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U.S. Bancorp 3
2002 2001
Year Ended December 31 (Dollars and Shares in Millions, Except Per Share Data) 2002 2001 2000 v 2001 v 2000
Total net revenue (taxable-equivalent basis) . . . . . . . . . . . . . . . . $12,744.9 $11,761.9 $11,018.2 8.4% 6.7%
Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,932.5 5,658.8 5,368.3 4.8 5.4
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,349.0 2,146.6 828.0
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,925.7 1,405.7 1,715.0
Operating earnings (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,537.7 $ 2,550.8 $ 3,106.9 38.7% (17.9)%
Merger and restructuring-related items (after-tax) . . . . . . . . . . . . (211.3) (844.3) (231.3)
Cumulative effect of change in accounting principles (after-tax) . (37.2) ——
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,289.2 $ 1,706.5 $ 2,875.6 92.7% (40.7)%
Per Common Share
Earnings per share before cumulative effect of
change in accounting principles . . . . . . . . . . . . . . . . . . . . . . . $ 1.74 $ .89 $ 1.51 95.5% (41.1)%
Diluted earnings per share before cumulative
effect of change in accounting principles . . . . . . . . . . . . . . . . 1.73 .88 1.50 96.6 (41.3)
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.72 .89 1.51 93.3 (41.1)
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.71 .88 1.50 94.3 (41.3)
Dividends declared per share (b) . . . . . . . . . . . . . . . . . . . . . . . . . .78 .75 .65 4.0 15.4
Book value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.44 8.43 7.97 12.0 5.8
Market value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.22 20.93 23.25 1.4 (10.0)
Average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,916.0 1,927.9 1,906.0 (.6) 1.1
Average diluted shares outstanding . . . . . . . . . . . . . . . . . . . . . . . 1,926.1 1,939.5 1,918.5 (.7) 1.1
Financial Ratios
Return on average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.91% 1.03% 1.81%
Return on average equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.4 10.5 20.0
Net interest margin (taxable-equivalent basis) . . . . . . . . . . . . . . . 4.61 4.42 4.33
Efficiency ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.3 57.5 51.9
Financial Ratios Excluding Merger and
Restructuring-Related Items and Cumulative
Effect of Change in Accounting Principles (a)
Return on average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.06% 1.54% 1.96%
Return on average equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9 15.7 21.6
Efficiency ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.7 49.5 48.8
Banking efficiency ratio (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.0 45.2 43.5
Average Balances
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 114,456 $ 118,177 $ 118,317 (3.1)% (.1)%
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,829 21,916 17,311 31.5 26.6
Earning assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,143 145,165 140,606 2.7 3.2
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171,948 165,944 158,481 3.6 4.7
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,124 104,956 103,426 .2 1.5
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,963 16,201 14,365 4.7 12.8
Period End Balances
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 116,251 $ 114,405 $ 122,365 1.6% (6.5)%
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,422 2,457 1,787 (1.4) 37.5
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,488 26,608 17,642 7.1 50.8
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,027 171,390 164,921 5.0 3.9
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,534 105,219 109,535 9.8 (3.9)
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,101 16,461 15,168 10.0 8.5
Regulatory capital ratios
Tangible common equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6% 5.7% 6.3%
Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 7.7 7.2
Total risk-based capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 11.7 10.6
Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 7.7 7.4
(a) The Company analyzes its performance on a net income basis in accordance with accounting principles generally accepted in the United States, as well
as on an operating basis before merger and restructuring-related items and cumulative effect of change in accounting principles referred to in this Annual
Report and Form 10-K as “operating earnings.” Operating earnings are presented as supplemental information to enhance the reader's understanding of,
and highlight trends in, the Company’s financial results excluding the impact of merger and restructuring-related items of specific business acquisitions and
restructuring activities and cumulative effect of change in accounting principles. Operating earnings should not be viewed as a substitute for net income
and earnings per share as determined in accordance with accounting principles generally accepted in the United States. Merger and restructuring-related
items excluded from net income to derive operating earnings may be significant and may not be comparable to other companies.
(b) Dividends per share have not been restated for the 2001 merger of Firstar and the former U.S. Bancorp.
(c) Without investment banking and brokerage activity.
Forward-Looking Statements
This Annual Report and Form 10-K contains forward-looking statements. Statements that are not historical or current facts, including statements about beliefs
and expectations, are forward-looking statements. These forward-looking statements cover, among other things, anticipated future revenue and expenses and
the future prospects of the Company. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to
differ materially from those anticipated, including the following, in addition to those contained in U.S. Bancorp’s reports on file with the SEC: (i) general eco-
nomic or industry conditions could be less favorable than expected, resulting in a deterioration in credit quality, a change in the allowance for credit losses, or
a reduced demand for credit or fee-based products and services; (ii) changes in the domestic interest rate environment could reduce net interest income and
could increase credit losses; (iii) the conditions of the securities markets could change, adversely affecting revenues from capital markets businesses, the value
or credit quality of the Company’s assets, or the availability and terms of funding necessary to meet the Company’s liquidity needs; (iv) changes in the extensive
laws, regulations and policies governing financial services companies could alter the Company’s business environment or affect operations; (v) the potential
need to adapt to industry changes in information technology systems, on which the Company is highly dependent, could present operational issues or require
significant capital spending; (vi) competitive pressures could intensify and affect the Company’s profitability, including as a result of continued industry consoli-
dation, the increased availability of financial services from non-banks, technological developments or bank regulatory reform; (vii) acquisitions may not produce
revenue enhancements or cost savings at levels or within timeframes originally anticipated, or may result in unforeseen integration difficulties; and (viii) capital
investments in the Company’s businesses may not produce expected growth in earnings anticipated at the time of the expenditure. Forward-looking statements
speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events.
Financial Summary