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U.S. Bancorp Discloses Summary Results Of Dodd-Frank Act Stress Test

Today U.S. Bancorp disclosed a summary of its Dodd-Frank Act Stress Test (“DFAST”) results. The disclosure includes U.S. Bancorp’s projected stressed minimum and end-of-period capital ratios for the period from the fourth quarter of 2013 through the fourth quarter of 2015. The projections assume annual common stock dividends equal to the average dollar amount paid in the previous year and no stock redemption or repurchase activity, in addition to estimates of losses, revenues, net income before taxes and loan losses by type of loan over the same time period. The projections were made under the Supervisory Severely Adverse Scenario defined by the Federal Reserve. This hypothetical stressed economic scenario is designed to assess the overall strength and resilience of the banking industry and does not necessarily represent future economic conditions expected by the Company.

A summary of the Company’s DFAST results are included in the table below. The Company’s DFAST results may differ from those calculated and published by the Federal Reserve due to differences in models, methodologies and tax rate, among other things. A document summarizing the risks and methodologies used to calculate the results, as well as an analysis of the significant reasons for the changes in capital ratios under the hypothetical stressed economic scenario is available on our website at www.usbank.com.
                             
CCAR 2014
U.S. Bancorp Disclosure
 
Dodd-Frank Stress Testing Results
Projected stressed capital ratios, risk-weighted assets, losses, revenues, net income before taxes, and loan losses
 
Supervisory-defined severely adverse scenario
 
U.S. Bancorp
 
Projected stressed capital ratios through Q4 2015

Actual Q3 2013 and projected Q4 2015 risk-weighted assets

 
 

 
         

Stressed capital ratios (1)

Projected Q4 2015
Actual Actual Current Basel lll
Q3 2013 Ending Minimum

Q3 2013

general

standardized
                                 

 
 

approach
 

approach
Tier 1 common ratio (%) 9.3% 8.5% 8.5%

 
Common equity tier 1 capital ratio (%) (2) n/a 8.1% 8.1% Risk-weighted assets 293.2 283.6 296.1
Tier 1 risk-based capital ratio (%) 11.2% 9.5% 9.5% (billions of dollars) (1)            
Total risk-based capital ratio (%) 13.3% 11.5% 11.5%
Tier 1 leverage ratio (%)   9.6%   7.7%   7.7% (1) For each quarter in 2014, risk-weighted assets are calculated using the
current general risk-based capital approach. For each quarter in 2015,
(1) The capital ratios are calculated using capital action assumptions provided risk-weighted assets are calculated under the Basel lll standardized capital
within the Dodd-Frank Act stress testing rule. These projections represent risk-based approach, except for the tier 1 common ratio which uses the
hypothetical estimates that involve an economic outcome that is more adverse general risk-based capital approach for all quarters.
than expected. These estimates are not forecasts of expected losses,
revenues, net income before taxes, or capital ratios. The minimum capital
ratio presented is for the period Q4 2013 to Q4 2015.
(2) Advanced approaches bank holding companies (BHCs) are subject to the Projected losses, revenue, and net income before taxes
common equity tier 1 ratio for each quarter of 2014. All bank holding through Q4 2015
companies are subject to the common equity tier 1 ratio for each quarter of      
2015. For purposes of this stress test cycle, an advanced approaches BHC Percent of
includes any BHC that has consolidated assets greater than or equal to Billions of average
$250 billion or total consolidated on-balance sheet foreign exposure of at dollars assets (1)
least $10 billion as of December 31, 2013. See 12 CFR 217.100(b)(1); Pre-provision net revenue (2) 17.1 4.6%
12 CFR part 225, appendix G, section 1(b). Other BHCs include any BHC Other revenue (3) 0.0
that is subject to 12 CFR 225.8 and is not an advanced approaches BHC. less
n/a Not applicable. Provisions 17.5
Realized losses/gains on securities (AFS/HTM) 0.1
Trading and counterparty losses (4) 0.0
Other losses/gains (5) 0.0
Projected loan losses, by type of loans, Q4 2013-Q4 2015 equals
  Net income before taxes (0.5) -0.1%
Portfolio Memo items
Billions of loss Other comprehensive income (6) 0.4
dollars rates (%)(1) Other effects on capital Q4 2014 Q4 2015
Loan losses 15.0 6.6% AOCI included in capital (billions of dollars) (7) (0.3) (0.3)
First-lien mortgages, domestic 1.8 3.1%
Junior liens and HELOCs, domestic 0.7 4.7% (1) Average assets is the nine-quarter average of total assets.
Commercial and industrial (2) 3.5 7.2% (2) Pre-provision net revenue includes losses from operational-risk events,
Commercial real estate, domestic 3.9 9.6% mortgage repurchase expenses, and other real estate owned (OREO) costs.
Credit cards 2.9 15.6% (3) Other revenue includes one-time income and (expense) items not included in
Other consumer (3) 1.2 4.2% pre-provision net revenue.
Other loans (4) 1.0 5.2% (4) Trading and counterparty losses include mark-to-market and credit valuation
adjustments (CVA) losses and losses arising from the counterparty default

component applied to derivatives, securities lending, and repurchase
(1) Average loan balances used to calculate portfolio loss rates exclude loans agreement activities.
held for sale and loans held for investment under the fair-value option, and (5) Other losses/gains includes projected change in fair value of loans held for sale
are calculated over nine quarters.

and loans held for investment measured under the fair-value option.
(2) Commercial and industrial loans include small- and medium- enterprise loans

 
and corporate cards. (6) Other comprehensive income is only calculated for advanced approaches
(3) Other consumer loans include student loans and automobile loans. BHCs, as only those BHCs include accumulated other comprehensive income
(4) Other loans include international real estate loans. (AOCI) in calculations of regulatory capital. Other comprehensive income
includes incremental unrealized losses/gains on AFS securities and on any
Note: Estimates may not sum precisely due to rounding. HTM securities that have experienced other than temporary impairment.
(7) For advanced approaches BHCs, 20 percent of AOCI is included in capital
calculations for 2014 and 40 percent of AOCI is included in capital calculations
for 2015. For the purposes of this stress test cycle, non-advanced approaches
BHCs are assumed to opt-out of including AOCI in their capital calculations.
 

Minneapolis-based U.S. Bancorp (“USB”), with $364 billion in assets as of Dec. 31, 2013, is the parent company of U.S. Bank National Association, the 5th largest commercial bank in the United States. The Company operates 3,081 banking offices in 25 states and 4,906 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 www.usbank.com.

Forward-Looking Statements

The following information appears in accordance with the Private Securities Litigation Reform Act of 1995:

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