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 (“DFA”) results. The disclosure includes U.S. Bancorp’s projected stressed minimum capital ratios for the period from the fourth quarter of 2012 through the fourth quarter of 2014, assuming 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. All projections were made under the Supervisory Severely Adverse Scenario set by the Federal Reserve, a two-year hypothetical stressed economic scenario designed to assess the overall strength and resilience of the banking industry, which is much more severe than actually expected by the Company.

A summary of the Company’s DFA results is included in the table below. The Company’s DFA 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.
 
2013 CCAR
U.S. Bancorp Disclosure
           
Dodd-Frank Stress Testing Results
Projected Stressed Capital Ratios, Losses, Revenues, Net Income before Taxes, and Loan Losses by Type of Loan
U.S. Bancorp Estimates in the Supervisory Severely Adverse Scenario
 

U.S. Bancorp
 

The capital ratios are calculated using capital action assumptions provided within the Dodd-Frank Act stress testing rule. These projections represent hypothetical estimates that involve an economic outcome that is more adverse 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 2012 to Q4 2014.
 
Projected Capital Ratios through Q4 2014 under the Supervisory Severely Adverse Scenario
 
Actual Stressed Capital Ratios
Q3 2012 Q4 2014 Minimum
 
Tier 1 Common Ratio (%) 9.0 % 8.5 % 8.5 %
Tier 1 Capital Ratio (%) 10.9 % 10.4 % 10.4 %
Total Risk-based Capital Ratio (%) 13.3 % 12.4 % 12.4 %
Tier 1 Leverage Ratio (%) 9.2 % 8.7 % 8.7 %
 

Projected Losses, Revenue, and Net Income Before Taxes through Q4 2014 under the Supervisory Severely Adverse Scenario

Projected Loan Losses by Type of Loans for Q4 2012 through Q4 2014 under the Supervisory Severely Adverse Scenario

 
     

 
     

Billions ofDollars
 

Percent ofAverageAssets

 

Billions ofDollars
 

PortfolioLossRates (%)

 

 

 

 
 
Pre-provision Net Revenue (1) 18.0 5.3 % Loan Losses (1) 13.0 6.1 %

Other Revenue (2)

0.1
First Lien Mortgages, Domestic 1.8 3.9 %

Less
Junior Liens and HELOCs, Domestic 0.9 5.6 %
Provisions 15.9 Commercial and Industrial 2.4 5.3 %
Realized (Gains)/Losses on Securities (AFS/HTM) 0.1 Commercial Real Estate 2.4 6.2 %
Trading and Counterparty Losses (3) 0.0 Credit Cards 3.5 18.8 %
Other Losses/Gains (4) 0.0 Other Consumer 1.2 4.1 %
Equals Other Loans 0.8 4.5 %
Net Income Before Taxes 2.0 0.6 %
 

(1) Pre-provision net revenue includes losses from operational risk events, mortgage put-back expenses, and OREO costs.

(2) Other revenue includes one-time income and (expense) items not included in pre-provision net revenue.

(3) Trading and counterparty includes mark-to-market losses, changes in credit valuation adjustments (CVA) and incremental default losses.

(4) Other losses/gains includes projected change in fair value of loans held for sale and loans held for investment measured under the fair-value option, and goodwill impairment losses.
 

(1) Commercial and Industrial loans include small and medium enterprise loans and corporate cards. Other loans include international real estate loans. Average loan balances used to calculate portfolio loss rates exclude loans held for sale and loans held for investment under the fair-value option. Note: Estimates may not sum precisely due to rounding.

 

 

Minneapolis-based U.S. Bancorp, with $354 billion in assets as of December 31, 2012, is the parent company of U.S. Bank National Association, the 5th largest commercial bank in the United States. The company operates 3,084 banking offices in 25 states and 5,065 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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