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EX-99.2 - EX-99.2 - US BANCORP \DE\ | c64174exv99w2.htm |
8-K - FORM 8-K - US BANCORP \DE\ | c64174e8vk.htm |
Exhibit 99.1
News Release | ||||
Contacts: | ||||
Steve Dale | Judith T. Murphy | |||
Media | Investors/Analysts | |||
(612) 303-0784 | (612) 303-0783 |
U.S. BANCORP REPORTS NET INCOME
FOR THE FIRST QUARTER OF 2011
FOR THE FIRST QUARTER OF 2011
Achieves Total Net Revenue of $4.5 Billion; Earns Over $1 Billion in Net Income
MINNEAPOLIS, April 19, 2011 U.S. Bancorp (NYSE: USB) today reported net income of
$1,046 million for the first quarter of 2011, or $.52 per diluted common share. Earnings for the
first quarter of 2011 were driven by year-over-year growth in total net revenue and a reduction in
the provision for credit losses. Included in the first quarter of 2011 was a $46 million gain
related to the acquisition of First Community Bank of New Mexico (FCB) in a transaction with the
Federal Deposit Insurance Corporation (FDIC). Highlights for the first quarter of 2011 included:
| Strong new lending activity of $47.4 billion during the first quarter including: |
| $11.9 billion of new commercial and commercial real estate commitments | ||
| $15.9 billion of commercial and commercial real estate commitment renewals | ||
| $1.9 billion of lines related to new credit card accounts | ||
| $17.7 billion of mortgage and other retail originations |
| Average total loan growth of 2.4 percent (2.1 percent excluding acquisitions) over the first quarter of 2010 |
| Average total loan growth of 1.1 percent over the prior quarter (.7 percent excluding acquisitions) |
| Average total commercial loan growth of 2.1 percent over the prior quarter (1.9 percent excluding acquisitions) |
| Significant growth in average deposits of 11.9 percent (7.3 percent excluding acquisitions) over the first quarter of 2010, including: |
| 16.3 percent growth in average noninterest-bearing deposits (15.6 percent excluding acquisitions) |
| 14.9 percent growth in average total savings deposits (8.1 percent excluding acquisitions) |
| Total net revenue growth of 4.6 percent over the first quarter of 2010 |
U.S. Bancorp Reports First Quarter 2011 Results
April 19, 2011
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April 19, 2011
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| Net interest income growth of 4.3 percent over the first quarter of 2010, driven by: |
| Average earning asset growth of 10.1 percent, including predicted growth in the investment securities portfolio (22.1 percent) |
| Exceptionally strong growth in lower cost core deposit funding |
| Net interest margin of 3.69 percent for the first quarter of 2011, compared with 3.90 percent for the first quarter of 2010, and 3.83 percent for the fourth quarter of 2010 (decline due to higher investment securities portfolio balances and a higher cash position at the Federal Reserve, the result of unexpectedly strong deposit growth) |
| Strong year-over-year growth in payments-related fee income and commercial products revenue, driven by: |
| Higher credit and debit card revenue (3.5 percent), corporate payment products revenue (4.2 percent) and merchant processing services revenue (3.1 percent) |
| An 18.6 percent increase in commercial products revenue (including syndication revenue, foreign exchange revenue, standby letters of credit fees and commercial loan fees) |
| Net charge-offs and nonperforming assets declined on a linked quarter basis. Provision for credit losses was $50 million less than net charge-offs. |
| Sixth consecutive quarterly decrease in the provision for credit losses |
| Net charge-offs declined 14.1 percent from the fourth quarter of 2010 |
| Excluding the FCB acquisition, nonperforming assets (excluding covered assets) decreased 4.7 percent from the fourth quarter of 2010 |
| Early and late stage loan delinquencies (excluding covered loans) as a percentage of ending loan balances declined in most loan categories on a linked quarter basis |
| Allowance to period-end loans (excluding covered loans) was 2.97 percent at March 31, 2011, compared with 3.03 percent at December 31, 2010, and 3.20 percent at March 31, 2010 |
| Allowance to nonperforming assets (excluding covered assets) was 154 percent at March 31, 2011, compared with 162 percent at December 31, 2010, and 136 percent at March 31, 2010 |
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April 19, 2011
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April 19, 2011
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| Strong capital generation continues to strengthen capital position; ratios at March 31, 2011 were: |
| Tier 1 common equity ratio of 8.2 percent | ||
| Tier 1 capital ratio of 10.8 percent | ||
| Total risk based capital ratio of 13.8 percent | ||
| Tier 1 common ratio of 7.7 percent under anticipated Basel III guidelines |
| Dividend and share authorization announced March 18th |
| Annual dividend raised from $.20 to $.50, a 150 percent increase | ||
| Share repurchase authorization of 50 million shares through December 31, 2011 |
EARNINGS SUMMARY | Table 1 |
Percent | Percent | |||||||||||||||||||
Change | Change | |||||||||||||||||||
1Q | 4Q | 1Q | 1Q11 vs | 1Q11 vs | ||||||||||||||||
($ in millions, except per-share data) | 2011 | 2010 | 2010 | 4Q10 | 1Q10 | |||||||||||||||
Net income attributable to U.S. Bancorp |
$ | 1,046 | $ | 974 | $ | 669 | 7.4 | 56.4 | ||||||||||||
Diluted earnings per common share |
$ | .52 | $ | .49 | $ | .34 | 6.1 | 52.9 | ||||||||||||
Return on average assets (%) |
1.38 | 1.31 | .96 | |||||||||||||||||
Return on average common equity (%) |
14.5 | 13.7 | 10.5 | |||||||||||||||||
Net interest margin (%) |
3.69 | 3.83 | 3.90 | |||||||||||||||||
Efficiency ratio (%) |
51.1 | 52.5 | 49.0 | |||||||||||||||||
Tangible efficiency ratio (%) (a) |
49.5 | 50.6 | 46.8 | |||||||||||||||||
Dividends declared per common share |
$ | .125 | $ | .050 | $ | .050 | nm | nm | ||||||||||||
Book value per common share (period-end) |
$ | 14.83 | $ | 14.36 | $ | 13.16 | 3.3 | 12.7 |
(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 $1,046 million for the first quarter of 2011,
56.4 percent higher than the $669 million for the first quarter of 2010 and 7.4 percent higher than
the $974 million for the fourth quarter of 2010. Diluted earnings per common share of $.52 in the
first quarter of 2011 were $.18 higher than the first quarter of 2010 and $.03 higher than the
previous quarter. Return on average assets and return on average common equity were 1.38 percent
and 14.5 percent, respectively, for the first quarter of 2011, compared with .96 percent and 10.5
percent, respectively, for the first quarter of 2010. Included in the first quarter of 2011 was a
$46 million FCB gain that increased first quarter of 2011 diluted earnings per common share by
approximately $.02. Significant items in the fourth quarter of 2010 included a $103
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million gain ($41 million after tax) from the exchange of the long-term asset management
business of FAF Advisors, Inc., an affiliate of the Company, for an equity interest in Nuveen
Investments and cash consideration (Nuveen Gain), partially offset by $14 million of net
securities losses, while the first quarter of 2010 included net securities losses of $34 million.
The provision for credit losses for the first quarter of 2011 was $50 million lower than net
charge-offs as compared with $25 million lower than net charge-offs for the fourth quarter of 2010
and $175 million in excess of net charge-offs for the first quarter of 2010.
U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis said, Our
results for the first quarter of 2011 reflected our proven business model during a recovering, yet
still uncertain, economic environment. Total net revenue grew by 4.6 percent over the first
quarter of 2010, and we achieved year-over-year average loan growth of 2.4 percent and linked
quarter average loan growth of just over one percent. Deposit growth was exceptionally strong.
The growth in total net revenue and significantly lower credit costs resulted in earnings of over
$1.0 billion for the quarter.
Our balance sheet and fee-based businesses continued to build momentum during the first
quarter of 2011. Average commercial loans outstanding were 1.9 percent higher, excluding
acquisitions, in the first quarter than the prior quarter, as lending and commitments to corporate,
middle market and small business customers grew. Contributing to this growth were our metropolitan
branch banking and in-store divisions, which together increased average small business loans
outstanding by over 22 percent year-over-year and by 3.9 percent linked quarter. The growth in
lending activity and commitments, higher deposits, new and enhanced product capabilities and
expansion initiatives in each of our business lines contributed to strong first quarter net
revenue, which was, in fact, a record first quarter total for our Company.
We continue to invest in our franchise, most notably this quarter with the acquisition of the
banking operations of First Community Bank from the FDIC. The acquisition extended our branch
banking franchise into New Mexico, our 25th contiguous state, and immediately established us as one
of the top three banks in terms of market share in this new attractive market. The purchase of FCB
fits perfectly into our strategy of acquiring businesses and smaller fill-in banking franchises
that add product and service capabilities, as well as profitable scale to our existing business
lines and footprint in comparatively low-risk transactions.
Our adherence to prudent underwriting and an improving economy resulted in significantly
lower credit costs for the first quarter. Lower net charge-offs, improving risk ratings and a more
positive economic outlook led to a $50 million reserve release in the current quarter, compared
with a reserve build of $175
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million in the first quarter of last year and a $25 million reserve release in the prior
quarter. We expect net charge-offs and nonperforming assets to decline again in the coming
quarter.
Our capital levels are strong and growing, as we ended the quarter with a Tier 1 common
equity ratio of 8.2 percent and a Tier 1 capital ratio of 10.8 percent. On March 18th we announced
a 150 percent increase in our dividend rate after receiving notice from the Federal Reserve that
they did not object to our request to increase our dividend or undertake the other capital
distributions included in the Companys Comprehensive Capital Plan. Raising the dividend has been
a priority for this management team and our board of directors for more than a year, as we
continued to generate and build significant capital each and every quarter. I am pleased to begin
rewarding our shareholders for their patience, confidence and support during the recent economic
downturn. In addition to the dividend increase, our board of directors authorized a 50 million
share common stock repurchase program, which provides the Company with added flexibility going
forward as we seek to return capital to our shareholders.
The economy is slowly recovering. We can see it in our customers actions from growth in
small business lending to higher payment processing transaction volumes to improving credit metrics
and, importantly, in our customers outlook. A healthy banking industry is crucial to the
countrys economic growth and future prosperity, and our Company and our employees are taking an
active role in Washington D.C., communicating with our regulators, legislators and the
administration. In fact, this year U.S. Bank market leaders from across our footprint have
attended over 130 meetings with representatives in Washington D.C. We are working on behalf of the
industry to make certain that our voice is heard and that new regulation and legislation supports
the recovery, rather than stifles the countrys progress.
And we are working everyday on behalf of our stakeholders. Emerging from this downturn as a
stronger Company, I am confident that our operating model, our prudent risk management and growth
strategies will continue to serve us well for the benefit of our employees, customers, communities
and, importantly, our shareholders.
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INCOME STATEMENT HIGHLIGHTS | Table 2 |
Percent | Percent | |||||||||||||||||||
Change | Change | |||||||||||||||||||
(Taxable-equivalent basis, $ in millions, | 1Q | 4Q | 1Q | 1Q11 vs | 1Q11 vs | |||||||||||||||
except per-share data) | 2011 | 2010 | 2010 | 4Q10 | 1Q10 | |||||||||||||||
Net interest income |
$ | 2,507 | $ | 2,499 | $ | 2,403 | .3 | 4.3 | ||||||||||||
Noninterest income |
2,012 | 2,222 | 1,918 | (9.5 | ) | 4.9 | ||||||||||||||
Total net revenue |
4,519 | 4,721 | 4,321 | (4.3 | ) | 4.6 | ||||||||||||||
Noninterest expense |
2,314 | 2,485 | 2,136 | (6.9 | ) | 8.3 | ||||||||||||||
Income before provision and taxes |
2,205 | 2,236 | 2,185 | (1.4 | ) | .9 | ||||||||||||||
Provision for credit losses |
755 | 912 | 1,310 | (17.2 | ) | (42.4 | ) | |||||||||||||
Income before taxes |
1,450 | 1,324 | 875 | 9.5 | 65.7 | |||||||||||||||
Taxable-equivalent adjustment |
55 | 53 | 51 | 3.8 | 7.8 | |||||||||||||||
Applicable income taxes |
366 | 315 | 161 | 16.2 | nm | |||||||||||||||
Net income |
1,029 | 956 | 663 | 7.6 | 55.2 | |||||||||||||||
Net (income) loss attributable to
noncontrolling interests |
17 | 18 | 6 | (5.6 | ) | nm | ||||||||||||||
Net income attributable to U.S. Bancorp |
$ | 1,046 | $ | 974 | $ | 669 | 7.4 | 56.4 | ||||||||||||
Net income applicable to U.S. Bancorp
common shareholders |
$ | 1,003 | $ | 951 | $ | 648 | 5.5 | 54.8 | ||||||||||||
Diluted earnings per common share |
$ | .52 | $ | .49 | $ | .34 | 6.1 | 52.9 | ||||||||||||
Net income attributable to U.S. Bancorp for the first quarter of 2011 was $377 million
(56.4 percent) higher than the first quarter of 2010 and $72 million (7.4 percent) higher than the
fourth quarter of 2010. The increase in net income year-over-year was principally the result of
growth in total net revenue, driven by increases in both net interest income and fee-based revenue,
and a lower provision for credit losses. These positive variances were partially offset by an
increase in total noninterest expense. The increase in net income attributable to U.S. Bancorp on
a linked quarter basis was driven by a lower provision for credit losses and a decrease in total
noninterest expense, partially offset by a decline in total noninterest income.
Total net revenue on a taxable-equivalent basis for the first quarter of 2011 was $4,519
million; $198 million (4.6 percent) higher than the first quarter of 2010, reflecting a 4.3 percent
increase in net interest income and a 4.9 percent increase in noninterest income. The increase in
net interest income year-over-year was largely the result of an increase in average earning assets
and continued growth in lower cost core
deposit funding. Noninterest income increased year-over-year, primarily due to higher
payments-related revenue, commercial products revenue and other income, as well as lower net
securities losses. Total net revenue on a taxable-equivalent basis was $202 million (4.3 percent)
lower on a linked quarter basis,
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principally due to a 9.5 percent decrease in total noninterest income driven by lower mortgage
banking revenue, seasonally lower payments-related revenue and lower other income.
Total noninterest expense in the first quarter of 2011 was $2,314 million; $178 million (8.3
percent) higher than the first quarter of 2010 and $171 million (6.9 percent) lower than the fourth
quarter of 2010. The increase in total noninterest expense year-over-year was primarily due to
higher compensation and employee benefits expense. The decrease in total noninterest expense on a
linked quarter basis was principally due to seasonally higher fourth quarter of 2010 costs related
to investments in affordable housing and other tax-advantaged projects, professional services and
marketing and business development expenses.
The Companys provision for credit losses declined from a year ago and on a linked quarter
basis. The provision for credit losses for the first quarter of 2011 was $755 million, $157
million lower than the fourth quarter of 2010 and $555 million lower than the first quarter of
2010. The provision for credit losses was $50 million lower than net charge-offs in the first
quarter of 2011. In the fourth quarter of 2010, the provision for credit losses was $25 million
lower than net charge-offs, while in the first quarter of 2010, it exceeded net charge-offs by $175
million. Net charge-offs in the first quarter of 2011 were $805 million, compared with $937
million in the fourth quarter of 2010, and $1,135 million in the first quarter of 2010. Given
current economic conditions, the Company expects the level of net charge-offs to continue to trend
lower in the second quarter of 2011.
Nonperforming assets include assets originated by the Company, as well as loans and other real
estate acquired under FDIC loss sharing agreements (covered assets) that substantially reduce the
risk of credit losses to the Company. Additionally, nonperforming assets included $287 million of
loans and other real estate acquired through the recent acquisition of FCB from the FDIC, which are
not covered by a loss sharing agreement. Assets associated with the FCB transaction were recorded
at their estimated fair value at the acquisition date and included in the related asset categories.
Excluding covered assets, nonperforming assets were $3,479 million at March 31, 2011, $3,351
million at December 31, 2010, and $3,995 million at March 31, 2010. The increase on a linked
quarter basis was due to the FCB acquisition. Without the impact of FCB, nonperforming assets,
excluding covered assets, at March 31, 2011, were $3,192 million, a 4.7 percent decrease from the
prior quarter. The decline, without FCB, on linked quarter and year-over-year basis was
led by reductions in nonperforming construction and land development assets as the Company
continued to resolve and reduce exposure to these problem assets, in addition to improvement in
other commercial portfolios, reflecting the stabilizing economy. However, there was continued
stress in the
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residential mortgage portfolio, due to the overall duration of the economic slowdown. Covered
nonperforming assets were $1,541 million at March 31, 2011, $1,697 million at December 31, 2010,
and $2,385 million at March 31, 2010. The majority of the nonperforming covered assets were
considered credit-impaired at acquisition and were recorded at their estimated fair value at the
date of acquisition. The ratio of the allowance for credit losses to period-end loans, excluding
covered loans, was 2.97 percent at March 31, 2011, compared with 3.03 percent at December 31, 2010,
and 3.20 percent at March 31, 2010. The ratio of the allowance for credit losses to period-end
loans, including covered loans, was 2.78 percent at March 31, 2011, compared with 2.81 percent at
December 31, 2010, and 2.85 percent at March 31, 2010. The Company expects total nonperforming
assets, excluding covered assets, to trend lower in the second quarter of 2011.
On April 13, 2011, U.S. Bancorps two primary banking subsidiaries, U.S. Bank National
Association and U.S. Bank National Association ND, consented to the issuance of a Consent Order
with the Office of the Comptroller of the Currency regarding residential mortgage servicing and
foreclosure processes. U.S. Bancorp entered into a related Consent Order with the Board of
Governors of the Federal Reserve System. The Orders were the result of the recent interagency
horizontal review of the foreclosure practices of the 14 largest mortgage servicers in the United
States. U.S. Bank is a relatively small participant in the mortgage servicing market
(approximately 2 percent), and has long been committed to sound modification and foreclosure
practices. Foreclosure has always been regarded as the last resort. U.S. Bank will continue to
support its customers during these challenging economic times and stands ready to assist them. Any
recommendations by our regulators for improvements to our processes are always taken very
seriously, and we are committed to working with the regulators to quickly resolve any outstanding
issues.
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NET INTEREST INCOME | Table 3 | |
Change | Change | |||||||||||||||||||
1Q | 4Q | 1Q | 1Q11 vs | 1Q11 vs | ||||||||||||||||
(Taxable-equivalent basis; $ in millions) | 2011 | 2010 | 2010 | 4Q10 | 1Q10 | |||||||||||||||
Components of net interest income |
||||||||||||||||||||
Income on earning assets |
$ | 3,157 | $ | 3,148 | $ | 3,046 | $ | 9 | $ | 111 | ||||||||||
Expense on interest-bearing
liabilities |
650 | 649 | 643 | 1 | 7 | |||||||||||||||
Net interest income |
$ | 2,507 | $ | 2,499 | $ | 2,403 | $ | 8 | $ | 104 | ||||||||||
Average yields and rates paid |
||||||||||||||||||||
Earning assets yield |
4.65 | % | 4.82 | % | 4.94 | % | (.17 | )% | (.29 | )% | ||||||||||
Rate paid on interest-bearing
liabilities |
1.18 | 1.21 | 1.24 | (.03 | ) | (.06 | ) | |||||||||||||
Gross interest margin |
3.47 | % | 3.61 | % | 3.70 | % | (.14 | )% | (.23 | )% | ||||||||||
Net interest margin |
3.69 | % | 3.83 | % | 3.90 | % | (.14 | )% | (.21 | )% | ||||||||||
Average balances |
||||||||||||||||||||
Investment securities (a) |
$ | 56,405 | $ | 49,790 | $ | 46,211 | $ | 6,615 | $ | 10,194 | ||||||||||
Loans |
197,570 | 195,484 | 192,878 | 2,086 | 4,692 | |||||||||||||||
Earning assets |
273,940 | 259,859 | 248,828 | 14,081 | 25,112 | |||||||||||||||
Interest-bearing liabilities |
223,886 | 212,308 | 209,538 | 11,578 | 14,348 | |||||||||||||||
Net free funds (b) |
50,054 | 47,551 | 39,290 | 2,503 | 10,764 |
(a) | Excludes unrealized gain (loss) | |
(b) | Represents noninterest-bearing deposits, other noninterest-bearing liabilities and equity, allowance for loan losses and unrealized gain (loss) on available-for-sale securities less non-earning assets. |
Net Interest Income
Net interest income on a taxable-equivalent basis in the first quarter of 2011 was $2,507
million, compared with $2,403 million in the first quarter of 2010, an increase of $104 million
(4.3 percent). The increase was principally the result of growth in average earning assets and
growth in lower cost core deposit funding. Average earning assets were $25.1 billion (10.1
percent) higher than the first quarter of 2010, driven by increases of $4.7 billion (2.4 percent)
in average loans, $10.2 billion (22.1 percent) in average investment securities and $8.1 billion
in average other earning assets, which included balances held at the Federal Reserve. Net interest
income was relatively flat on a linked quarter basis, as growth in average earning assets, largely
in lower yielding investment securities and balances at the Federal Reserve, more than
offset the impact of fewer days in the first quarter relative to the prior quarter. The net
interest margin was 3.69 percent in the first quarter of 2011, 3.90 percent in the first quarter of
2010, and 3.83 percent in the fourth quarter of 2010. The decline in the net interest margin
year-over-year and on a linked quarter basis
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reflected higher balances in lower yielding investment
securities and growth in cash balances held at the Federal Reserve.
AVERAGE LOANS | Table 4 | |
Percent | Percent | |||||||||||||||||||
Change | Change | |||||||||||||||||||
1Q | 4Q | 1Q | 1Q11 vs | 1Q11 vs | ||||||||||||||||
($ in millions) | 2011 | 2010 | 2010 | 4Q10 | 1Q10 | |||||||||||||||
Commercial |
$ | 42,683 | $ | 41,700 | $ | 40,837 | 2.4 | 4.5 | ||||||||||||
Lease financing |
6,030 | 6,012 | 6,445 | .3 | (6.4 | ) | ||||||||||||||
Total commercial |
48,713 | 47,712 | 47,282 | 2.1 | 3.0 | |||||||||||||||
Commercial mortgages |
27,709 | 26,750 | 25,444 | 3.6 | 8.9 | |||||||||||||||
Construction and development |
7,470 | 7,827 | 8,707 | (4.6 | ) | (14.2 | ) | |||||||||||||
Total commercial real estate |
35,179 | 34,577 | 34,151 | 1.7 | 3.0 | |||||||||||||||
Residential mortgages |
31,777 | 29,659 | 26,408 | 7.1 | 20.3 | |||||||||||||||
Credit card |
16,124 | 16,403 | 16,368 | (1.7 | ) | (1.5 | ) | |||||||||||||
Retail leasing |
4,647 | 4,459 | 4,509 | 4.2 | 3.1 | |||||||||||||||
Home equity and second mortgages |
18,801 | 19,119 | 19,402 | (1.7 | ) | (3.1 | ) | |||||||||||||
Other retail |
24,691 | 24,983 | 23,343 | (1.2 | ) | 5.8 | ||||||||||||||
Total retail |
64,263 | 64,964 | 63,622 | (1.1 | ) | 1.0 | ||||||||||||||
Total loans, excluding covered
loans |
179,932 | 176,912 | 171,463 | 1.7 | 4.9 | |||||||||||||||
Covered loans |
17,638 | 18,572 | 21,415 | (5.0 | ) | (17.6 | ) | |||||||||||||
Total loans |
$ | 197,570 | $ | 195,484 | $ | 192,878 | 1.1 | 2.4 | ||||||||||||
Total average loans were $4.7 billion (2.4 percent) higher in the first quarter of 2011
than the first quarter of 2010, driven by growth in residential mortgages (20.3 percent), total
commercial loans (3.0 percent), total commercial real estate loans (3.0 percent) and total retail
loans (1.0 percent). These increases were partially offset by a 17.6 percent decline in average
covered loans. Total average loans were $2.1 billion (1.1 percent) higher in the first quarter of
2011 than the fourth quarter of 2010, as increases in the majority of loan categories, including
residential mortgages (7.1 percent), total commercial loans (2.1
percent), and total commercial real estate loans (1.7 percent) were partially offset by lower
covered loans (5.0 percent) and total retail loans (1.1 percent). The increases were driven by
demand for loans and lines by new and existing credit-worthy borrowers and the impact of the FCB
acquisition.
Average investment securities in the first quarter of 2011 were $10.2 billion (22.1 percent)
higher year-over-year and $6.6 billion (13.3 percent) higher than the prior quarter. The increases
over the prior year and
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linked quarter were primarily due to purchases of U.S. Treasury and
government agency-backed securities, as the Company continued to move liquidity on-balance sheet.
AVERAGE DEPOSITS | Table 5 | |
Percent | Percent | |||||||||||||||||||
Change | Change | |||||||||||||||||||
1Q | 4Q | 1Q | 1Q11 vs | 1Q11 vs | ||||||||||||||||
($ in millions) | 2011 | 2010 | 2010 | 4Q10 | 1Q10 | |||||||||||||||
Noninterest-bearing deposits |
$ | 44,189 | $ | 42,950 | $ | 38,000 | 2.9 | 16.3 | ||||||||||||
Interest-bearing savings deposits |
||||||||||||||||||||
Interest checking |
42,645 | 41,920 | 39,994 | 1.7 | 6.6 | |||||||||||||||
Money market savings |
45,649 | 39,585 | 40,902 | 15.3 | 11.6 | |||||||||||||||
Savings accounts |
25,330 | 23,470 | 18,029 | 7.9 | 40.5 | |||||||||||||||
Total of savings deposits |
113,624 | 104,975 | 98,925 | 8.2 | 14.9 | |||||||||||||||
Time certificates of deposit less
than $100,000 |
15,264 | 15,212 | 18,335 | .3 | (16.7 | ) | ||||||||||||||
Time deposits greater than $100,000 |
31,228 | 27,176 | 27,271 | 14.9 | 14.5 | |||||||||||||||
Total interest-bearing deposits |
160,116 | 147,363 | 144,531 | 8.7 | 10.8 | |||||||||||||||
Total deposits |
$ | 204,305 | $ | 190,313 | $ | 182,531 | 7.4 | 11.9 | ||||||||||||
Average total deposits for the first quarter of 2011 were $21.8 billion (11.9 percent)
higher than the first quarter of 2010. Noninterest-bearing deposits increased $6.2 billion (16.3
percent) year-over-year, largely due to growth in Wholesale Banking and Consumer and Small Business
Banking balances. Average total savings deposits were $14.7 billion (14.9 percent) higher
year-over-year, the result of growth in corporate trust balances, including the impact of the
December 30, 2010, acquisition of the securitization trust administration businesses of Bank of
America, N.A. (securitization trust acquisition), and Consumer and Small Business Banking
balances. Average time certificates of deposit less than $100,000 were $3.1 billion (16.7 percent)
lower year-over-year, reflecting maturities and fewer renewals given the current rate environment.
Time deposits greater than $100,000 increased $4.0 billion (14.5 percent), principally due to
higher balances in Wholesale Banking and institutional and corporate trust, including the impact of
the securitization trust and FCB acquisitions.
Average total deposits increased $14.0 billion (7.4 percent) over the fourth quarter of 2010.
Noninterest-bearing deposits increased $1.2 billion (2.9 percent) with increases across the
majority of business lines. Total average savings deposits increased $8.6 billion (8.2 percent) on
a linked quarter basis due to higher corporate trust balances, including the impact of the
securitization trust acquisition, and increased balances in Consumer and Small Business Banking.
Average time deposits less than $100,000
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April 19, 2011
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remained relatively flat as a decline in Consumer and
Small Business Banking was offset by the impact of the FCB acquisition. Average time deposits over
$100,000 were $4.1 billion (14.9 percent) higher on a linked quarter basis, reflecting the
securitization trust and FCB acquisitions, partially offset by maturities and fewer renewals given
the low interest rate environment and wholesale funding decisions.
NONINTEREST INCOME | Table 6 | |
Percent | Percent | |||||||||||||||||||
Change | Change | |||||||||||||||||||
1Q | 4Q | 1Q | 1Q11 vs | 1Q11 vs | ||||||||||||||||
($ in millions) | 2011 | 2010 | 2010 | 4Q10 | 1Q10 | |||||||||||||||
Credit and debit card revenue |
$ | 267 | $ | 293 | $ | 258 | (8.9 | ) | 3.5 | |||||||||||
Corporate payment products revenue |
175 | 173 | 168 | 1.2 | 4.2 | |||||||||||||||
Merchant processing services |
301 | 323 | 292 | (6.8 | ) | 3.1 | ||||||||||||||
ATM processing services |
112 | 105 | 105 | 6.7 | 6.7 | |||||||||||||||
Trust and investment management fees |
256 | 282 | 264 | (9.2 | ) | (3.0 | ) | |||||||||||||
Deposit service charges |
143 | 144 | 207 | (.7 | ) | (30.9 | ) | |||||||||||||
Treasury management fees |
137 | 134 | 137 | 2.2 | | |||||||||||||||
Commercial products revenue |
191 | 208 | 161 | (8.2 | ) | 18.6 | ||||||||||||||
Mortgage banking revenue |
199 | 250 | 200 | (20.4 | ) | (.5 | ) | |||||||||||||
Investment products fees and
commissions |
32 | 29 | 25 | 10.3 | 28.0 | |||||||||||||||
Securities gains (losses), net |
(5 | ) | (14 | ) | (34 | ) | 64.3 | 85.3 | ||||||||||||
Other |
204 | 295 | 135 | (30.8 | ) | 51.1 | ||||||||||||||
Total noninterest income |
$ | 2,012 | $ | 2,222 | $ | 1,918 | (9.5 | ) | 4.9 | |||||||||||
Noninterest Income
First quarter noninterest income was $2,012 million; $94 million (4.9 percent) higher than the
first quarter of 2010 and $210 million (9.5 percent) lower than the fourth quarter of 2010.
Year-over-year,
noninterest income benefited from payments-related revenues, which were $25 million (3.5 percent)
higher, largely due to increased transaction volumes and business expansion, and a $30 million
(18.6 percent) increase in commercial products revenue, attributable to higher standby letters of
credit fees, commercial loan and syndication fees, foreign exchange income and other capital
markets revenue. Additionally, there was a $29 million (85.3 percent) improvement in net
securities losses and other income was higher than the first quarter of 2010 by $69 million (51.1
percent), principally due to the FCB gain and a gain related to the Companys investment in Visa
Inc. (NYSE: V) (Visa Gain). Offsetting these positive variances was a decrease in trust and
investment management fees of $8 million (3.0 percent), primarily due to the transfer of
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the long-term asset management business to Nuveen Investments in the fourth quarter of 2010. This
decline was partially offset by the positive impact of the securitization trust acquisition and
improved market conditions. Deposit service charges decreased $64 million (30.9 percent), as the
result of Company-initiated and regulatory revisions to overdraft fee policies, partially offset by
core account growth.
Noninterest income was $210 million (9.5 percent) lower in the first quarter of 2011 than the
fourth quarter of 2010. Payments-related revenue decreased $46 million (5.8 percent), primarily
driven by seasonally lower merchant processing and credit and debit card transaction volumes.
Trust and investment management fees were $26 million (9.2 percent) lower on a linked quarter
basis, mainly due to the transfer of the long-term asset management business to Nuveen Investments
in the fourth quarter of 2010, partially offset by the positive impact of the securitization trust
acquisition. The decrease in commercial products revenue of $17 million (8.2 percent) from the
fourth quarter of 2010 was attributable to lower syndication and other capital markets fees.
Mortgage banking revenue declined by $51 million (20.4 percent), primarily due to lower sales and
origination revenue, partially offset by a higher net valuation of mortgage servicing rights
(MSRs). Other income decreased by $91 million (30.8 percent) as the first quarter of 2011 FCB and
Visa Gains were more than offset by the fourth quarter of 2010 Nuveen and Visa Gains.
NONINTEREST EXPENSE | Table 7 | |
Percent | Percent | |||||||||||||||||||
Change | Change | |||||||||||||||||||
1Q | 4Q | 1Q | 1Q11 vs | 1Q11 vs | ||||||||||||||||
($ in millions) | 2011 | 2010 | 2010 | 4Q10 | 1Q10 | |||||||||||||||
Compensation |
$ | 959 | $ | 999 | $ | 861 | (4.0 | ) | 11.4 | |||||||||||
Employee benefits |
230 | 171 | 180 | 34.5 | 27.8 | |||||||||||||||
Net occupancy and equipment |
249 | 237 | 227 | 5.1 | 9.7 | |||||||||||||||
Professional services |
70 | 97 | 58 | (27.8 | ) | 20.7 | ||||||||||||||
Marketing and business
development |
65 | 106 | 60 | (38.7 | ) | 8.3 | ||||||||||||||
Technology and communications |
185 | 187 | 185 | (1.1 | ) | | ||||||||||||||
Postage, printing and supplies |
74 | 78 | 74 | (5.1 | ) | | ||||||||||||||
Other intangibles |
75 | 89 | 97 | (15.7 | ) | (22.7 | ) | |||||||||||||
Other |
407 | 521 | 394 | (21.9 | ) | 3.3 | ||||||||||||||
Total noninterest expense |
$ | 2,314 | $ | 2,485 | $ | 2,136 | (6.9 | ) | 8.3 | |||||||||||
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Noninterest Expense
Noninterest expense in the first quarter of 2011 totaled $2,314 million, an increase of $178
million (8.3 percent) over the first quarter of 2010, and a $171 million decrease (6.9 percent)
from the fourth quarter of 2010. The increase in noninterest expense over the same quarter of last
year was principally due to increased compensation and employee benefits expense. Compensation and
employee benefits expense increased over the prior year by $98 million (11.4 percent) and $50
million (27.8 percent), respectively. Compensation expense increased primarily because of
acquisitions, branch expansion and other business initiatives, higher incentives related to the
Companys improved financial results and merit increases. Employee benefits expense increased due
to higher pension and medical costs and the impact of additional staff. Net occupancy and
equipment expense increased $22 million (9.7 percent) year-over-year largely due to business
expansion and technology initiatives. Professional services expense was $12 million (20.7 percent)
higher year-over-year, due to technology-related and other projects across multiple business lines.
Other expense was higher by $13 million (3.3 percent) primarily due to insurance and litigation
matters. These increases were partially offset by a decrease in other intangibles expense of $22
million (22.7 percent) compared with the prior year, due to the reduction or completion of the
amortization of certain intangibles.
Noninterest expense was $171 million (6.9 percent) lower on a linked quarter basis.
Compensation expense decreased $40 million (4.0 percent), principally due to lower incentives and
commissions, partially offset by the impact of business expansion initiatives. Professional
services and marketing and business development expenses were lower on a linked quarter basis by
$27 million (27.8 percent) and $41 million (38.7 percent), respectively, due to the timing of
payments-related initiatives and the impact of seasonally higher expenses in the fourth quarter of
2010. Other intangibles expense declined $14 million (15.7 percent) due to the reduction or
completion of the amortization of certain intangibles. In addition, other expense decreased $114
million (21.9 percent) from the fourth quarter of 2010 mainly due to lower acquisition integration
expense, lower costs associated with other real estate owned and seasonally higher investments in
affordable housing and other tax-advantaged projects in the fourth quarter of 2010. These
favorable variances were partially offset by a $59 million (34.5 percent) increase in employee
benefits expense, reflecting higher pension expense, medical costs and a seasonal increase in
payroll taxes.
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April 19, 2011
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Provision for Income Taxes
The provision for income taxes for the first quarter of 2011 resulted in a tax rate on a
taxable-equivalent basis of 29.0 percent (effective tax rate of 26.2 percent), compared with 24.2
percent (effective tax rate of 19.5 percent) in the first quarter of 2010 and 27.8 percent
(effective tax rate of 24.8 percent) in the fourth quarter of 2010. The increase in the effective
tax rate primarily reflected the marginal impact of higher pretax earnings.
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April 19, 2011
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ALLOWANCE FOR CREDIT LOSSES | Table 8 | |
1Q | 4Q | 3Q | 2Q | 1Q | ||||||||||||||||
($ in millions) | 2011 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||
Balance, beginning of period |
$ | 5,531 | $ | 5,540 | $ | 5,536 | $ | 5,439 | $ | 5,264 | ||||||||||
Net charge-offs |
||||||||||||||||||||
Commercial |
125 | 117 | 153 | 223 | 243 | |||||||||||||||
Lease financing |
14 | 17 | 18 | 22 | 34 | |||||||||||||||
Total commercial |
139 | 134 | 171 | 245 | 277 | |||||||||||||||
Commercial mortgages |
40 | 90 | 113 | 71 | 46 | |||||||||||||||
Construction and development |
85 | 129 | 94 | 156 | 146 | |||||||||||||||
Total commercial real estate |
125 | 219 | 207 | 227 | 192 | |||||||||||||||
Residential mortgages |
129 | 131 | 132 | 138 | 145 | |||||||||||||||
Credit card |
247 | 275 | 296 | 317 | 312 | |||||||||||||||
Retail leasing |
1 | 1 | 2 | 4 | 5 | |||||||||||||||
Home equity and second mortgages |
81 | 83 | 79 | 79 | 90 | |||||||||||||||
Other retail |
81 | 91 | 101 | 99 | 111 | |||||||||||||||
Total retail |
410 | 450 | 478 | 499 | 518 | |||||||||||||||
Total net charge-offs, excluding covered loans |
803 | 934 | 988 | 1,109 | 1,132 | |||||||||||||||
Covered loans |
2 | 3 | 7 | 5 | 3 | |||||||||||||||
Total net charge-offs |
805 | 937 | 995 | 1,114 | 1,135 | |||||||||||||||
Provision for credit losses |
755 | 912 | 995 | 1,139 | 1,310 | |||||||||||||||
Net change for credit losses to be reimbursed by the
FDIC |
17 | 16 | 4 | 72 | | |||||||||||||||
Balance, end of period |
$ | 5,498 | $ | 5,531 | $ | 5,540 | $ | 5,536 | $ | 5,439 | ||||||||||
Components |
||||||||||||||||||||
Allowance for loan losses, excluding losses to be
reimbursed by the FDIC |
$ | 5,161 | $ | 5,218 | $ | 5,245 | $ | 5,248 | $ | 5,235 | ||||||||||
Allowance for credit losses to be reimbursed
by the FDIC |
109 | 92 | 76 | 72 | | |||||||||||||||
Liability for unfunded credit commitments |
228 | 221 | 219 | 216 | 204 | |||||||||||||||
Total allowance for credit losses |
$ | 5,498 | $ | 5,531 | $ | 5,540 | $ | 5,536 | $ | 5,439 | ||||||||||
Gross charge-offs |
$ | 899 | $ | 1,035 | $ | 1,069 | $ | 1,186 | $ | 1,206 | ||||||||||
Gross recoveries |
$ | 94 | $ | 98 | $ | 74 | $ | 72 | $ | 71 | ||||||||||
Allowance for credit losses as a percentage of |
||||||||||||||||||||
Period-end loans, excluding covered loans |
2.97 | 3.03 | 3.10 | 3.18 | 3.20 | |||||||||||||||
Nonperforming loans, excluding covered loans |
180 | 192 | 181 | 168 | 156 | |||||||||||||||
Nonperforming assets, excluding covered assets |
154 | 162 | 153 | 146 | 136 | |||||||||||||||
Period-end loans |
2.78 | 2.81 | 2.85 | 2.89 | 2.85 | |||||||||||||||
Nonperforming loans |
133 | 136 | 133 | 120 | 109 | |||||||||||||||
Nonperforming assets |
110 | 110 | 102 | 94 | 85 |
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Credit Quality
Net charge-offs and nonperforming assets declined on a linked quarter and year-over-year basis
as economic conditions stabilized. The allowance for credit losses was $5,498 million at March 31,
2011, compared with $5,531 million at December 31, 2010, and $5,439 million at March 31, 2010.
Total net charge-offs in the first quarter of 2011 were $805 million, compared with $937 million in
the fourth quarter of 2010, and $1,135 million in the first quarter of 2010. The decrease in total
net charge-offs was principally due to improvement in the commercial real estate, credit card and
other retail portfolios. The Company recorded $755 million of provision for credit losses, $50
million less than net charge-offs during the first quarter of 2011. The allowance for credit
losses reimbursable by the FDIC was higher than the prior quarter by $17 million.
Commercial and commercial real estate loan net charge-offs decreased to $264 million in the
first quarter of 2011 (1.28 percent of average loans outstanding), compared with $353 million (1.70
percent of average loans outstanding) in the fourth quarter of 2010 and $469 million (2.34 percent
of average loans outstanding) in the first quarter of 2010. The decrease primarily reflected the
impact of efforts to resolve and reduce exposure to problem assets in the Companys commercial real
estate portfolios.
Residential mortgage loan net charge-offs decreased to $129 million (1.65 percent of average
loans outstanding) in the first quarter of 2011, compared with $131 million (1.75 percent of
average loans outstanding) in the fourth quarter of 2010 and $145 million (2.23 percent of average
loans outstanding) in the
first quarter of 2010. Total retail loan net charge-offs were $410 million (2.59 percent of
average loans outstanding) in the first quarter of 2011, lower than the $450 million (2.75 percent
of average loans outstanding) in the fourth quarter of 2010 and the $518 million (3.30 percent of
average loans outstanding) in the first quarter of 2010.
The ratio of the allowance for credit losses to period-end loans was 2.78 percent (2.97
percent excluding covered loans) at March 31, 2011, compared with 2.81 percent (3.03 percent
excluding covered loans) at December 31, 2010, and 2.85 percent (3.20 percent excluding covered
loans) at March 31, 2010. The ratio of the allowance for credit losses to nonperforming loans was
133 percent (180 percent excluding covered loans) at March 31, 2011, compared with 136 percent (192
percent excluding covered loans) at December 31, 2010, and 109 percent (156 percent excluding
covered loans) at March 31, 2010.
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CREDIT RATIOS | Table 9 |
1Q | 4Q | 3Q | 2Q | 1Q | ||||||||||||||||
(Percent) | 2011 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||
Net charge-offs ratios (a) |
||||||||||||||||||||
Commercial |
1.19 | 1.11 | 1.49 | 2.23 | 2.41 | |||||||||||||||
Lease financing |
.94 | 1.12 | 1.18 | 1.41 | 2.14 | |||||||||||||||
Total commercial |
1.16 | 1.11 | 1.45 | 2.12 | 2.38 | |||||||||||||||
Commercial mortgages |
.59 | 1.33 | 1.72 | 1.11 | .73 | |||||||||||||||
Construction and development |
4.61 | 6.54 | 4.56 | 7.31 | 6.80 | |||||||||||||||
Total commercial real estate |
1.44 | 2.51 | 2.40 | 2.67 | 2.28 | |||||||||||||||
Residential mortgages |
1.65 | 1.75 | 1.88 | 2.06 | 2.23 | |||||||||||||||
Credit card (b) |
6.21 | 6.65 | 7.11 | 7.79 | 7.73 | |||||||||||||||
Retail leasing |
.09 | .09 | .19 | .37 | .45 | |||||||||||||||
Home equity and second mortgages |
1.75 | 1.72 | 1.62 | 1.64 | 1.88 | |||||||||||||||
Other retail |
1.33 | 1.45 | 1.65 | 1.70 | 1.93 | |||||||||||||||
Total retail |
2.59 | 2.75 | 2.95 | 3.16 | 3.30 | |||||||||||||||
Total net charge-offs, excluding covered loans |
1.81 | 2.09 | 2.26 | 2.61 | 2.68 | |||||||||||||||
Covered loans |
.05 | .06 | .14 | .10 | .06 | |||||||||||||||
Total net charge-offs |
1.65 | 1.90 | 2.05 | 2.34 | 2.39 | |||||||||||||||
Delinquent loan ratios - 90 days or more past due excluding nonperforming loans (c) | ||||||||||||||||||||
Commercial |
.12 | .13 | .19 | .21 | .18 | |||||||||||||||
Commercial real estate |
.02 | | .05 | .09 | .01 | |||||||||||||||
Residential mortgages |
1.33 | 1.63 | 1.75 | 1.85 | 2.26 | |||||||||||||||
Retail |
.71 | .81 | .85 | .95 | 1.00 | |||||||||||||||
Total loans, excluding covered loans |
.52 | .61 | .66 | .72 | .78 | |||||||||||||||
Covered loans |
5.83 | 6.04 | 4.96 | 4.91 | 3.90 | |||||||||||||||
Total loans |
.99 | 1.11 | 1.08 | 1.16 | 1.12 | |||||||||||||||
Delinquent loan ratios - 90 days or more past due including nonperforming loans (c) | ||||||||||||||||||||
Commercial |
1.12 | 1.37 | 1.67 | 1.89 | 2.06 | |||||||||||||||
Commercial real estate |
4.17 | 3.73 | 4.20 | 4.84 | 5.37 | |||||||||||||||
Residential mortgages |
3.45 | 3.70 | 3.90 | 4.08 | 4.33 | |||||||||||||||
Retail |
1.23 | 1.26 | 1.26 | 1.32 | 1.37 | |||||||||||||||
Total loans, excluding covered loans |
2.17 | 2.19 | 2.37 | 2.61 | 2.82 | |||||||||||||||
Covered loans |
12.51 | 12.94 | 11.12 | 11.72 | 11.19 | |||||||||||||||
Total loans |
3.07 | 3.17 | 3.23 | 3.56 | 3.74 |
(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 6.45 percent for the first quarter of 2011, 7.21 percent for the fourth quarter of 2010, 7.84 percent for the third quarter of 2010, 8.53 percent for the second quarter of 2010 and 8.42 percent for the first quarter of 2010. | |
(c) | Ratios are expressed as a percent of ending loan balances. |
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April 19, 2011
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ASSET QUALITY | Table 10 |
Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | ||||||||||||||||
($ in millions) | 2011 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||
Nonperforming loans |
||||||||||||||||||||
Commercial |
$ | 439 | $ | 519 | $ | 594 | $ | 669 | $ | 758 | ||||||||||
Lease financing |
54 | 78 | 111 | 115 | 113 | |||||||||||||||
Total commercial |
493 | 597 | 705 | 784 | 871 | |||||||||||||||
Commercial mortgages |
635 | 545 | 624 | 601 | 596 | |||||||||||||||
Construction and development |
835 | 748 | 799 | 1,013 | 1,236 | |||||||||||||||
Total commercial real estate |
1,470 | 1,293 | 1,423 | 1,614 | 1,832 | |||||||||||||||
Residential mortgages |
685 | 636 | 614 | 607 | 550 | |||||||||||||||
Retail |
330 | 293 | 262 | 237 | 229 | |||||||||||||||
Total nonperforming loans, excluding covered loans |
2,978 | 2,819 | 3,004 | 3,242 | 3,482 | |||||||||||||||
Covered loans |
1,151 | 1,244 | 1,172 | 1,360 | 1,524 | |||||||||||||||
Total nonperforming loans |
4,129 | 4,063 | 4,176 | 4,602 | 5,006 | |||||||||||||||
Other real estate (a) |
480 | 511 | 537 | 469 | 482 | |||||||||||||||
Covered other real estate (a) |
390 | 453 | 679 | 791 | 861 | |||||||||||||||
Other nonperforming assets |
21 | 21 | 22 | 23 | 31 | |||||||||||||||
Total nonperforming assets (b) (c) |
$ | 5,020 | $ | 5,048 | $ | 5,414 | $ | 5,885 | $ | 6,380 | ||||||||||
Total nonperforming assets, excluding covered assets |
$ | 3,479 | $ | 3,351 | $ | 3,563 | $ | 3,734 | $ | 3,995 | ||||||||||
Accruing loans 90 days or more
past due, excluding covered loans |
$ | 949 | $ | 1,094 | $ | 1,165 | $ | 1,239 | $ | 1,321 | ||||||||||
Accruing loans 90 days or more past due |
$ | 1,954 | $ | 2,184 | $ | 2,110 | $ | 2,221 | $ | 2,138 | ||||||||||
Restructured loans that continue to accrue interest (d) |
$ | 2,431 | $ | 2,207 | $ | 2,180 | $ | 2,112 | $ | 2,008 | ||||||||||
Nonperforming assets to loans
plus ORE, excluding covered assets (%) |
1.92 | 1.87 | 2.02 | 2.17 | 2.34 | |||||||||||||||
Nonperforming assets to loans
plus ORE (%) |
2.52 | 2.55 | 2.76 | 3.05 | 3.31 |
(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 | |
(c) | Includes $287 million of nonperforming assets from the FCB acquisition which were recorded at estimated fair value | |
(d) | Excludes temporary concessionary modifications under hardship programs |
Nonperforming assets at March 31, 2011, totaled $5,020 million, compared with $5,048
million at December 31, 2010, and $6,380 million at March 31, 2010. Total nonperforming assets at
March 31, 2011, included $1,541 million of assets covered under loss sharing agreements with the
FDIC that substantially reduce the risk of credit losses to the Company. In addition, total
nonperforming asset at March 31, 2011, included $287 million of loans and other real estate owned
from the FCB acquisition, which were not covered by a loss sharing agreement. The majority of
these assets were considered credit-impaired at the time of the acquisition and all of the assets were recorded at estimated fair value. The ratio of
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April 19, 2011
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Page 20
nonperforming assets to loans and other real estate was 2.52 percent (1.92 percent excluding
covered assets) at March 31, 2011, compared with 2.55 percent (1.87 percent excluding covered
assets) at December 31, 2010, and 3.31 percent (2.34 percent excluding covered assets) at March 31,
2010. The decrease in nonperforming assets, excluding covered assets, compared with a year ago was
driven primarily by the construction and land development portfolios, as well as by improvement in
other commercial portfolios, partially offset by the FCB acquisition. Given current economic
conditions, the Company expects nonperforming assets, excluding covered assets, to trend lower in
the second quarter of 2011.
Accruing loans 90 days or more past due were $1,954 million ($949 million excluding covered
loans) at March 31, 2011, compared with $2,184 million ($1,094 million excluding covered loans) at
December 31, 2010, and $2,138 million ($1,321 million excluding covered loans) at March 31, 2010.
Restructured loans that continue to accrue interest increased compared with the first quarter of
2010 and the fourth quarter of 2010, primarily due to the impact of loan modifications for certain
residential mortgage and consumer credit card customers in light of current economic conditions.
The Company continues to work with customers to modify loans for borrowers who are having financial
difficulties, including those acquired through FDIC-assisted acquisitions, but expects increases in
restructured loans to moderate.
CAPITAL POSITION | Table 11 |
Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | ||||||||||||||||
($ in millions) | 2011 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||
Total U.S. Bancorp shareholders equity |
$ | 30,507 | $ | 29,519 | $ | 29,151 | $ | 28,169 | $ | 26,709 | ||||||||||
Tier 1 capital |
26,821 | 25,947 | 24,908 | 24,021 | 23,278 | |||||||||||||||
Total risk-based capital |
34,198 | 33,033 | 32,265 | 31,890 | 30,858 | |||||||||||||||
Tier 1 capital ratio |
10.8 | % | 10.5 | % | 10.3 | % | 10.1 | % | 9.9 | % | ||||||||||
Total risk-based capital ratio |
13.8 | 13.3 | 13.3 | 13.4 | 13.2 | |||||||||||||||
Leverage ratio |
9.0 | 9.1 | 9.0 | 8.8 | 8.6 | |||||||||||||||
Tier 1 common equity ratio |
8.2 | 7.8 | 7.6 | 7.4 | 7.1 | |||||||||||||||
Tangible common equity ratio |
6.3 | 6.0 | 6.2 | 6.0 | 5.6 | |||||||||||||||
Tangible common equity as a percent of
risk-weighted assets |
7.6 | 7.2 | 7.2 | 6.9 | 6.5 |
Total U.S. Bancorp shareholders equity was $30.5 billion at March 31, 2011, compared
with $29.5 billion at December 31, 2010, and $26.7 billion at March 31, 2010. The increase over
the prior year principally reflected corporate earnings, as well as the issuance, net of related
discount, of $430 million of perpetual preferred stock in exchange for certain income trust
securities in the second quarter of 2010. On
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U.S. Bancorp Reports First Quarter 2011 Results
April 19, 2011
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April 19, 2011
Page 21
March 18, 2011, the Company announced an increase of the dividend rate to $.50 on an annualized
basis, or $.125 on a quarterly basis. The board of directors of the Company also approved an
authorization to repurchase up to 50 million shares of its outstanding common stock through
December of 2011. This new authorization replaces the Companys current share repurchase program.
The Tier 1 capital ratio was 10.8 percent at March 31, 2011, compared with 10.5 percent at December
31, 2010, and 9.9 percent at March 31, 2010. The Tier 1 common equity ratio was 8.2 percent at
March 31, 2011, compared with 7.8 percent at December 31, 2010, and 7.1 percent at March 31, 2010.
The tangible common equity ratio was 6.3 percent at March 31, 2011, compared with 6.0 percent at
December 31, 2010, and 5.6 percent at March 31, 2010. All regulatory ratios continue to be in
excess of well-capitalized requirements. Additionally, the Tier 1 common ratio under anticipated
Basel III guidelines was 7.7 percent as of March 31, 2011.
COMMON SHARES | Table 12 |
1Q | 4Q | 3Q | 2Q | 1Q | ||||||||||||||||
(Millions) | 2011 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||
Beginning shares outstanding |
1,921 | 1,918 | 1,917 | 1,916 | 1,913 | |||||||||||||||
Shares issued for stock option and stock
purchase
plans, acquisitions and other corporate
purposes |
7 | 3 | 1 | 1 | 4 | |||||||||||||||
Shares repurchased for stock option plans |
(1 | ) | | | | (1 | ) | |||||||||||||
Ending shares outstanding |
1,927 | 1,921 | 1,918 | 1,917 | 1,916 | |||||||||||||||
LINE OF BUSINESS FINANCIAL PERFORMANCE (a) | Table 13 |
Net Income Attributable | ||||||||||||||||||||||||
to U.S. Bancorp | Percent Change | 1Q 2011 | ||||||||||||||||||||||
($ in millions) | 1Q | 4Q | 1Q | 1Q11 vs | 1Q11 vs | Earnings | ||||||||||||||||||
Business Line | 2011 | 2010 | 2010 | 4Q10 | 1Q10 | Composition | ||||||||||||||||||
Wholesale
Banking and Commercial Real Estate |
$ | 206 | $ | 154 | $ | 9 | 33.8 | nm | 20 | % | ||||||||||||||
Consumer and
Small Business Banking |
132 | 155 | 174 | (14.8 | ) | (24.1 | ) | 13 | ||||||||||||||||
Wealth
Management and Securities Services |
50 | 57 | 53 | (12.3 | ) | (5.7 | ) | 5 | ||||||||||||||||
Payment Services |
287 | 264 | 111 | 8.7 | nm | 27 | ||||||||||||||||||
Treasury and Corporate Support |
371 | 344 | 322 | 7.8 | 15.2 | 35 | ||||||||||||||||||
Consolidated Company |
$ | 1,046 | $ | 974 | $ | 669 | 7.4 | 56.4 | 100 | % | ||||||||||||||
(a) | preliminary data |
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U.S. Bancorp Reports First Quarter 2011 Results
April 19, 2011
Page 22
April 19, 2011
Page 22
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 2011, 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, treasury management, capital markets, foreign exchange,
international trade services and other financial services to middle market, large corporate,
commercial real estate, financial institution and public sector clients. Wholesale Banking and
Commercial Real Estate contributed $206 million of the Companys net income in the first quarter of
2011, compared with $9 million in the first quarter of 2010 and $154 million in the fourth quarter
of 2010. Wholesale Banking and Commercial Real Estates net income increased $197 million over the
same quarter of 2010 due to higher total net revenue and a lower provision for credit losses,
partially offset by an increase in total noninterest expense. Net interest income increased $45
million (9.7 percent) year-over-year due to higher average loan and deposit balances, improved
spreads on new loans and an increase in loan fees, partially offset by the impact of declining
rates on the margin benefit from deposits. Total noninterest income increased $28 million (10.5
percent), mainly due to growth in commercial products revenue across all products including
syndication and other capital markets fees, foreign exchange and international trade revenue, and
commercial loan and standby letters of credit fees. Total noninterest expense increased $26
million (9.5 percent) over a year ago, primarily due to higher compensation and employee benefits
expense and increased shared services costs. The provision for credit
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U.S. Bancorp Reports First Quarter 2011 Results
April 19, 2011
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April 19, 2011
Page 23
losses was $263 million (59.5 percent) lower year-over-year due to a reduction in net charge-offs and a decrease in reserve
allocation.
Wholesale Banking and Commercial Real Estates contribution to net income in the first quarter
of 2011 was $52 million (33.8 percent) higher than the fourth quarter of 2010. This improvement
was due to lower total noninterest expense and a reduction in the provision for credit losses, partially offset by a
decline in total net revenue. Total net revenue was lower by $20 million (2.4 percent). Net
interest income was $14 million (2.7 percent) lower on a linked quarter basis, principally due to
fewer days in the current quarter and a reduction in the margin benefit of deposits, partially
offset by higher loan and deposit balances and improved spreads on new loans. A $6 million (2.0
percent) decrease in total noninterest income was the result of lower commercial products revenue,
primarily syndication and other capital markets fees, partially offset by an increase in equity
investment revenue. Total noninterest expense decreased by $51 million (14.5 percent), largely due
to lower compensation and employee benefits expense and a reduction in litigation costs. The
provision for credit losses decreased $50 million (21.8 percent) on a linked quarter basis,
primarily due to 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 and ATM processing. It encompasses
community banking, metropolitan banking, in-store banking, small business banking, consumer
lending, mortgage banking, consumer finance, workplace banking, student banking and 24-hour
banking. Consumer and Small Business Banking contributed $132 million of the Companys net income
in the first quarter of 2011, a $42 million (24.1 percent) decrease from the first quarter of 2010,
and a $23 million (14.8 percent) decrease from the prior quarter. Within Consumer and Small
Business Banking, the retail banking division reported a $56 million reduction in its contribution
from the same quarter of last year. The decrease in the retail banking divisions contribution
from the same period of 2010 was principally due to higher total noninterest expense. Retail
bankings total net revenue was relatively flat compared with the first quarter of 2010 as an
increase in net interest income was offset by a decline in total noninterest income. Net interest
income increased 6.6 percent due to higher loan and deposit volumes, partially offset by the impact
of lower rates on the margin benefit from deposits. Total noninterest income for the retail
banking division decreased 13.5 percent from a year ago due to a reduction in deposit service
charges, reflecting the impact of Company-initiated and regulatory revisions to overdraft fee
policies, partially offset by core account growth. Total noninterest expense for the retail
banking division in the first quarter of 2011 was 9.7 percent higher year-over-year,
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U.S. Bancorp Reports First Quarter 2011 Results
April 19, 2011
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April 19, 2011
Page 24
principally
due to higher compensation and employee benefits expense, shared services costs and net occupancy
and equipment expenses related to business expansion, partially offset by lower other intangibles
expense. The provision for credit losses for the retail banking division decreased .3 percent on a
year-over-year basis. In the first quarter of 2011, the mortgage banking divisions contribution
was $114 million, a 14.0 percent increase over the first quarter of 2010. The divisions total net revenue increased 12.3
percent over a year ago, reflecting increased interest income on higher average balances of
mortgages and mortgage loans held-for-sale. Total noninterest expense for the mortgage banking
division increased 12.6 percent over the first quarter of 2010, primarily due to higher
compensation and employee benefits expense. The provision for credit losses increased 6.3 percent
year-over-year, reflecting a change in the reserve allocation compared with the first quarter of
2010.
Consumer and Small Business Bankings contribution in the first quarter of 2011 was $23
million (14.8 percent) lower than the fourth quarter of 2010, due to lower total net revenue and
higher total noninterest expense, partially offset by a reduction in the provision for credit
losses. Within Consumer and Small Business Banking, the retail banking divisions contribution
increased $19 million on a linked quarter basis, principally due to a 16.8 percent decrease in the
provision for credit losses. Total net revenue for the retail banking division was relatively flat
as a 1.4 percent decrease in net interest income due to the impact of lower rates on the margin
benefit of deposits and fewer days in the current quarter, was offset by a 2.1 percent increase in
total noninterest income, reflecting higher ATM processing services and equity investment revenue.
Total noninterest expense for the retail banking division increased 3.7 percent on a linked quarter
basis due to higher compensation and employee benefits expense and increased net occupancy and
equipment expense due to business expansion. The provision for credit losses for the division
decreased 16.8 percent due to lower net charge-offs and a decrease in the reserve allocation. The
contribution of the mortgage banking division decreased 26.9 percent from the fourth quarter of
2010, driven by lower total net revenue and a higher provision for credit losses, partially offset
by lower total noninterest expense. Total net revenue decreased 16.2 percent due to lower sales
and origination revenue, partially offset by a higher net valuation of MSRs. Additionally, net
interest income declined 11.8 percent on a linked quarter basis due to lower average mortgage loans
held-for-sale balances. Total noninterest expense decreased 8.9 percent due to lower commission
and incentive expense. The mortgage banking divisions provision for credit losses increased 24.4
percent on a linked quarter basis due to a higher reserve allocation.
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U.S. Bancorp Reports First Quarter 2011 Results
April 19, 2011
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April 19, 2011
Page 25
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 $50 million of the Companys net income in the first quarter of 2011, a 5.7
percent decrease from the first quarter of 2010, and a 12.3 percent decrease from the fourth quarter of 2010. The decrease in the business lines
contribution compared with the same quarter of 2010 was due to higher total noninterest expense,
partially offset by an increase in total net revenue. Total net revenue increased by $24 million
(7.2 percent) year-over-year. Net interest income was higher by $24 million (36.9 percent),
primarily due to higher average deposit balances, including the impact of the securitization trust
acquisition. Total noninterest income was flat compared with the first quarter of 2010. Trust and
investment management fees declined, primarily due to the transfer of the long-term asset
management business to Nuveen Investments, partially offset by the positive impact of the
securitization trust acquisition and improved market conditions. Additionally, there was an
increase in investment product fees due to increased sales volume. Total noninterest expense
increased by $26 million (10.5 percent), due to higher compensation and employee benefits expense
and the impact of the securitization trust acquisition, partially offset by a reduction in other
intangibles expense. The provision for credit losses was higher due to an increase in the reserve
allocation.
The business lines contribution in the first quarter of 2011 was lower than the prior quarter
by $7 million (12.3 percent). Total net revenue decreased $4 million (1.1 percent). Total
noninterest income decreased $13 million (4.6 percent) on a linked quarter basis, mainly due to the
transfer of the long-term asset management business to Nuveen Investments in the fourth quarter of
2010, partially offset by the positive impact of the securitization trust acquisition. This
decline was partially offset by a $9 million (11.3 percent) increase in net interest income due to
the impact of the securitization trust acquisition. The provision for credit losses was $6 million
higher than the prior quarter due to an increase in the reserve allocation.
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 $287 million of the Companys net income in the first quarter of 2011, an
increase of $176 million over the same period of 2010, and an increase of $23 million (8.7 percent)
over the prior quarter. The increase year-over-year was primarily due to a lower provision for
credit losses. Total net
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U.S. Bancorp Reports First Quarter 2011 Results
April 19, 2011
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April 19, 2011
Page 26
revenue increased $5 million (.5 percent) year-over-year. Net interest
income decreased $15 million (4.3 percent) due in large part to lower retail credit card average
loan balances and loan fees, while total noninterest income increased $20 million (2.7 percent)
year-over-year, primarily due to increased transaction volumes, including business expansion.
Total noninterest expense increased $26 million (5.9 percent), driven by higher compensation and
employee benefits expense and processing costs, partially offset by lower other intangibles
expense. The provision for credit losses decreased $301 million (65.0 percent) due to lower net
charge-offs and a favorable change in the reserve allocation due to improved loss rates.
Payment Services contribution in the first quarter of 2011 was $23 million (8.7 percent)
higher than the fourth quarter of 2010, driven by a lower provision for credit losses and a
decrease in total noninterest expense, partially offset by lower total net revenue. Total net
revenue was lower by $50 million (4.4 percent) compared with the fourth quarter of 2010, as a $5
million (1.5 percent) increase in net interest income was more than offset by a $55 million (6.7
percent) decrease in total noninterest income, principally due to seasonally lower merchant
processing and credit and debit card transaction volumes. Total noninterest expense decreased $48
million (9.4 percent) on a linked quarter basis, principally due to the timing of marketing
programs and lower other intangibles expense. The provision for credit losses decreased $44
million (21.4 percent) due to lower net charge-offs and a reduction in the reserve allocation, as
the outlook for future losses on the credit card portfolios moderated.
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, asset securitization, interest rate risk management, the net effect of transfer pricing
related to average balances and the residual aggregate of expenses associated with corporate
activities that are managed on a consolidated basis. Treasury and Corporate Support recorded net
income of $371 million in the first quarter of 2011, compared with net income of $322 million in
the first quarter of 2010 and net income of $344 million in the fourth quarter of 2010. Net
interest income decreased $51 million (10.3 percent) from the first quarter of 2010, reflecting the
impact of the current rate environment, lower average covered asset balances, wholesale funding
decisions and the Companys asset/liability position. Total noninterest income increased by $108
million year-over-year principally due to the FCB and Visa Gains and lower net securities losses.
Total noninterest expense decreased $4 million (2.8 percent) as a favorable variance in the shared
services allocation was partially offset by higher pension costs.
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U.S. Bancorp Reports First Quarter 2011 Results
April 19, 2011
Page 27
April 19, 2011
Page 27
Net income in the first quarter of 2011 was higher on a linked quarter basis, principally due
to lower total noninterest expense. Total net revenue was lower than the fourth quarter of 2010 by
$50 million (8.7 percent), largely due to the Nuveen and Visa Gains that were recorded in the
fourth quarter of 2010, partially offset by FCB and Visa Gains recorded in the first quarter of
2011 and lower net securities losses. The $93 million (39.9 percent) decrease in total noninterest
expense from the fourth quarter of 2010 was primarily due to seasonally lower costs related to affordable housing and other tax-advantaged projects, as
well as lower acquisition integration costs and professional services expense.
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.
On Tuesday, April 19, 2011, at 7:00 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
52244910. 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 Tuesday, April 19th, and will
run through Tuesday, April 26th, at 11:00 p.m. (CDT). To access the recorded message within the
United States and Canada, dial 800-642-1687. If calling from outside the United States and Canada,
please dial 706-645-9291 to access the recording. The conference ID is 52244910. 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 $311 billion in assets, is the parent company of U.S.
Bank National Association, the 5th largest commercial bank in the United States. The Company
operates 3,082 banking offices in 25 states and 5,238 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 First Quarter 2011 Results
April 19, 2011
Page 28
April 19, 2011
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 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.
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 impacted by
effects of recently enacted and future legislation and regulation. U.S. Bancorps results could
also be adversely affected by continued 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, 2010, 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.
Non-Regulatory Capital Ratios
In addition to capital ratios defined by banking regulators, the Company considers various other
measures when evaluating capital utilization and adequacy, including:
| Tangible common equity to tangible assets, | ||
| Tier 1 common equity to risk-weighted assets, | ||
| Tangible common equity to risk-weighted assets, and | ||
| Tier 1 common equity to risk-weighted assets using anticipated Basel III definition. |
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U.S. Bancorp Reports First Quarter 2011 Results
April 19, 2011
Page 29
April 19, 2011
Page 29
These non-regulatory capital ratios are viewed by management as useful additional methods of
reflecting the level of capital available to withstand unexpected market conditions. Additionally,
presentation of these ratios allows readers to compare the Companys capitalization to other
financial services companies. These ratios differ from capital ratios defined by banking
regulators 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
ratios are not defined in generally accepted accounting principals (GAAP) or federal banking
regulations. As a result, these non-regulatory capital ratios disclosed by the Company may be
considered non-GAAP financial measures.
Because there are no standardized definitions for these non-regulatory capital ratios, the
Companys calculation methods may differ from those used by other financial services companies.
Also, 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-regulatory
capital ratios.
###
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U.S. Bancorp
Consolidated Statement of Income
Three Months Ended | ||||||||
(Dollars and Shares in Millions, Except Per Share Data) | March 31, | |||||||
(Unaudited) | 2011 | 2010 | ||||||
Interest Income |
||||||||
Loans |
$ | 2,552 | $ | 2,505 | ||||
Loans held for sale |
63 | 44 | ||||||
Investment securities |
428 | 410 | ||||||
Other interest income |
57 | 34 | ||||||
Total interest income |
3,100 | 2,993 | ||||||
Interest Expense |
||||||||
Deposits |
234 | 236 | ||||||
Short-term borrowings |
133 | 128 | ||||||
Long-term debt |
281 | 277 | ||||||
Total interest expense |
648 | 641 | ||||||
Net interest income |
2,452 | 2,352 | ||||||
Provision for credit losses |
755 | 1,310 | ||||||
Net interest income after provision for credit losses |
1,697 | 1,042 | ||||||
Noninterest Income |
||||||||
Credit and debit card revenue |
267 | 258 | ||||||
Corporate payment products revenue |
175 | 168 | ||||||
Merchant processing services |
301 | 292 | ||||||
ATM processing services |
112 | 105 | ||||||
Trust and investment management fees |
256 | 264 | ||||||
Deposit service charges |
143 | 207 | ||||||
Treasury management fees |
137 | 137 | ||||||
Commercial products revenue |
191 | 161 | ||||||
Mortgage banking revenue |
199 | 200 | ||||||
Investment products fees and commissions |
32 | 25 | ||||||
Securities gains (losses), net |
(5 | ) | (34 | ) | ||||
Other |
204 | 135 | ||||||
Total noninterest income |
2,012 | 1,918 | ||||||
Noninterest Expense |
||||||||
Compensation |
959 | 861 | ||||||
Employee benefits |
230 | 180 | ||||||
Net occupancy and equipment |
249 | 227 | ||||||
Professional services |
70 | 58 | ||||||
Marketing and business development |
65 | 60 | ||||||
Technology and communications |
185 | 185 | ||||||
Postage, printing and supplies |
74 | 74 | ||||||
Other intangibles |
75 | 97 | ||||||
Other |
407 | 394 | ||||||
Total noninterest expense |
2,314 | 2,136 | ||||||
Income before income taxes |
1,395 | 824 | ||||||
Applicable income taxes |
366 | 161 | ||||||
Net income |
1,029 | 663 | ||||||
Net (income) loss attributable to noncontrolling interests |
17 | 6 | ||||||
Net income attributable to U.S. Bancorp |
$ | 1,046 | $ | 669 | ||||
Net income applicable to U.S. Bancorp common shareholders |
$ | 1,003 | $ | 648 | ||||
Earnings per common share |
$ | .52 | $ | .34 | ||||
Diluted earnings per common share |
$ | .52 | $ | .34 | ||||
Dividends declared per common share |
$ | .125 | $ | .050 | ||||
Average common shares outstanding |
1,918 | 1,910 | ||||||
Average diluted common shares outstanding |
1,928 | 1,919 | ||||||
Page 30
U.S. Bancorp
Consolidated Ending Balance Sheet
March 31, | December 31, | March 31, | ||||||||||
(Dollars in Millions) | 2011 | 2010 | 2010 | |||||||||
(Unaudited) | (Unaudited) | |||||||||||
Assets |
||||||||||||
Cash and due from banks |
$ | 13,800 | $ | 14,487 | $ | 8,380 | ||||||
Investment securities |
||||||||||||
Held-to-maturity |
8,213 | 1,469 | 625 | |||||||||
Available-for-sale |
52,248 | 51,509 | 46,288 | |||||||||
Loans held for sale |
4,141 | 8,371 | 3,884 | |||||||||
Loans |
||||||||||||
Commercial |
49,272 | 48,398 | 46,312 | |||||||||
Commercial real estate |
35,437 | 34,695 | 34,207 | |||||||||
Residential mortgages |
32,344 | 30,732 | 26,520 | |||||||||
Retail |
63,745 | 65,194 | 63,191 | |||||||||
Total loans, excluding covered loans |
180,798 | 179,019 | 170,230 | |||||||||
Covered loans |
17,240 | 18,042 | 20,923 | |||||||||
Total loans |
198,038 | 197,061 | 191,153 | |||||||||
Less allowance for loan losses |
(5,270 | ) | (5,310 | ) | (5,235 | ) | ||||||
Net loans |
192,768 | 191,751 | 185,918 | |||||||||
Premises and equipment |
2,508 | 2,487 | 2,246 | |||||||||
Goodwill |
8,947 | 8,954 | 9,007 | |||||||||
Other intangible assets |
3,415 | 3,213 | 3,388 | |||||||||
Other assets |
25,422 | 25,545 | 22,692 | |||||||||
Total assets |
$ | 311,462 | $ | 307,786 | $ | 282,428 | ||||||
Liabilities and Shareholders Equity |
||||||||||||
Deposits |
||||||||||||
Noninterest-bearing |
$ | 47,039 | $ | 45,314 | $ | 38,913 | ||||||
Interest-bearing |
129,344 | 129,381 | 117,922 | |||||||||
Time deposits greater than $100,000 |
31,910 | 29,557 | 27,204 | |||||||||
Total deposits |
208,293 | 204,252 | 184,039 | |||||||||
Short-term borrowings |
31,021 | 32,557 | 31,196 | |||||||||
Long-term debt |
31,775 | 31,537 | 32,399 | |||||||||
Other liabilities |
9,038 | 9,118 | 7,406 | |||||||||
Total liabilities |
280,127 | 277,464 | 255,040 | |||||||||
Shareholders equity |
||||||||||||
Preferred stock |
1,930 | 1,930 | 1,500 | |||||||||
Common stock |
21 | 21 | 21 | |||||||||
Capital surplus |
8,215 | 8,294 | 8,267 | |||||||||
Retained earnings |
27,769 | 27,005 | 24,597 | |||||||||
Less treasury stock |
(6,089 | ) | (6,262 | ) | (6,409 | ) | ||||||
Accumulated other comprehensive income (loss) |
(1,339 | ) | (1,469 | ) | (1,267 | ) | ||||||
Total U.S. Bancorp shareholders equity |
30,507 | 29,519 | 26,709 | |||||||||
Noncontrolling interests |
828 | 803 | 679 | |||||||||
Total equity |
31,335 | 30,322 | 27,388 | |||||||||
Total liabilities and equity |
$ | 311,462 | $ | 307,786 | $ | 282,428 | ||||||
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U.S. Bancorp
Non-Regulatory Capital Ratios
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
(Dollars in Millions, Unaudited) | 2011 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||
Total equity |
$ | 31,335 | $ | 30,322 | $ | 29,943 | $ | 28,940 | $ | 27,388 | ||||||||||
Preferred stock |
(1,930 | ) | (1,930 | ) | (1,930 | ) | (1,930 | ) | (1,500 | ) | ||||||||||
Noncontrolling interests |
(828 | ) | (803 | ) | (792 | ) | (771 | ) | (679 | ) | ||||||||||
Goodwill (net of deferred tax liability) |
(8,317 | ) | (8,337 | ) | (8,429 | ) | (8,425 | ) | (8,374 | ) | ||||||||||
Intangible assets, other than mortgage servicing rights |
(1,342 | ) | (1,376 | ) | (1,434 | ) | (1,525 | ) | (1,610 | ) | ||||||||||
Tangible common equity (a) |
18,918 | 17,876 | 17,358 | 16,289 | 15,225 | |||||||||||||||
Tier 1 capital, determined in accordance with prescribed
regulatory requirements using Basel I definition |
26,821 | 25,947 | 24,908 | 24,021 | 23,278 | |||||||||||||||
Trust preferred securities |
(3,949 | ) | (3,949 | ) | (3,949 | ) | (3,949 | ) | (4,524 | ) | ||||||||||
Preferred stock |
(1,930 | ) | (1,930 | ) | (1,930 | ) | (1,930 | ) | (1,500 | ) | ||||||||||
Noncontrolling interests, less preferred stock not eligible for Tier 1 capital |
(694 | ) | (692 | ) | (694 | ) | (694 | ) | (692 | ) | ||||||||||
Tier 1 common equity using Basel I definition (b) |
20,248 | 19,376 | 18,335 | 17,448 | 16,562 | |||||||||||||||
Tier 1 capital, determined in accordance with prescribed
regulatory requirements using anticipated Basel III definition |
21,855 | |||||||||||||||||||
Preferred stock |
(1,930 | ) | ||||||||||||||||||
Noncontrolling interests of real estate investment trusts |
(667 | ) | ||||||||||||||||||
Tier 1 common equity using anticipated Basel III definition (c) |
19,258 | |||||||||||||||||||
Total assets |
311,462 | 307,786 | 290,654 | 283,243 | 282,428 | |||||||||||||||
Goodwill (net of deferred tax liability) |
(8,317 | ) | (8,337 | ) | (8,429 | ) | (8,425 | ) | (8,374 | ) | ||||||||||
Intangible assets, other than mortgage servicing rights |
(1,342 | ) | (1,376 | ) | (1,434 | ) | (1,525 | ) | (1,610 | ) | ||||||||||
Tangible assets (d) |
301,803 | 298,073 | 280,791 | 273,293 | 272,444 | |||||||||||||||
Risk-weighted assets, determined in accordance with
prescribed regulatory requirements using Basel I definition (e) |
247,486 | * | 247,619 | 242,490 | 237,145 | 234,042 | ||||||||||||||
Risk-weighted assets using anticipated Basel III definition (f) |
251,625 | * | ||||||||||||||||||
Ratios * |
||||||||||||||||||||
Tangible common equity to tangible assets (a)/(d) |
6.3 | % | 6.0 | % | 6.2 | % | 6.0 | % | 5.6 | % | ||||||||||
Tier 1 common equity to risk-weighted assets using
Basel I definition (b)/(e) |
8.2 | 7.8 | 7.6 | 7.4 | 7.1 | |||||||||||||||
Tier 1 common equity to risk-weighted assets using
anticipated Basel III definition (c)/(f) |
7.7 | |||||||||||||||||||
Tangible common equity to risk-weighted assets (a)/(e) |
7.6 | 7.2 | 7.2 | 6.9 | 6.5 | |||||||||||||||
* | Preliminary data. Subject to change prior to filings with applicable regulatory agencies. |
Note: Anticipated Basel III definitions reflect adjustments for changes to the related elements as proposed in December 2010 by regulatory authorities.
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