninterest income, driven by lower mortgage origination and sales revenue, and a 7.3 percent decrease in net interest income, primarily the result of lower average loans held for sale. Total noninterest expense was 15.6 percent lower, reflecting a reduction in mortgage servicing review-related professional services costs, partially offset by an increase in net shared services expense. The provision for credit losses for the mortgage banking division decreased 40.2 percent due to a favorable change in the reserve allocation and lower net charge-offs.
Consumer and Small Business Bankings contribution in the second quarter of 2013 was $32 million (10.1 percent) higher than the first quarter of 2013, driven by a lower provision for credit losses. Within Consumer and Small Business Banking, the retail banking divisions contribution increased 57.5 percent. Total net revenue for the retail banking division was relatively flat with a .4 percent decrease from the previous quarter. Net interest income decreased by .3 percent due to lower loan rates and the impact of lower rates on the margin benefit from deposits, partially offset by higher average loan and deposit balances. Total noninterest income was .5 percent lower on a linked quarter basis, driven by lower retail lease revenue, partially offset by higher deposit service charges, reflecting seasonally higher transaction volumes. Total noninterest expense for the retail banking division was relatively flat on a linked quarter basis as higher marketing expense was offset by lower compensation and employee benefits expense, principally due to
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 24
seasonally lower payroll taxes. The provision for credit losses decreased 45.4 percent on a linked quarter basis due to a favorable change in the reserve allocation and lower net-charge-offs. The contribution of the mortgage banking division decreased 13.7 percent from the first quarter of 2013 due to lower total net revenue and an increase in the provision for credit losses, partially offset by a decline in total noninterest expense. Total net revenue decreased 3.8 percent due to a 9.3 percent decline in net interest income, driven by lower average loans held for sale, and a 1.3 percent decrease in total noninterest income, primarily due to an unfavorable change in the valuation of MSRs, net of hedging activities, partially offset by an increase in origination and sales revenue. Total noninterest expense decreased 3.1 percent, driven by lower compensation and employee benefits expense and costs related to other real estate owned. The mortgage banking divisions provision for credit losses increased on a linked quarter basis, principally due to an unfavorable change in the reserve allocation.
Wealth Management and Securities Services provides private banking, financial advisory services, investment management, retail brokerage services, insurance, trust, custody and fund servicing through five businesses: Wealth Management, Corporate Trust Services, U.S. Bancorp Asset Management, Institutional Trust & Custody and Fund Services. Wealth Management and Securities Services contributed $46 million of the Companys net income in the second quarter of 2013, compared with $41 million in the second quarter of 2012 and $35 million in the first quarter of 2013. The business lines contribution was $5 million (12.2 percent) higher compared to the same quarter of 2012 due to higher total net revenue, partially offset by an increase in total noninterest expense. Total net revenue increased by $40 million (11.1 percent) year-over-year, driven by a $32 million (11.5 percent) increase in total noninterest income, primarily due to the impact of improved market conditions, business expansion and higher investment products fees. Net interest income increased $8 million (9.6 percent), principally due to higher average deposit and loans balances, partially offset by the impact of lower rates on the margin benefit from deposits. Total noninterest expense increased by $33 million (11.2 percent) due to higher compensation and employee benefits expense and an increase in net shared services costs, including the impact of business expansion.
The business lines contribution in the second quarter of 2013 was $11 million (31.4 percent) higher than the prior quarter. Total net revenue increased $15 million (3.9 percent) on a linked quarter basis, driven by improved market conditions and account growth, along with higher investment products fees, while total noninterest expense decreased $3 million (.9 percent) due to lower litigation-related costs, partially offset by an increase in compensation expense.
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 25
Payment Services includes consumer and business credit cards, stored-value cards, debit cards, corporate and purchasing card services, consumer lines of credit and merchant processing. Payment Services contributed $313 million of the Companys net income in the second quarter of 2013, equal to the $313 million for the same period of 2012, but higher than the $256 million in the first quarter of 2013. Total net revenue increased $23 million (1.9 percent) year-over-year. Net interest income increased $11 million (2.9 percent), primarily due to improved loan rates and lower rebate costs on the government card program. Total noninterest income increased $12 million (1.5 percent) year-over-year. Credit and debit card revenue was $9 million (3.8 percent) higher than the prior year, primarily the result of higher volumes, including the impact of business expansion, partially offset by the impact of a credit recorded in the second quarter of 2012 related to the final expiration of debit card customer rewards. Merchant processing services revenue grew by $14 million (3.9 percent) due to higher product fees and volumes. Total noninterest expense increased $37 million (7.6 percent) compared with the second quarter of 2012, primarily due to higher compensation and employee benefits expense and net shared services expense, including the impact of business expansion, and an increase in marketing expense, partially offset by a reduction in other intangibles expense. The provision for credit losses decreased $14 million (7.1 percent), principally due to a favorable change in the reserve allocation.
Payment Services contribution in the second quarter of 2013 was $57 million (22.3 percent) higher than the first quarter of 2013 due to an increase in total net revenue and a lower provision for credit losses, partially offset by an increase in total noninterest expense. Total net revenue increased by $80 million (7.0 percent) from the first quarter of 2013. Net interest income was flat on a linked quarter basis, while total noninterest income was $81 million (10.8 percent) higher than the first quarter of 2013. This increase was due to a 14.0 percent increase in credit and debit card revenue, a 2.3 percent increase in corporate payment products revenue and a 7.5 percent increase in merchant processing revenue, primarily due to seasonally higher transaction volumes. Total noninterest expense increased $11 million (2.1 percent) on a linked quarter basis, principally due to the timing of marketing and professional services projects. The provision for credit losses decreased $22 million (10.7 percent) primarily due to a change in the reserve allocation, partially offset by an increase in net charge-offs.
Treasury and Corporate Support includes the Companys investment portfolios, most covered commercial and commercial real estate loans and related other real estate owned, funding, capital management, interest rate risk management, the net effect of transfer pricing related to average balances,
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 26
income taxes not allocated to business lines, including most tax advantaged investments and the residual aggregate of those expenses associated with corporate activities that are managed on a consolidated basis. Treasury and Corporate Support recorded net income of $453 million in the second quarter of 2013, compared with net income of $359 million in the second quarter of 2012 and net income of $492 million in the first quarter of 2013. Net interest income decreased $10 million (1.8 percent) from the second quarter of 2012, principally due to lower rates on the investment portfolio, partially offset by lower funding costs. Total noninterest income increased $53 million over the second quarter of last year, driven by a favorable variance in net securities gains (losses), principally due to impairments recorded in the prior year, and higher commercial products revenue. Total noninterest expense decreased by $73 million (27.0 percent), principally reflecting the prior year Visa accrual and a reduction in net shared services expense, partially offset by an increase in compensation and employee benefits expense and costs related to investments in affordable housing and other tax-advantaged projects. The provision for credit losses was $43 million higher than the second quarter of 2012, due to an increase in net charge-offs and an increase in the allowance allocation related to acquired loans.
Net income in the second quarter of 2013 was $39 million (7.9 percent) lower on a linked quarter basis due to higher total noninterest expense and an increase in the provision for credit losses. Total net revenue increased modestly on a linked quarter basis, as a $23 million (4.1 percent) decrease in net interest income, a result of lower rates on the investment portfolio, was more than offset by a $27 million (43.5 percent) increase in total noninterest income driven primarily by higher equity investment and trading account revenue. A $92 million (87.6 percent) increase in total noninterest expense primarily reflected higher insurance and regulatory expense relative to the prior quarter. The provision for credit losses was $33 million higher due to an increase in net charge-offs and an increase in the allowance allocation related to acquired loans.
Additional schedules containing more detailed information about the Companys business line results are available on the web at usbank.com or by calling Investor Relations at 612-303-0781.
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 27
On Wednesday, July 17, 2013, at 8:00 a.m. (CDT) Richard K. Davis, chairman, president and chief executive officer, and Andrew Cecere, vice chairman and chief financial officer, will host a conference call to review the financial results. The conference call will be available by telephone or on the Internet. A presentation will be used during the call and will be available on the Companys website at www.usbank.com. 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 91458345. For those unable to participate during the live call, a recording of the call will be available approximately two hours after the conference call ends on Wednesday, July 17th, and will run through Wednesday, July 24th, at 11:00 p.m. (CDT). To access the recorded message within the United States and Canada, dial 855-859-2056. If calling from outside the United States and Canada, please dial 404-537-3406 to access the recording. The conference ID is 91458345. 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 of the bottom of the page.
Minneapolis-based U.S. Bancorp (USB), with $353 billion in assets as of June 30, 2013, is the parent company of U.S. Bank National Association, the 5th largest commercial bank in the United States. The Company operates 3,087 banking offices in 25 states and 5,032 ATMs and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. Visit U.S. Bancorp on the web at usbank.com.
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U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 28
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. Global and domestic economies could fail to recover from the recent economic downturn or could experience another severe contraction, which could adversely affect U.S. Bancorps revenues and the values of its assets and liabilities. Global financial markets could experience a recurrence of significant turbulence, which could reduce the availability of funding to certain financial institutions and lead to a tightening of credit, a reduction of business activity, and increased market volatility. Continued stress in the commercial real estate markets, as well as a delay or failure of recovery in the residential real estate markets could cause additional credit losses and deterioration in asset values. In addition, U.S. Bancorps business and financial performance is likely to be negatively impacted by recently enacted and future legislation and regulation. U.S. Bancorps results could also be adversely affected by deterioration in general business and economic conditions; changes in interest rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of securities held in its investment securities portfolio; legal and regulatory developments; increased competition from both banks and non-banks; changes in customer behavior and preferences; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and managements ability to effectively manage credit risk, residual value risk, market risk, operational risk, interest rate risk and liquidity risk.
For discussion of these and other risks that may cause actual results to differ from expectations, refer to U.S. Bancorps Annual Report on Form 10-K for the year ended December 31, 2012, on file with the Securities and Exchange Commission, including the sections entitled Risk Factors and Corporate Risk Profile contained in Exhibit 13, and all subsequent filings with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. However, factors other than these also could adversely affect U.S. Bancorps results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.
(MORE)
U.S. Bancorp Reports Second Quarter 2013 Results
July 17, 2013
Page 29
Non-GAAP Financial Measures
In addition to capital ratios defined by banking regulators under the FDIC Improvement Act prompt corrective action provisions applicable to all banks, 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 using Basel I definition, |
| Tier 1 common equity to risk-weighted assets using Basel I definition, |
| Tier 1 common equity to risk-weighted assets approximated using proposed rules for the Basel III standardized approach released June 2012, and |
| Tier 1 common equity to risk-weighted assets estimated using final rules for the Basel III standardized approach released July 2013. |
These measures are viewed by management as useful additional methods of reflecting the level of capital available to withstand unexpected market or economic conditions. Additionally, presentation of these measures allows investors, analysts and banking regulators to assess the Companys capital position relative to other financial services companies. These measures differ from capital ratios defined by current banking regulations principally in that the numerator excludes trust preferred securities and preferred stock, the nature and extent of which varies among different financial services companies. These measures are not defined in generally accepted accounting principles (GAAP) or federal banking regulations. As a result, these measures disclosed by the Company may be considered non-GAAP financial measures.
There may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider the consolidated financial statements and other financial information contained in this press release in their entirety, and not to rely on any single financial measure. A table follows that shows the Companys calculation of these non-GAAP financial measures.
###
(MORE)
U.S. Bancorp
Consolidated Statement of Income
Three Months Ended | Six Months Ended | |||||||||||||||
(Dollars and Shares in Millions, Except Per Share Data) | June 30, | June 30, | ||||||||||||||
(Unaudited) |
2013 | 2012 | 2013 | 2012 | ||||||||||||
Interest Income |
||||||||||||||||
Loans |
$ | 2,552 | $ | 2,631 | $ | 5,114 | $ | 5,269 | ||||||||
Loans held for sale |
54 | 67 | 126 | 132 | ||||||||||||
Investment securities |
392 | 470 | 802 | 938 | ||||||||||||
Other interest income |
40 | 60 | 107 | 121 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total interest income |
3,038 | 3,228 | 6,149 | 6,460 | ||||||||||||
Interest Expense |
||||||||||||||||
Deposits |
144 | 177 | 299 | 358 | ||||||||||||
Short-term borrowings |
87 | 127 | 172 | 250 | ||||||||||||
Long-term debt |
191 | 266 | 409 | 560 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total interest expense |
422 | 570 | 880 | 1,168 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net interest income |
2,616 | 2,658 | 5,269 | 5,292 | ||||||||||||
Provision for credit losses |
362 | 470 | 765 | 951 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net interest income after provision for credit losses |
2,254 | 2,188 | 4,504 | 4,341 | ||||||||||||
Noninterest Income |
||||||||||||||||
Credit and debit card revenue |
244 | 235 | 458 | 437 | ||||||||||||
Corporate payment products revenue |
176 | 190 | 348 | 365 | ||||||||||||
Merchant processing services |
373 | 359 | 720 | 696 | ||||||||||||
ATM processing services |
83 | 89 | 165 | 176 | ||||||||||||
Trust and investment management fees |
284 | 262 | 562 | 514 | ||||||||||||
Deposit service charges |
160 | 156 | 313 | 309 | ||||||||||||
Treasury management fees |
140 | 142 | 274 | 276 | ||||||||||||
Commercial products revenue |
209 | 216 | 409 | 427 | ||||||||||||
Mortgage banking revenue |
396 | 490 | 797 | 942 | ||||||||||||
Investment products fees |
46 | 38 | 87 | 73 | ||||||||||||
Securities gains (losses), net |
6 | (19 | ) | 11 | (19 | ) | ||||||||||
Other |
159 | 197 | 297 | 398 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total noninterest income |
2,276 | 2,355 | 4,441 | 4,594 | ||||||||||||
Noninterest Expense |
||||||||||||||||
Compensation |
1,098 | 1,076 | 2,180 | 2,128 | ||||||||||||
Employee benefits |
277 | 229 | 587 | 489 | ||||||||||||
Net occupancy and equipment |
234 | 230 | 469 | 450 | ||||||||||||
Professional services |
91 | 136 | 169 | 220 | ||||||||||||
Marketing and business development |
96 | 80 | 169 | 189 | ||||||||||||
Technology and communications |
214 | 201 | 425 | 402 | ||||||||||||
Postage, printing and supplies |
78 | 77 | 154 | 151 | ||||||||||||
Other intangibles |
55 | 70 | 112 | 141 | ||||||||||||
Other |
414 | 502 | 762 | 991 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total noninterest expense |
2,557 | 2,601 | 5,027 | 5,161 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes |
1,973 | 1,942 | 3,918 | 3,774 | ||||||||||||
Applicable income taxes |
529 | 564 | 1,087 | 1,091 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
1,444 | 1,378 | 2,831 | 2,683 | ||||||||||||
Net (income) loss attributable to noncontrolling interests |
40 | 37 | 81 | 70 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income attributable to U.S. Bancorp |
$ | 1,484 | $ | 1,415 | $ | 2,912 | $ | 2,753 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income applicable to U.S. Bancorp common shareholders |
$ | 1,405 | $ | 1,345 | $ | 2,763 | $ | 2,630 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Earnings per common share |
$ | .76 | $ | .71 | $ | 1.49 | $ | 1.39 | ||||||||
Diluted earnings per common share |
$ | .76 | $ | .71 | $ | 1.49 | $ | 1.38 | ||||||||
Dividends declared per common share |
$ | .230 | $ | .195 | $ | .425 | $ | .390 | ||||||||
Average common shares outstanding |
1,843 | 1,888 | 1,851 | 1,895 | ||||||||||||
Average diluted common shares outstanding |
1,853 | 1,898 | 1,860 | 1,904 | ||||||||||||
|
|
|
|
|
|
|
|
Page 30
U.S. Bancorp
Consolidated Ending Balance Sheet
June 30, | December 31, | June 30, | ||||||||||
(Dollars in Millions) |
2013 | 2012 | 2012 | |||||||||
(Unaudited) | (Unaudited) | |||||||||||
Assets |
||||||||||||
Cash and due from banks |
$ | 6,618 | $ | 8,252 | $ | 15,403 | ||||||
Investment securities |
||||||||||||
Held-to-maturity |
34,668 | 34,389 | 34,635 | |||||||||
Available-for-sale |
40,307 | 40,139 | 39,313 | |||||||||
Loans held for sale |
4,766 | 7,976 | 8,257 | |||||||||
Loans |
||||||||||||
Commercial |
68,185 | 66,223 | 61,534 | |||||||||
Commercial real estate |
38,298 | 36,953 | 36,557 | |||||||||
Residential mortgages |
47,753 | 44,018 | 39,920 | |||||||||
Credit card |
16,649 | 17,115 | 16,905 | |||||||||
Other retail |
47,105 | 47,712 | 48,035 | |||||||||
|
|
|
|
|
|
|||||||
Total loans, excluding covered loans |
217,990 | 212,021 | 202,951 | |||||||||
Covered loans |
9,985 | 11,308 | 13,137 | |||||||||
|
|
|
|
|
|
|||||||
Total loans |
227,975 | 223,329 | 216,088 | |||||||||
Less allowance for loan losses |
(4,312 | ) | (4,424 | ) | (4,572 | ) | ||||||
|
|
|
|
|
|
|||||||
Net loans |
223,663 | 218,905 | 211,516 | |||||||||
Premises and equipment |
2,622 | 2,670 | 2,638 | |||||||||
Goodwill |
9,156 | 9,143 | 8,934 | |||||||||
Other intangible assets |
3,287 | 2,706 | 2,712 | |||||||||
Other assets |
28,328 | 29,675 | 29,728 | |||||||||
|
|
|
|
|
|
|||||||
Total assets |
$ | 353,415 | $ | 353,855 | $ | 353,136 | ||||||
|
|
|
|
|
|
|||||||
Liabilities and Shareholders Equity |
||||||||||||
Deposits |
||||||||||||
Noninterest-bearing |
$ | 70,632 | $ | 74,172 | $ | 69,905 | ||||||
Interest-bearing |
147,693 | 145,972 | 133,936 | |||||||||
Time deposits greater than $100,000 |
33,243 | 29,039 | 37,475 | |||||||||
|
|
|
|
|
|
|||||||
Total deposits |
251,568 | 249,183 | 241,316 | |||||||||
Short-term borrowings |
26,179 | 26,302 | 30,684 | |||||||||
Long-term debt |
19,724 | 25,516 | 28,821 | |||||||||
Other liabilities |
14,894 | 12,587 | 13,441 | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities |
312,365 | 313,588 | 314,262 | |||||||||
Shareholders equity |
||||||||||||
Preferred stock |
4,756 | 4,769 | 4,769 | |||||||||
Common stock |
21 | 21 | 21 | |||||||||
Capital surplus |
8,167 | 8,201 | 8,176 | |||||||||
Retained earnings |
36,707 | 34,720 | 32,687 | |||||||||
Less treasury stock |
(8,680 | ) | (7,790 | ) | (7,031 | ) | ||||||
Accumulated other comprehensive income (loss) |
(1,288 | ) | (923 | ) | (830 | ) | ||||||
|
|
|
|
|
|
|||||||
Total U.S. Bancorp shareholders equity |
39,683 | 38,998 | 37,792 | |||||||||
Noncontrolling interests |
1,367 | 1,269 | 1,082 | |||||||||
|
|
|
|
|
|
|||||||
Total equity |
41,050 | 40,267 | 38,874 | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities and equity |
$ | 353,415 | $ | 353,855 | $ | 353,136 | ||||||
|
|
|
|
|
|
Page 31
U.S. Bancorp
Non-GAAP Financial Measures
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
(Dollars in Millions, Unaudited) |
2013 | 2013 | 2012 | 2012 | 2012 | |||||||||||||||
Total equity |
$ | 41,050 | $ | 40,847 | $ | 40,267 | $ | 39,825 | $ | 38,874 | ||||||||||
Preferred stock |
(4,756 | ) | (4,769 | ) | (4,769 | ) | (4,769 | ) | (4,769 | ) | ||||||||||
Noncontrolling interests |
(1,367 | ) | (1,316 | ) | (1,269 | ) | (1,164 | ) | (1,082 | ) | ||||||||||
Goodwill (net of deferred tax liability) |
(8,317 | ) | (8,333 | ) | (8,351 | ) | (8,194 | ) | (8,205 | ) | ||||||||||
Intangible assets, other than mortgage servicing rights |
(910 | ) | (963 | ) | (1,006 | ) | (980 | ) | (1,118 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible common equity (a) |
25,700 | 25,466 | 24,872 | 24,718 | 23,700 | |||||||||||||||
Tier 1 capital, determined in accordance with prescribed regulatory requirements using Basel I definition |
32,219 | 31,774 | 31,203 | 30,766 | 30,044 | |||||||||||||||
Preferred stock |
(4,756 | ) | (4,769 | ) | (4,769 | ) | (4,769 | ) | (4,769 | ) | ||||||||||
Noncontrolling interests, less preferred stock not eligible for Tier 1 capital |
(685 | ) | (684 | ) | (685 | ) | (685 | ) | (685 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tier 1 common equity using Basel I definition (b) |
26,778 | 26,321 | 25,749 | 25,312 | 24,590 | |||||||||||||||
Tangible common equity (as calculated above) |
25,700 | 25,466 | 24,872 | 24,718 | 23,700 | |||||||||||||||
Adjustments (1) |
(43 | ) | 81 | 126 | 157 | 153 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tier 1 common equity approximated using proposed rules for the Basel III standardized approach released June 2012 (c) |
25,657 | 25,547 | 24,998 | 24,875 | 23,853 | |||||||||||||||
Tangible common equity (as calculated above) |
25,700 | |||||||||||||||||||
Adjustments (2) |
195 | |||||||||||||||||||
|
|
|||||||||||||||||||
Tier 1 common equity estimated using final rules for the Basel III standardized approach released July 2013 (d) |
25,895 | |||||||||||||||||||
Total assets |
353,415 | 355,447 | 353,855 | 352,253 | 353,136 | |||||||||||||||
Goodwill (net of deferred tax liability) |
(8,317 | ) | (8,333 | ) | (8,351 | ) | (8,194 | ) | (8,205 | ) | ||||||||||
Intangible assets, other than mortgage servicing rights |
(910 | ) | (963 | ) | (1,006 | ) | (980 | ) | (1,118 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible assets (e) |
344,188 | 346,151 | 344,498 | 343,079 | 343,813 | |||||||||||||||
Risk-weighted assets, determined in accordance with prescribed regulatory requirements using Basel I definition (f) |
289,613 | * | 289,672 | 287,611 | 282,033 | 279,972 | ||||||||||||||
Adjustments (3) |
20,866 | * | 21,021 | 21,233 | 22,167 | 23,240 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Risk-weighted assets approximated using proposed rules for the Basel III standardized approach released June 2012 (g) |
310,479 | * | 310,693 | 308,844 | 304,200 | 303,212 | ||||||||||||||
Risk-weighted assets, determined in accordance with prescribed regulatory requirements using Basel I definition |
289,613 | * | ||||||||||||||||||
Adjustments (4) |
12,476 | * | ||||||||||||||||||
|
|
|||||||||||||||||||
Risk-weighted assets estimated using final rules for the Basel III standardized approach released July 2013 (h) |
302,089 | * | ||||||||||||||||||
Ratios * |
||||||||||||||||||||
Tangible common equity to tangible assets (a)/(e) |
7.5 | % | 7.4 | % | 7.2 | % | 7.2 | % | 6.9 | % | ||||||||||
Tangible common equity to risk-weighted assets using Basel I definition (a)/(f) |
8.9 | 8.8 | 8.6 | 8.8 | 8.5 | |||||||||||||||
Tier 1 common equity to risk-weighted assets using Basel I definition (b)/(f) |
9.2 | 9.1 | 9.0 | 9.0 | 8.8 | |||||||||||||||
Tier 1 common equity to risk-weighted assets approximated using proposed rules for the Basel III standardized approach released June 2012 (c)/(g) |
8.3 | 8.2 | 8.1 | 8.2 | 7.9 | |||||||||||||||
Tier 1 common equity to risk-weighted assets estimated using final rules for the Basel III standardized approach released July 2013 (d)/(h) |
8.6 | | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
* | Preliminary data. Subject to change prior to filings with applicable regulatory agencies. |
(1) | Includes net losses on cash flow hedges included in accumulated other comprehensive income, unrealized losses on securities transferred from available-for-sale to held-to-maturity included in accumulated other comprehensive income and disallowed mortgage servicing rights. |
(2) | Includes net losses on cash flow hedges included in accumulated other comprehensive income and unrealized losses on securities transferred from available-for-sale to held-to-maturity included in accumulated other comprehensive income. |
(3) | Includes higher risk-weighting for residential mortgages, unfunded loan commitments, investment securities and mortgage servicing rights, and other adjustments. |
(4) | Includes higher risk-weighting for unfunded loan commitments, investment securities and mortgage servicing rights, and other adjustments. |
Page 32
U.S.
Bancorp 2Q13 Earnings
Conference Call
U.S. Bancorp
2Q13 Earnings
Conference Call
July 17, 2013
Richard K. Davis
Chairman, President and CEO
Andy Cecere
Vice Chairman and CFO
Exhibit 99.2 |
2
Forward-looking Statements and Additional Information
The following information appears in accordance with the Private
Securities Litigation Reform Act of 1995:
This
presentation
contains
forward-looking
statements
about
U.S.
Bancorp.
Statements
that
are
not
historical
or
current
facts,
including
statements
about
beliefs
and
expectations,
are
forward-looking
statements
and
are
based
on
the
information
available
to,
and
assumptions
and
estimates
made
by,
management
as
of
the
date
made.
These
forward-looking
statements
cover,
among
other
things,
anticipated
future
revenue
and
expenses
and
the
future
plans
and
prospects
of
U.S.
Bancorp.
Forward-looking
statements
involve
inherent
risks
and
uncertainties,
and
important
factors
could
cause
actual
results
to
differ
materially
from
those
anticipated.
Global
and
domestic
economies
could
fail
to
recover
from
the
recent
economic
downturn
or
could
experience
another
severe
contraction,
which
could
adversely
affect
U.S.
Bancorps
revenues
and
the
values
of
its
assets
and
liabilities.
Global
financial
markets
could
experience
a
recurrence
of
significant
turbulence,
which
could
reduce
the
availability
of
funding
to
certain
financial
institutions
and
lead
to
a
tightening
of
credit,
a
reduction
of
business
activity,
and
increased
market
volatility.
Continued
stress
in
the
commercial
real
estate
markets,
as
well
as
a
delay
or
failure
of
recovery
in
the
residential
real
estate
markets,
could
cause
additional
credit
losses
and
deterioration
in
asset
values.
In
addition,
U.S.
Bancorps
business
and
financial
performance
is
likely
to
be
negatively
impacted
by
recently
enacted
and
future
legislation
and
regulation.
U.S.
Bancorps
results
could
also
be
adversely
affected
by
deterioration
in
general
business
and
economic
conditions;
changes
in
interest
rates;
deterioration
in
the
credit
quality
of
its
loan
portfolios
or
in
the
value
of
the
collateral
securing
those
loans;
deterioration
in
the
value
of
securities
held
in
its
investment
securities
portfolio;
legal
and
regulatory
developments;
increased
competition
from
both
banks
and
non-banks;
changes
in
customer
behavior
and
preferences;
effects
of
mergers
and
acquisitions
and
related
integration;
effects
of
critical
accounting
policies
and
judgments;
and
managements
ability
to
effectively
manage
credit
risk,
residual
value
risk,
market
risk,
operational
risk,
interest
rate
risk
and
liquidity
risk.
For
discussion
of
these
and
other
risks
that
may
cause
actual
results
to
differ
from
expectations,
refer
to
U.S.
Bancorps
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2012,
on
file
with
the
Securities
and
Exchange
Commission,
including
the
sections
entitled
Risk
Factors
and
Corporate
Risk
Profile
contained
in
Exhibit
13,
and
all
subsequent
filings
with
the
Securities
and
Exchange
Commission
under
Sections
13(a),
13(c),
14
or
15(d)
of
the
Securities
Exchange
Act
of
1934.
Forward-looking
statements
speak
only
as
of
the
date
they
are
made,
and
U.S.
Bancorp
undertakes
no
obligation
to
update
them
in
light
of
new
information
or
future
events.
This
presentation
includes
non-GAAP
financial
measures
to
describe
U.S.
Bancorps
performance.
The
reconciliations
of
those
measures
to
GAAP
measures
are
provided
within
or
in
the
appendix
of
the
presentation.
These
disclosures
should
not
be
viewed
as
a
substitute
for
operating
results
determined
in
accordance
with
GAAP,
nor
are
they
necessarily
comparable
to
non-GAAP
performance
measures
that
may
be
presented
by
other
companies. |
3
2Q13 Earnings
Conference Call
2Q13 Highlights
Record net income of $1.5 billion; $0.76 per diluted common share
Average loan growth of 5.2% vs. 2Q12 and average loan growth of
1.2% vs. 1Q13
Strong average deposit growth of 7.0% vs. 2Q12 and 1.0% vs. 1Q13
Net charge-offs declined 9.5% vs. 1Q13
Nonperforming assets declined 5.4% vs. 1Q13 (5.3% excluding covered assets)
Capital generation continues to reinforce capital position
Tier 1 common equity ratio estimated at 8.6% using final rules for Basel III
standardized approach released July 2013
Tier 1 common equity ratio of 9.2%; Tier 1 capital ratio of 11.1%
Returned 73% of earnings to shareholders in 2Q13
Annual dividend increased from $0.78 to $0.92, an 18% increase
Repurchased 18 million shares of common stock during 2Q13
|
4
2Q13 Earnings
Conference Call
Performance Ratios
ROCE and ROA
Efficiency Ratio and
Net Interest Margin
Return on Avg Common Equity
Return on Avg Assets
Efficiency Ratio
Net Interest Margin
Efficiency
ratio
computed
as
noninterest
expense
divided
by
the
sum
of
net
interest
income
on
a
taxable-equivalent
basis
and
noninterest
income
excluding
securities
gains
(losses)
net |
5
2Q13 Earnings
Conference Call
$5,068
$5,179
$5,112
$4,874
$4,948
3,500
4,000
4,500
5,000
5,500
2Q12
3Q12
4Q12
1Q13
2Q13
Taxable-equivalent basis
Revenue Growth
Year-Over-Year Growth
8.1%
8.0%
0.2%
(1.1%)
(2.4%)
$ in millions |
6
2Q13 Earnings
Conference Call
170.0
190.0
210.0
230.0
250.0
2Q12
3Q12
4Q12
1Q13
2Q13
Loans
Deposits
Loan and Deposit Growth
Average Balances
Year-Over-Year Growth
$ in billions
7.7%
$214.1
7.3%
$216.9
6.4%
$220.3
5.8%
$222.4
5.2%
$225.2
10.5%
$231.3
11.1%
$239.3
9.2%
$243.8
7.3%
$245.0
7.0%
$247.4 |
7
2Q13 Earnings
Conference Call
Credit Quality
* Excluding Covered Assets (assets subject to loss sharing agreements with
FDIC) ** Related to a regulatory clarification in the treatment of residential mortgage and other consumer
loans to borrowers who have exited bankruptcy but continue to make payments on
their loans *** Excluding $54 million of incremental charge-offs $
in millions Net Charge-offs (Left Scale)
NCOs to Avg Loans (Right Scale)
Nonperforming Assets (Left Scale)
NPAs to Loans plus ORE (Right Scale) |
8
2Q13 Earnings
Conference Call
Earnings Summary
$ in millions, except per-share data
Taxable-equivalent basis
YTD
YTD
2Q13
1Q13
2Q12
vs 1Q13
vs 2Q12
2013
2012
% B/(W)
Net Interest Income
2,672
$
2,709
$
2,713
$
(1.4)
(1.5)
5,381
$
5,403
$
(0.4)
Noninterest Income
2,276
2,165
2,355
5.1
(3.4)
4,441
4,594
(3.3)
Total Revenue
4,948
4,874
5,068
1.5
(2.4)
9,822
9,997
(1.8)
Noninterest Expense
2,557
2,470
2,601
(3.5)
1.7
5,027
5,161
2.6
Operating Income
2,391
2,404
2,467
(0.5)
(3.1)
4,795
4,836
(0.8)
Net Charge-offs
392
433
520
9.5
24.6
825
1,091
24.4
Excess Provision
(30)
(30)
(50)
--
--
(60)
(140)
--
Income before Taxes
2,029
2,001
1,997
1.4
1.6
4,030
3,885
3.7
Applicable Income Taxes
585
614
619
4.7
5.5
1,199
1,202
0.2
Noncontrolling Interests
40
41
37
(2.4)
8.1
81
70
15.7
Net Income
1,484
1,428
1,415
3.9
4.9
2,912
2,753
5.8
Preferred Dividends/Other
79
70
70
(12.9)
(12.9)
149
123
(21.1)
NI to Common
1,405
$
1,358
$
1,345
$
3.5
4.5
2,763
$
2,630
$
5.1
Diluted EPS
0.76
$
0.73
$
0.71
$
4.1
7.0
1.49
$
1.38
$
8.0
Average Diluted Shares
1,853
1,867
1,898
0.7
2.4
1,860
1,904
2.3
% B/(W) |
9
2Q13 Earnings
Conference Call
2Q13 Results -
Key Drivers
vs. 2Q12
Net Revenue decline of 2.4%
Net interest income decline of 1.5%; net interest margin of 3.43% vs. 3.58% in
2Q12
Noninterest income decline of 3.4%
Noninterest expense decline of 1.7%
Provision for credit losses lower by $108 million
Net charge-offs lower by $128 million
Provision lower than NCOs by $30 million vs. $50 million in 2Q12
vs. 1Q13
Net Revenue growth of 1.5%
Net interest income decline of 1.4%; net interest margin of 3.43% vs. 3.48% in
1Q13
Noninterest income growth of 5.1%
Noninterest expense increase of 3.5%
Provision for credit losses lower by $41 million
Net charge-offs lower by $41 million
Provision lower than NCOs by $30 million vs. $30 million in 1Q13
|
10
2Q13 Earnings
Conference Call
Capital Position
$ in billions
RWA = risk-weighted assets
2Q13
1Q13
4Q12
3Q12
2Q12
Shareholders' equity
39.7
$
39.5
$
39.0
$
38.7
$
37.8
$
Tier 1 capital
32.2
31.8
31.2
30.8
30.0
Total risk-based capital
38.4
38.1
37.8
37.6
36.4
Tier 1 common equity ratio
9.2%
9.1%
9.0%
9.0%
8.8%
Tier 1 capital ratio
11.1%
11.0%
10.8%
10.9%
10.7%
Total risk-based capital ratio
13.3%
13.2%
13.1%
13.3%
13.0%
Leverage ratio
9.5%
9.3%
9.2%
9.2%
9.1%
Tangible common equity ratio
7.5%
7.4%
7.2%
7.2%
6.9%
Tangible common equity as a % of RWA
8.9%
8.8%
8.6%
8.8%
8.5%
Basel III
Tier 1 common equity ratio approximated
using proposed rules for the Basel III
standardized approach released June 2012
8.3%
8.2%
8.1%
8.2%
7.9%
Tier 1 common equity ratio estimated
using final rules for the Basel III
standardized approach released July 2013
8.6%
-
-
-
- |
11
2Q13 Earnings
Conference Call
Capital Actions
Dividend increase announced June 18
Annual dividend increased from $0.78 to $0.92, an 18% increase
One
year
authorization
to
repurchase
up
to
$2.25
billion
of
outstanding
stock
effective
April
1,
2013
Returned 73% of earnings to shareholders during 2Q13
Reinvest and
Acquisitions
Dividends
Share
Repurchases
20 -
40%
Targets:
30 -
40%
30 -
40%
27%
2Q13
Actual:
43%
30%
Earnings Distribution
th |
12
2Q13 Earnings
Conference Call
Mortgage Repurchase
Mortgages Repurchased and Make-whole Payments
Mortgage Representation and Warranties Reserve
$ in millions
2Q13
1Q13
4Q12
3Q12
2Q12
Beginning Reserve
$233
$240
$220
$216
$202
Net Realized Losses
(16)
(23)
(32)
(32)
(31)
Change in Reserve
(27)
16
52
36
45
Ending Reserve
$190
$233
$240
$220
$216
Mortgages
repurchased
and make-whole
payments
$41
$79
$57
$58
$58
Repurchase activity lower than
peers due to:
Conservative credit and
underwriting culture
Disciplined origination process -
primarily conforming
loans
(
95% sold to GSEs)
Do not participate in private
placement securitization market
Outstanding repurchase and
make-whole requests balance
= $64 million |
13
A Rich
A Rich Heritage
A Strong Future
A Strong Future
1863 -
2013 |
14
2Q13 Earnings
Conference Call
Appendix |
15
2Q13 Earnings
Conference Call
Average Loans
Average Loans
Key Points
$ in billions
vs. 2Q12
Average total loans grew by $11.1 billion, or 5.2%
Average total loans, excluding covered loans,
were higher by 7.2%
Average total commercial loans increased $6.7
billion, or 11.2%; average residential mortgage
loans increased $7.7 billion, or 19.7%
vs. 1Q13
Average total loans grew by $2.8 billion, or 1.2%
Average total loans, excluding covered loans,
were higher by 1.6%
Average total commercial loans increased $1.5
billion, or 2.2%; average residential mortgage
loans increased $1.8 billion, or 3.9%
Covered
Commercial
CRE
Res Mtg
Retail
Credit Card |
16
2Q13 Earnings
Conference Call
Average Deposits
Average Deposits
Key Points
$ in billions
vs. 2Q12
Average total deposits increased by $16.1
billion, or 7.0%
Average low cost deposits (NIB, interest
checking, money market and savings)
increased by $18.1 billion, or 9.8%
vs. 1Q13
Average total deposits increased by $2.4
billion, or 1.0%
Average low cost deposits increased by $3.3
billion, or 1.6%
Time
Money Market
Checking and Savings
Noninterest-bearing
Noninterest
-bearing
Checking
& Savings
Money
Market
Time
2.2%
15.0%
8.8%
7.6%
(4.3%)
(1.2%)
6.5%
9.6%
15.6%
24.5%
8.1%
7.1%
4.7%
4.6%
6.4%
32.5%
16.2%
14.2%
4.4%
3.6%
0
70
140
210
280
2Q12
3Q12
4Q12
1Q13
2Q13 |
17
2Q13 Earnings
Conference Call
Net Interest Income
Net Interest Income
Key Points
$ in millions
Taxable-equivalent basis
vs. 2Q12
Average earning assets grew by $8.2 billion,
or 2.7%
Net interest margin lower by 15 bps (3.43%
vs. 3.58%) driven by:
Lower rates on investment securities and loans
Partially offset by lower rates on deposits and
long-term debt
vs. 1Q13
Average earning assets declined by $2.1
billion, or 0.7%
Net interest margin lower by 5 bps (3.43% vs.
3.48%) driven by:
Lower rates on investment securities and loans
Year-Over-Year Growth
6.6%
6.1%
4.1%
0.7%
(1.5%)
$2,713
$2,783
$2,783
$2,709
$2,672
3.58%
3.59%
3.55%
3.48%
3.43%
0.0%
2.0%
4.0%
6.0%
8.0%
0
1,000
2,000
3,000
4,000
2Q12
3Q12
4Q12
1Q13
2Q13
Net Interest Income
Net Interest Margin |
Noninterest Income
Noninterest Income
Key Points
$ in millions
Payments = credit and debit card revenue, corporate payment products revenue and
merchant processing; Service charges = deposit service charges, treasury
management fees and ATM processing services vs. 2Q12
Noninterest income declined by $79 million, or 3.4%,
driven by:
Mortgage banking revenue decline of $94 million
Lower corporate payments revenue (7.4% decline), mainly due to
lower government and transportation-related transactions
Higher trust and investment management fees (8.4% increase),
due to improved market conditions and business expansion, and
higher investment product fees (21.1% increase), due to higher
sales volume and fees
Higher merchant processing (3.9% increase) and higher credit
and debit card revenue (3.8% increase)
Lower other income, mainly due to lower equity investment and
retail lease revenue
vs. 1Q13
Noninterest income grew by $111 million, or 5.1%,
driven by:
Higher payments revenue (8.2% increase), primarily due to
seasonally higher transaction volumes
Higher trust and investment management fees (2.2% increase)
and higher investment product fees (12.2% increase)
Higher commercial products revenue (4.5% increase)
Higher deposit service charges (4.6% increase) and treasury
management fees (4.5% increase), mainly due to seasonally
higher transaction volumes
Higher other income, mainly due to higher equity investment and
other revenue, partially offset by lower retail lease revenue
Year-Over-Year Growth
9.7%
10.4%
(4.2%)
(3.3%)
(3.4%)
$2,329
$2,165
$2,276
$2,355
$2,396
Trust and
Inv Mgmt
Service
Charges
All Other
Mortgage
Payments
All Other
Mortgage
Service Charges
Trust and Inv Mgmt
Payments
2,800
2,100
1,400
700
0
2Q12
3Q12
4Q12
1Q13
2Q13
2Q13 Earnings
Conference Call
18 |
19
2Q13 Earnings
Conference Call
Noninterest Expense
Noninterest Expense
Key Points
$ in millions
vs. 2Q12
Noninterest expense was lower by $44 million, or
1.7%, driven by:
Lower other expense, mainly due to prior year Visa accrual,
lower FDIC insurance expense and costs related to OREO,
partially offset by higher costs related to investments in
affordable housing and other tax-advantaged projects
Lower professional services expense (33.1% decline), due to
reduction in mortgage servicing review-related costs
Higher compensation (2.0% increase), primarily the result of
growth in staffing and employee benefits (21.0% increase),
mainly due to higher pension costs
Higher marketing and business development expense (20.0%
increase), mainly due to payments-related initiatives
vs. 1Q13
Noninterest expense was higher by $87 million, or
3.5%, driven by:
Higher other expense, mainly due to higher insurance and
regulatory expense relative to the prior quarter, partially offset
by lower OREO expense
Higher marketing and business development expense (31.5%
increase) and higher professional services expense (16.7%
increase), driven by the timing of projects and initiatives
across a majority of the business lines
Lower benefits expense (10.6% decrease), due mainly to
seasonally lower payroll taxes
All Other
Tech and Communications
Prof Svcs, Marketing and PPS
Occupancy and Equipment
Compensation and Benefits
2Q12
3Q12
4Q12
1Q13
2Q13
Mortgage servicing matters
-
$
-
$
80
$
-
$
-
$
Total
-
$
-
$
80
$
-
$
-
$
Notable Noninterest Expense Items
Year-Over-Year Growth
7.3%
5.4%
(0.4%)
(3.5%)
(1.7%)
$2,601
$2,609
$2,686
$2,470
$2,557
Compensation
and Benefits
Occupancy
and Equipment
Prof Services,
Marketing
and PPS
Tech and Comm
All Other |
20
2Q13 Earnings
Conference Call
Credit Quality
-
Commercial Loans
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Strong
new
lending
activity
resulted
in
2.6%
linked
quarter
loan
growth
and
13.1%
year-over-year
growth
even though utilization rates remained at historically low levels
Nonperforming loans and net charge-offs continued to improve
year-over-year and were unchanged on a linked quarter basis
Early stage delinquencies remained at moderate levels
2Q12
1Q13
2Q13
Average Loans
$54,362
$59,921
$61,507
30-89 Delinquencies
0.26%
0.20%
0.23%
90+ Delinquencies
0.07%
0.10%
0.10%
Nonperforming Loans
0.31%
0.14%
0.14%
$ in millions
$54,362
$56,655
$58,552
$59,921
$61,507
0.41%
0.41%
0.32%
0.22%
0.22%
0.0%
1.0%
2.0%
3.0%
4.0%
0
20,000
40,000
60,000
80,000
2Q12
3Q12
4Q12
1Q13
2Q13
Average Loans
Net Charge-offs Ratio |
21
2Q13 Earnings
Conference Call
Credit Quality
-
Commercial Leases
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Net charge-offs improved materially year-over-year and rose modestly on
a linked quarter basis Nonperforming loans and early stage delinquencies
improved year-over-year and on a linked quarter basis
2Q12
1Q13
2Q13
Average Loans
$5,658
$5,378
$5,255
30-89 Delinquencies
0.83%
0.82%
0.74%
90+ Delinquencies
0.00%
0.00%
0.00%
Nonperforming Loans
0.40%
0.30%
0.27%
$ in millions
$5,658
$5,537
$5,377
$5,378
$5,255
1.07%
0.50%
0.37%
0.23%
0.31%
0.0%
1.0%
2.0%
3.0%
4.0%
0
2,000
4,000
6,000
8,000
2Q12
3Q12
4Q12
1Q13
2Q13
Average Loans
Net Charge-offs Ratio
Commercial Leases |
22
Credit Quality
-
Commercial Real Estate
Key Statistics
Comments
Average loans increased 1.8% on a linked quarter basis
High levels of commercial real estate recoveries, reflecting continued improvement
in market conditions Early stage delinquencies remain stable
year-over-year and on a linked quarter basis Nonperforming loans
continued to decline, down from the peak of 5.36% in 1Q10 2Q12
1Q13
2Q13
Average Loans
$36,549
$37,218
$37,884
30-89 Delinquencies
0.24%
0.22%
0.23%
90+ Delinquencies
0.03%
0.02%
0.03%
Nonperforming Loans
1.89%
1.36%
1.11%
Performing TDRs*
596
526
494
$ in millions
Investor
$20,270
Owner
Occupied
$11,101
Multi-family
$2,085
Retail
$494
Residential
Construction
$1,385
A&D
Construction
$547
Office
$510
Other
$1,492
* TDR = troubled debt restructuring
Average Loans and Net Charge-offs Ratios
2Q13 Earnings
Conference Call
45,000
30,000
15,000
0
$36,549
$36,630
$36,851
$37,218
$37,884
0.9%
0.6%
0.3%
0.0%
-0.3%
2Q12
3Q12
4Q12
1Q13
2Q13
Average Loans
Net Charge-offs Ratio
22 |
23
2Q13 Earnings
Conference Call
Credit Quality
-
Residential Mortgage
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Strong growth in high quality originations (weighted average FICO 763, weighted
average LTV 65%) as average loans increased 3.9% over 1Q13, driven by demand
for refinancing Over 74% of the balances have been originated since the
beginning of 2009, the origination quality metrics and performance to date
have significantly outperformed prior vintages with similar seasoning Net
charge-offs continue to decline as housing values improve 2Q12
1Q13
2Q13
Average Loans
$39,166
$45,109
$46,873
30-89 Delinquencies
0.86%
0.71%
0.78%
90+ Delinquencies
0.80%
0.54%
0.53%
Nonperforming Loans
1.65%
1.46%
1.43%
$ in millions
*
Excluding
$22
million
related
to
a
regulatory
clarification
in
the
treatment
of
loans
to
borrowers
who
have
exited
bankruptcy
but
continue
to
make
payments
on
their
loans
$39,166
$40,969
$43,156
$45,109
$46,873
1.12%
1.17%
0.88%
0.83%
0.63%
0.96%*
0.0%
1.0%
2.0%
3.0%
4.0%
0
15,000
30,000
45,000
60,000
2Q12
3Q12
4Q12
1Q13
2Q13
Average Loans
Net Charge-offs Ratio
Adjusted NCO Ratio
$2,011
$2,076
$2,087
$2,035
$2,084
0
1,000
2,000
3,000
4,000
2Q12
3Q12
4Q12
1Q13
2Q13
Residential Mortgage Performing TDRs**
**
Excludes
GNMA
loans,
whose
repayments
are
insured
by
the
FHA
or
guaranteed
by
the
Department
of
VA
($1,851
million
2Q13) |
24
2Q13 Earnings
Conference Call
2Q12
1Q13
2Q13
Average Loans
$16,696
$16,528
$16,416
30-89 Delinquencies
1.20%
1.24%
1.17%
90+ Delinquencies
1.17%
1.26%
1.10%
Nonperforming Loans
1.12%
0.78%
0.65%
Credit Quality -
Credit Card
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Increased loss rate driven by lower recoveries
Delinquencies remain at historically low levels
Nonperforming loans have decreased for eight consecutive quarters
$ in millions
$16,696
$16,551
$16,588
$16,528
$16,416
4.10%
4.01%
3.86%
3.93%
4.23%
0.0%
2.5%
5.0%
7.5%
10.0%
0
5,000
10,000
15,000
20,000
2Q12
3Q12
4Q12
1Q13
2Q13
Average Loans
Net Charge-offs Ratio
$189
$163
$146
$127
$109
1.12%
0.99%
0.85%
0.78%
0.65%
0.0%
0.6%
1.2%
1.8%
2.4%
0
60
120
180
240
2Q12
3Q12
4Q12
1Q13
2Q13
Credit Card Nonperforming Loans |
25
2Q13 Earnings
Conference Call
Credit Quality -
Home Equity
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
High-quality originations (weighted average FICO 761, weighted average CLTV
71%) originated primarily through the retail branch network to existing bank
customers on their primary residence Net charge-off ratio declined on a
linked quarter basis 2Q12
1Q13
2Q13
Average Loans
$17,598
$16,434
$15,989
30-89 Delinquencies
0.71%
0.70%
0.74%
90+ Delinquencies
0.30%
0.27%
0.25%
Nonperforming Loans
0.91%
1.25%
1.23%
$ in millions
*
Excluding
$26
million
related
to
a
regulatory
clarification
in
the
treatment
of
loans
to
borrowerswho
have
exited
bankruptcy
but
continue
to
make
payments
on
their
loans
$17,598
$17,329
$16,950
$16,434
$15,989
1.44%
2.04%
1.76%
1.80%
1.45%
1.44%*
0.0%
1.5%
3.0%
4.5%
6.0%
0
6,000
12,000
18,000
24,000
2Q12
3Q12
4Q12
1Q13
2Q13
Average Loans
Net Charge-offs Ratio
Adjusted NCO Ratio |
Credit Quality -
Retail Leasing
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Strong year-over-year growth (9.7%) driven by high-quality originations
(weighted average FICO 769) Delinquencies remain relatively stable at very
low levels Strong used auto values continued to contribute to historically
low net charge-offs 2Q12
1Q13
2Q13
Average Loans
$5,151
$5,448
$5,653
30-89 Delinquencies
0.13%
0.12%
0.14%
90+ Delinquencies
0.00%
0.02%
0.00%
Nonperforming Loans
0.00%
0.02%
0.02%
$ in millions
*
Manheim
Used
Vehicle
Value
Index
source:
www.manheimconsulting.com,
January
1995
=
100,
quarter
value
=
average
monthly
ending
value
9,000
6,000
3,000
0
$5,151
$5,256
$5,384
$5,448
$5,653
2Q12
3Q12
4Q12
1Q13
2Q13
0.00%
0.00%
0.07%
0.07%
-0.07%
1.5%
1.0%
0.5%
0.0%
130
120
110
100
Manheim Used Vehicle Index*
90
2Q13 Earnings
Conference Call
Average Loans
Net Charge-offs Ratio
26
-0.5% |
27
2Q13 Earnings
Conference Call
Credit Quality -
Other Retail
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Year-over-year
growth in Auto Loans continue to offset declines in Student Lending loan
balances (see slide 28 for auto loan detail)
Delinquencies and nonperforming loans remain stable and at very low levels
2Q12
1Q13
2Q13
Average Loans
$25,151
$25,364
$25,224
30-89 Delinquencies
0.51%
0.48%
0.46%
90+ Delinquencies
0.16%
0.16%
0.14%
Nonperforming Loans
0.09%
0.10%
0.11%
Installment
$5,564
$ in millions
* Excluding $5 million related to a regulatory clarification in the treatment of
loans to borrowers who have exited bankruptcy but continue to make payments on their loans
$25,151
$25,406
$25,595
$25,364
$25,224
0.86%
1.06%
0.92%
0.83%
0.76%
0.98%*
0.0%
1.0%
2.0%
3.0%
4.0%
0
10,000
20,000
30,000
40,000
2Q12
3Q12
4Q12
1Q13
2Q13
Average Loans
Net Charge-offs Ratio
Adjusted NCO Ratio
Other Retail |
28
2Q13 Earnings
Conference Call
Indirect and Direct Channel
Credit Quality -
Auto Loans
Average Loans and Net Charge-offs Ratios
Key Statistics
Comments
Continued growth in Auto Loans driven by high-quality originations (Indirect
channel weighted average FICO 767, Direct channel weighted average FICO
750) Low net charge-offs and delinquencies continue as used vehicle
values remain strong 2Q12
1Q13
2Q13
Average Loans
$11,974
$12,519
$12,575
30-89 Delinquencies
0.40%
0.30%
0.30%
90+ Delinquencies
0.04%
0.03%
0.02%
Nonperforming Loans
0.00%
0.02%
0.02%
$ in millions
Auto Loans are included in Other Retail category
Direct: 9%
Wtd Avg FICO: 748
NCO: 0.00%
Indirect: 91%
Wtd Avg FICO: 770
NCO: 0.00%
$11,974
$12,211
$12,540
$12,519
$12,575
0.13%
0.20%
0.22%
0.16%
0.00%
0.0%
0.2%
0.4%
0.6%
0.8%
0
4,000
8,000
12,000
16,000
2Q12
3Q12
4Q12
1Q13
2Q13
Average Loans
Net Charge-offs Ratio |
29
2Q13 Earnings
Conference Call
Non-GAAP Financial Measures
$ in millions
2Q13
1Q13
4Q12
3Q12
2Q12
Total equity
41,050
$
40,847
$
40,267
$
39,825
$
38,874
$
Preferred stock
(4,756)
(4,769)
(4,769)
(4,769)
(4,769)
Noncontrolling interests
(1,367)
(1,316)
(1,269)
(1,164)
(1,082)
Goodwill (net of deferred tax liability)
(8,317)
(8,333)
(8,351)
(8,194)
(8,205)
Intangible assets (exclude mortgage servicing rights)
(910)
(963)
(1,006)
(980)
(1,118)
Tangible common equity (a)
25,700
25,466
24,872
24,718
23,700
Tier 1 capital, determined in accordance with prescribed
regulatory requirements using Basel I definition
32,219
31,774
31,203
30,766
30,044
Preferred stock
(4,756)
(4,769)
(4,769)
(4,769)
(4,769)
Noncontrolling interests, less preferred stock not eligible for Tier I
capital (685)
(684)
(685)
(685)
(685)
Tier 1 common equity using Basel I definition (b)
26,778
26,321
25,749
25,312
24,590
Tangible common equity (as calculated above)
25,700
25,466
24,872
24,718
23,700
Adjustments
1
(43)
81
126
157
153
Tier 1 common equity approximated using proposed rules for the
Basel III standardized approach released June 2012 (c)
25,657
25,547
24,998
24,875
23,853
Tangible common equity (as calculated above)
25,700
Adjustments
2
195
Tier 1 common equity estimated using final rules for the
Basel III standardized approach released July 2013 (d)
25,895
1
Includes
net
losses
on
cash
flow
hedges
included
in
accumulated
other
comprehensive
income,
unrealized
losses
on
securities
transferred
from
available-for-sale
to
held-to-maturity
included
in
accumulated
other
comprehensive
income
and
disallowed
mortgage
servicing
rights
2
Includes
net
losses
on
cash
flow
hedges
included
in
accumulated
other
comprehensive
income
and
unrealized
losses
on
securities
transferred
from
available-for-sale
to
held-to-maturity
included
in
accumulated
other
comprehensive
income |
30
2Q13 Earnings
Conference Call
Non-GAAP Financial Measures
$ in millions
2Q13
1Q13
4Q12
3Q12
2Q12
Total assets
353,415
$
355,447
$
353,855
$
352,253
$
353,136
$
Goodwill (net of deferred tax liability)
(8,317)
(8,333)
(8,351)
(8,194)
(8,205)
Intangible assets (exclude mortgage servicing rights)
(910)
(963)
(1,006)
(980)
(1,118)
Tangible assets (e)
344,188
346,151
344,498
343,079
343,813
Risk-weighted assets, determined in accordance with prescribed
regulatory requirements using Basel I definition (f)
289,613
289,672
287,611
282,033
279,972
Adjustments
3
20,866
21,021
21,233
22,167
23,240
Risk-weighted assets approximated using proposed rules for the
Basel III standardized approach released June 2012 (g)
310,479
310,693
308,844
304,200
303,212
Risk-weighted assets, determined in accordance with prescribed
regulatory requirements using Basel I definition
289,613
Adjustments
4
12,476
Risk-weighted assets estimated using final rules for the
Basel III standardized approach released July 2013 (h)
302,089
Ratios
Tangible common equity to tangible assets (a)/(e)
7.5%
7.4%
7.2%
7.2%
6.9%
Tangible common equity to risk-weighted assets using Basel I definition
(a)/(f) 8.9%
8.8%
8.6%
8.8%
8.5%
Tier 1 common equity to risk-weighted assets using Basel I definition
(b)/(f) 9.2%
9.1%
9.0%
9.0%
8.8%
Tier 1 common equity to risk-weighted assets approximated using proposed
rules for the Basel III standardized approach released June 2012
(c)/(g)
8.3%
8.2%
8.1%
8.2%
7.9%
Tier 1 common equity to risk-weighted assets estimated using final rules
for the Basel III standardized approach released July 2013 (d)/(h)
8.6%
-
-
-
-
2Q13
risk-weighted
assets
are
preliminary
data,
subject
to
change
prior
to
filings
with
applicable
regulatory
agencies
3
Includes higher risk-weighting for residential mortgages, unfunded loan
commitments, investment securities and mortgage servicing rights, and other adjustments
4
Includes higher risk-weighting for unfunded loan commitments, investment
securities and mortgage servicing rights, and other adjustments |
U.S.
Bancorp 2Q13 Earnings
Conference Call
U.S. Bancorp
2Q13 Earnings
Conference Call
July 17, 2013 |
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