US Bank 2006 Annual Report Download - page 21

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principally due to the impact of adopting the fair value 3.97 percent in 2005. The year-over-year decline in net
method of accounting under Statement of Financial interest margin reflected the competitive lending
Accounting Standards No. 156 ‘‘Accounting for Servicing of environment and the impact of a flatter yield curve
Financial Assets’’ (‘‘SFAS 156’’) in the first quarter of 2006. compared to a year ago. The net interest margin also
In addition, noninterest income included a $120 million declined due to funding incremental asset growth with
favorable change in net securities gains (losses) as compared higher cost wholesale funding, share repurchases and
with 2005. The decline in net interest income reflected asset/liability decisions designed to reduce the Company’s
growth in average earning assets, more than offset by lower interest rate sensitivity position. These adverse factors
net interest margins. In 2006, average earning assets impacting the net interest margin were offset somewhat by
increased $7.8 billion (4.4 percent), compared with 2005, the margin benefit of net free funds in a rising rate
primarily due to growth in total average loans, partially environment and higher loan fees.
Total noninterest expense in 2006 increased
offset by a decrease in investment securities. The net interest
$317 million (5.4 percent), compared with 2005, primarily
margin in 2006 was 3.65 percent, compared with
SELECTED FINANCIAL DATA
Year Ended December 31
(Dollars and Shares in Millions, Except Per Share Data) 2006 2005 2004 2003 2002
CONDENSED INCOME STATEMENT
Net interest income (taxable-equivalent basis) (a)******************** $ 6,790 $ 7,088 $ 7,140 $ 7,217 $ 6,847
Noninterest income******************************************** 6,832 6,151 5,624 5,068 4,911
Securities gains (losses), net ************************************ 14 (106) (105) 245 300
Total net revenue ****************************************** 13,636 13,133 12,659 12,530 12,058
Noninterest expense ******************************************* 6,180 5,863 5,785 5,597 5,740
Provision for credit losses ************************************** 544 666 669 1,254 1,349
Income from continuing operations before taxes ***************** 6,912 6,604 6,205 5,679 4,969
Taxable-equivalent adjustment *********************************** 49 33 29 28 33
Applicable income taxes **************************************** 2,112 2,082 2,009 1,941 1,708
Income from continuing operations**************************** 4,751 4,489 4,167 3,710 3,228
Discontinued operations (after-tax) ******************************* ———23(23)
Cumulative effect of accounting change (after-tax) ******************* ————(37)
Net income *********************************************** $ 4,751 $ 4,489 $ 4,167 $ 3,733 $ 3,168
Net income applicable to common equity *********************** $ 4,703 $ 4,489 $ 4,167 $ 3,733 $ 3,168
PER COMMON SHARE
Earnings per share from continuing operations ********************* $ 2.64 $ 2.45 $ 2.21 $ 1.93 $ 1.68
Diluted earnings per share from continuing operations *************** 2.61 2.42 2.18 1.92 1.68
Earnings per share ******************************************** 2.64 2.45 2.21 1.94 1.65
Diluted earnings per share ************************************** 2.61 2.42 2.18 1.93 1.65
Dividends declared per share ************************************ 1.390 1.230 1.020 .855 .780
Book value per share ****************************************** 11.44 11.07 10.52 10.01 9.62
Market value per share***************************************** 36.19 29.89 31.32 29.78 21.22
Average common shares outstanding ***************************** 1,778 1,831 1,887 1,924 1,916
Average diluted common shares outstanding *********************** 1,804 1,857 1,913 1,936 1,925
FINANCIAL RATIOS
Return on average assets*************************************** 2.23% 2.21% 2.17% 1.99% 1.84%
Return on average common equity ******************************* 23.6 22.5 21.4 19.2 18.3
Net interest margin (taxable-equivalent basis)(a) ******************** 3.65 3.97 4.25 4.49 4.65
Efficiency ratio (b)********************************************* 45.4 44.3 45.3 45.6 48.8
AVERAGE BALANCES
Loans ****************************************************** $140,601 $131,610 $120,670 $116,937 $113,182
Loans held for sale******************************************** 3,663 3,290 3,079 5,041 3,915
Investment securities ****************************************** 39,961 42,103 43,009 37,248 28,829
Earning assets************************************************ 186,231 178,425 168,123 160,808 147,410
Assets ****************************************************** 213,512 203,198 191,593 187,630 171,948
Noninterest-bearing deposits ************************************ 28,755 29,229 29,816 31,715 28,715
Deposits **************************************************** 120,589 121,001 116,222 116,553 105,124
Short-term borrowings ***************************************** 24,422 19,382 14,534 10,503 10,116
Long-term debt*********************************************** 40,357 36,141 35,115 33,663 32,172
Shareholders’ equity ******************************************* 20,710 19,953 19,459 19,393 17,273
PERIOD END BALANCES
Loans ****************************************************** $143,597 $136,462 $124,941 $116,811 $114,905
Allowance for credit losses ************************************* 2,256 2,251 2,269 2,369 2,422
Investment securities ****************************************** 40,117 39,768 41,481 43,334 28,488
Assets ****************************************************** 219,232 209,465 195,104 189,471 180,027
Deposits **************************************************** 124,882 124,709 120,741 119,052 115,534
Long-term debt*********************************************** 37,602 37,069 34,739 33,816 31,582
Shareholders’ equity ******************************************* 21,197 20,086 19,539 19,242 18,436
Regulatory capital ratios
Tier 1 capital********************************************** 8.8% 8.2% 8.6% 9.1% 8.0%
Total risk-based capital************************************** 12.6 12.5 13.1 13.6 12.4
Leverage ************************************************* 8.2 7.6 7.9 8.0 7.7
Tangible common equity ************************************ 5.5 5.9 6.4 6.5 5.7
(a) Presented on a fully taxable-equivalent basis utilizing a tax rate of 35 percent.
(b) Computed as noninterest expense divided by the sum of net interest income on a taxable-equivalent basis and noninterest income excluding securities gains (losses), net.
U.S. BANCORP 19
Table 1