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U.S. Bancorp Reports Earnings For The First Quarter Of 2014

U.S. Bancorp (NYSE: USB) today reported net income of $1,397 million for the first quarter of 2014, or $.73 per diluted common share, compared with $1,428 million, or $.73 per diluted common share, in the first quarter of 2013.

Highlights for the first quarter of 2014 included:
  • Growth in average total loans of 6.0 percent over the first quarter of 2013 (7.6 percent excluding covered loans) and 1.3 percent on a linked quarter basis (1.7 percent excluding covered loans)
    • Growth in average total commercial loans of 8.5 percent over the first quarter of 2013 and 2.8 percent over the fourth quarter of 2013
    • Growth in average total commercial real estate loans of 7.6 percent over the first quarter of 2013 and 1.9 percent over the fourth quarter of 2013
    • Growth in average commercial and commercial real estate commitments of 11.7 percent year-over-year and 3.4 percent over the prior quarter
  • Strong new lending activity of $41.0 billion during the first quarter, including:
    • $26.9 billion of new and renewed commercial and commercial real estate commitments
    • $2.6 billion of lines related to new credit card accounts
    • $11.5 billion of mortgage and other retail loan originations
  • Strong growth in average total deposits of 5.1 percent over the first quarter of 2013
    • Average low cost deposits, including noninterest-bearing and total savings deposits, grew by 7.7 percent year-over-year and were stable on a linked quarter basis
  • Industry-leading performance ratios, including:
    • Return on average assets of 1.56 percent
    • Return on average common equity of 14.6 percent
    • Efficiency ratio of 52.9 percent
  • Net charge-offs declined 21.2 percent on a year-over-year basis. Provision for credit losses was $35 million less than net charge-offs
    • Allowance to period-end loans was 1.89 percent at March 31, 2014
    • Annualized net charge-offs to average total loans ratio was .59 percent
  • Nonperforming assets decreased on both a linked quarter and a year-over-year basis
    • Nonperforming assets (excluding covered assets) decreased 1.0 percent on a linked quarter basis and 11.6 percent from the first quarter of 2013
    • Allowance to nonperforming assets (excluding covered assets) was 243 percent at March 31, 2014, compared with 242 percent at December 31, 2013, and 221 percent at March 31, 2013
  • Capital generation continued to reinforce capital position and returns. Ratios at March 31, 2014, were:
    • Basel III transitional:
      • Common equity tier 1 capital ratio of 9.7 percent
      • Tier 1 capital ratio of 11.4 percent
      • Total risk based capital ratio of 13.5 percent
    • Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach of 9.0 percent
    • Returned 67 percent of first quarter earnings to shareholders through dividends and the buyback of 12 million common shares
  • Received the Federal Reserve’s non-objection to our capital plan on March 26, 2014
    • Announced a new share repurchase authorization of $2.3 billion, effective April 1st
    • Expect to recommend a second quarter dividend of $0.245 per common share, a 6.5 percent increase over the current dividend rate
                     
EARNINGS SUMMARY                   Table 1
($ in millions, except per-share data)         Percent   Percent
Change Change
1Q 4Q 1Q 1Q14 vs 1Q14 vs
2014   2013   2013   4Q13   1Q13
 
Net income attributable to U.S. Bancorp $1,397 $1,456 $1,428 (4.1 ) (2.2 )
Diluted earnings per common share $.73 $.76 $.73 (3.9 ) --
 
Return on average assets (%) 1.56 1.62 1.65
Return on average common equity (%) 14.6 15.4 16.0
Net interest margin (%) 3.35 3.40 3.48
Efficiency ratio (%) 52.9 54.9 50.7
Tangible efficiency ratio (%) (a) 51.9 53.7 49.6
 
Dividends declared per common share $.230 $.230 $.195 -- 17.9
Book value per common share (period-end) $20.48 $19.92 $18.71 2.8 9.5
 

(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 $1,397 million for the first quarter of 2014, 2.2 percent lower than the $1,428 million for the first quarter of 2013, and 4.1 percent lower than the $1,456 million for the fourth quarter of 2013. Diluted earnings per common share of $.73 in the first quarter of 2014 were equal to the first quarter of 2013 and $.03 lower than the previous quarter. Return on average assets and return on average common equity were 1.56 percent and 14.6 percent, respectively, for the first quarter of 2014, compared with 1.65 percent and 16.0 percent, respectively, for the first quarter of 2013. The provision for credit losses was lower than net charge-offs by $35 million in the first quarter of 2014 and the fourth quarter of 2013, and $30 million lower than net charge-offs in the first quarter of 2013.

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