US Bank 2013 Annual Report Download - page 61

TABLE 22 Regulatory Capital Ratios
At December 31 (Dollars in Millions) 2013 2012
U.S. Bancorp
Tier 1 capital .......................................................................................................... $33,386 $31,203
As a percent of risk-weighted assets ............................................................................... 11.2% 10.8%
As a percent of adjusted quarterly average assets (leverage ratio) ................................................ 9.6% 9.2%
Total risk-based capital ............................................................................................... $39,340 $37,780
As a percent of risk-weighted assets ............................................................................... 13.2% 13.1%
Bank Subsidiary
U.S. Bank National Association
Tier 1 capital ..................................................................................................... 10.3% 10.6%
Total risk-based capital .......................................................................................... 12.4 12.7
Leverage ........................................................................................................ 8.8 9.0
Bank Regulatory Capital Requirements Minimum
Well-
Capitalized
Tier 1 capital ..................................................................................................... 4.0% 6.0%
Total risk-based capital .......................................................................................... 8.0 10.0
Leverage ........................................................................................................ 4.0 5.0
Fourth Quarter Summary
The Company reported net income attributable to
U.S. Bancorp of $1.5 billion for the fourth quarter of 2013, or
$.76 per diluted common share, compared with $1.4 billion,
or $.72 per diluted common share, for the fourth quarter of
2012. 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
$35 million lower than net charge-offs for the fourth quarter of
2013, compared with $25 million lower than net charge-offs
for the fourth quarter of 2012. Also included in the fourth
quarter 2012 results was the $80 million expense accrual for
a mortgage foreclosure-related regulatory settlement.
Total net revenue, on a taxable-equivalent basis for the
fourth quarter of 2013, was $223 million (4.4 percent) lower
than the fourth quarter of 2012, reflecting a 1.8 percent
decrease in net interest income and a 7.4 percent decrease
in noninterest income. The decrease in net interest income
from 2012 was the result of an increase in average earning
assets, offset by a decrease in the net interest margin.
Noninterest income decreased from a year ago, primarily
due to lower mortgage banking revenue.
Noninterest expense in the fourth quarter of 2013 was
$4 million (.1 percent) lower than the fourth quarter of 2012.
The modest decrease was primarily due to the impact of the
$80 million mortgage foreclosure-related settlement accrual
in the fourth quarter of 2012 and a reduction in mortgage
servicing review-related professional services expense,
offset by higher costs related to investments in tax-
advantaged projects and employee benefits expense.
Fourth quarter 2013 net interest income, on a taxable-
equivalent basis, was $2.7 billion, compared with $2.8 billion
in the fourth quarter of 2012. The $50 million (1.8 percent)
decrease was principally the result of a lower net interest
margin, partially offset by higher average earning assets.
The net interest margin in the fourth quarter of 2013 was
3.40 percent, compared with 3.55 percent in the fourth
quarter of 2012, primarily reflecting lower rates on loans and
investment securities, partially offset by lower rates on
deposits and the positive impact from maturities of higher-
rate long-term debt. Average earning assets for the fourth
quarter of 2013 increased over the fourth quarter of 2012 by
$7.3 billion (2.3 percent), driven by increases of $12.5 billion
(5.7 percent) in loans and $4.4 billion (6.0 percent) in
investment securities, partially offset by decreases in loans
held for sale of $5.8 billion (66.2 percent) and other earning
assets of $3.8 billion (37.0 percent), primarily due to the
deconsolidation of certain consolidated VIEs during the
second quarter of 2013.
Noninterest income in the fourth quarter of 2013 was
$2.2 billion, compared with $2.3 billion in the same period of
2012, a decrease of $173 million (7.4 percent). The
decrease was principally driven by a $245 million
(51.5 percent) reduction in mortgage banking revenue due
to lower origination and sales revenue, partially offset by
favorable changes in the valuation of MSRs, net of hedging
activities. Growth in several fee categories helped to offset
the decline in mortgage banking revenue. Credit and debit
card revenue increased $21 million (8.7 percent) over the
prior year due to higher transaction volumes, including the
impact of business expansion. Merchant processing
services revenue was $13 million (3.7 percent) higher as a
result of an increase in fee-based product revenue and
U.S. BANCORP 59