US Bank 2002 Annual Report Download - page 53

this authorization. On December 18, 2001, the Board of increase in the total risk-based capital ratio was primarily
Directors approved an authorization to repurchase an related to the issuance of $1.0 billion of subordinated debt
additional 100 million shares of common stock through in 2002. All regulatory ratios, at both the bank and bank
2003. During the first quarter of 2002, the Company holding company level, continue to be in excess of stated
repurchased 40.0 million shares of common stock in both ‘‘well capitalized’’ requirements. Table 20 provides a
public and private transactions related to these summary of tier 1 and total risk-based capital ratios as
authorizations, completing the July 17, 2001 authorization. of December 31, 2002, and 2001, as defined by the
In 2002, the Company purchased 5.2 million shares of regulatory agencies.
common stock under the December 2001 plan. There are The Company uses tangible common equity expressed
approximately 91.5 million shares remaining to be as a percent of tangible common assets as an additional
purchased under this authorization. For a complete analysis measure of its capital. At December 31, 2002, the
of activities impacting shareholders’ equity and capital Company’s tangible common equity ratio was 5.6 percent,
management programs, refer to Note 16 of the Notes to compared with 5.7 percent at year-end 2001.
Consolidated Financial Statements.
FOURTH QUARTER SUMMARY
Banking regulators define minimum capital
requirements for banks and financial services holding In the fourth quarter of 2002, the Company had net income
companies. These requirements are expressed in the form of of $849.8 million ($.44 per diluted share), compared with
a minimum tier 1 capital ratio, total risk-based capital ratio, $695.4 million ($.36 per diluted share) in the fourth quarter
and tier 1 leverage ratio. The minimum required level for of 2001. The Company reported operating earnings (net
these ratios is 4.0 percent, 8.0 percent, and 4.0 percent, income excluding merger and restructuring-related items)
respectively. The Company targets its regulatory capital of $920.1 million ($.48 per diluted share) in the fourth
levels, at both the bank and bank holding company level, to quarter of 2002, compared with operating earnings of
exceed the ‘‘well capitalized’’ threshold for these ratios of $785.2 million ($.40 per diluted share) in the fourth quarter
6.0 percent, 10.0 percent, and 5.0 percent, respectively. As of 2001. The Company’s results for the fourth quarter of
of December 31, 2002, the Company’s tier 1 capital, total 2002 improved over the same period of 2001, primarily due
risk-based capital, and tier 1 leverage ratio were to strong growth in consumer banking and payment services
7.8 percent, 12.2 percent, and 7.5 percent, respectively. revenue, offset somewhat by lower investment banking
These ratios compare to 7.7 percent, 11.7 percent, and activity. The fourth quarter of 2002 results included
7.7 percent, respectively, as of December 31, 2001. The $152.7 million of significant income items, which were
Regulatory Capital Ratios
At December 31 (Dollars in Millions) 2002 2001
U.S. Bancorp
Tangible common equity ********************************************************************************* $ 9,489 $ 9,374
As a percent of tangible assets *********************************************************************** 5.6% 5.7%
Tier 1 capital ******************************************************************************************* $12,606 $12,488
As a percent of risk-weighted assets******************************************************************* 7.8% 7.7%
As a percent of adjusted quarterly average assets (leverage ratio) **************************************** 7.5% 7.7%
Total risk-based capital ********************************************************************************** $19,753 $19,148
As a percent of risk-weighted assets******************************************************************* 12.2% 11.7%
Bank Subsidiaries (a)
U.S. Bank National Association
Tier 1 capital************************************************************************************* 6.7% 7.5%
Total risk-based capital**************************************************************************** 10.8 11.8
Leverage **************************************************************************************** 6.7 7.7
U.S. Bank National Association ND
Tier 1 capital************************************************************************************* 13.4% 18.1%
Total risk-based capital**************************************************************************** 18.9 23.1
Leverage **************************************************************************************** 12.1 17.9
Well-
Bank Regulatory Capital Requirements Minimum Capitalized
Tier 1 capital**************************************************************************************** 4% 6%
Total risk-based capital ******************************************************************************* 810
Leverage ******************************************************************************************* 45
(a) These balances and ratios were prepared in accordance with regulatory accounting principles as disclosed in the subsidiaries’ regulatory reports.
U.S. Bancorp 51
Table 20