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U.S. Bancorp Reports Record Earnings For The Second Quarter Of 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
  • 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
                                   
EARNINGS SUMMARY                                 Table 1
($ in millions, except per-share data)           Percent   Percent      
Change Change
2Q 1Q 2Q 2Q13 vs 2Q13 vs YTD YTD Percent
2013   2013   2012   1Q13   2Q12   2013   2012   Change
 
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.

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