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U.S. Bancorp Reports Fourth Quarter And Full Year 2013 Earnings

Stocks in this article: USB

U.S. Bancorp (NYSE:USB) today reported net income of $1,456 million for the fourth quarter of 2013, or $.76 per diluted common share, compared with $1,420 million, or $.72 per diluted common share, in the fourth quarter of 2012.

Highlights for the full year 2013 included:

  • Record full year 2013 net income of $5.8 billion, 3.3 percent higher than 2012
    • Record full year diluted earnings per common share of $3.00, 5.6 percent higher than 2012
    • Industry-leading performance measures, including return on average assets of 1.65 percent, return on average common equity of 15.8 percent and efficiency ratio of 52.4 percent
    • Returned 71 percent of 2013 earning to shareholders through dividend and share buybacks

Highlights for the fourth quarter of 2013 included:

  • Industry-leading performance ratios, including:
    • Return on average assets of 1.62 percent
    • Return on average common equity of 15.4 percent
    • Efficiency ratio of 54.9 percent
  • Growth in average total loans of 5.7 percent over the fourth quarter of 2012 (7.3 percent excluding covered loans) and 1.5 percent on a linked quarter basis (1.9 percent excluding covered loans)
    • Growth in average total commercial loans of 7.8 percent over the fourth quarter of 2012 and 1.3 percent over the third quarter of 2013
    • Growth in average total commercial real estate loans of 6.7 percent over the fourth quarter of 2012 and 2.1 percent over the third quarter of 2013
    • Growth in average commercial and commercial real estate commitments of 10.1 percent year-over-year and 2.7 percent over the prior quarter
  • Strong new lending activity of $58.4 billion during the fourth quarter, including:
    • $40.6 billion of new and renewed commercial and commercial real estate commitments
    • $2.7 billion of lines related to new credit card accounts
    • $15.1 billion of mortgage and other retail loan originations
  • Continued strong growth in average total deposits of 5.4 percent over the fourth quarter of 2012 and 1.8 percent on a linked quarter basis.
    • Average low cost deposits, including noninterest-bearing and total savings deposits, grew by 8.5 percent year-over-year and 4.8 percent linked quarter
  • Net charge-offs declined on both a linked quarter and year-over-year basis. Provision for credit losses was $35 million less than net charge-offs
    • Net charge-offs were $16 million (4.9 percent) lower than the third quarter of 2013
    • Annualized net charge-offs to average total loans ratio decreased to .53 percent
    • Allowance to period-end loans was 1.93 percent at December 31, 2013
  • Nonperforming assets decreased on both a linked quarter and year-over-year basis
    • Nonperforming assets (excluding covered assets) decreased 3.6 percent from the third quarter of 2013
    • Allowance to nonperforming assets (excluding covered assets) was 242 percent at December 31, 2013, compared with 235 percent at September 30, 2013, and 218 percent at December 31, 2012
  • Tax rate on a taxable-equivalent basis was 23.8 percent for the fourth quarter, compared with 29.5 percent for the third quarter of 2013, principally reflecting the impact of accounting presentation changes related to investments in tax-advantaged projects
    • Change had no impact on net income attributable to U.S. Bancorp
    • Change increased other expense by $31 million, decreased net (income) loss attributable to noncontrolling interests by $53 million and decreased income tax expense by $84 million compared with the third quarter of 2013
  • Capital generation continues to reinforce capital position and return. Ratios at December 31, 2013, were:
    • Tier 1 capital ratio of 11.2 percent
    • Total risk based capital ratio of 13.2 percent
    • Tier 1 common equity to risk-weighted assets ratio of 9.4 percent
    • Common equity tier 1 ratio of 8.8 percent estimated using final rules for the Basel III standardized approach
    • Returned 65 percent of fourth quarter earnings to shareholders through dividends and the buyback of 13 million common shares
                                     
EARNINGS SUMMARY                                   Table 1
($ in millions, except per-share data)             Percent     Percent            
  Change Change
4Q 3Q 4Q 4Q13 vs 4Q13 vs Full Year Full Year Percent
2013 2013 2012 3Q13 4Q12 2013 2012 Change
 
Net income attributable to U.S. Bancorp $1,456 $1,468 $1,420 (.8 ) 2.5 $5,836 $5,647 3.3
Diluted earnings per common share $.76 $.76 $.72 -- 5.6 $3.00 $2.84 5.6
 
Return on average assets (%) 1.62 1.65 1.62 1.65 1.65
Return on average common equity (%) 15.4 15.8 15.6 15.8 16.2
Net interest margin (%) 3.40 3.43 3.55 3.44 3.58
Efficiency ratio (%) 54.9 52.4 52.6 52.4 51.5
Tangible efficiency ratio (%) (a) 53.7 51.3 51.3 51.3 50.2
 
Dividends declared per common share $.230 $.230 $.195 -- 17.9 $.885 $.780 13.5
Book value per common share (period-end) $19.92 $19.31 $18.31 3.2 8.8
 

(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 $1,456 million for the fourth quarter of 2013, 2.5 percent higher than the $1,420 million for the fourth quarter of 2012, and .8 percent lower than the $1,468 million for the third quarter of 2013. Diluted earnings per common share of $.76 in the fourth quarter of 2013 were $.04 higher than the fourth quarter of 2012 and equal to the previous quarter. Return on average assets and return on average common equity were 1.62 percent and 15.4 percent, respectively, for the fourth quarter of 2013, compared with 1.62 percent and 15.6 percent, respectively, for the fourth quarter of 2012. The provision for credit losses was lower than net charge-offs by $35 million in the fourth quarter of 2013, $30 million lower in the third quarter of 2013 and $25 million lower in the fourth quarter of 2012.

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