US Bank 2006 Annual Report Download - page 52

REGULATORY CAPITAL RATIOS
At December 31 (Dollars in Millions) 2006 2005
U.S. BANCORP
Tier 1 capital************************************************************************************************** $17,036 $15,145
As a percent of risk-weighted assets**************************************************************************** 8.8% 8.2%
As a percent of adjusted quarterly average assets (leverage ratio) **************************************************** 8.2% 7.6%
Total risk-based capital ****************************************************************************************** $24,495 $23,056
As a percent of risk-weighted assets**************************************************************************** 12.6% 12.5%
Tangible common equity***************************************************************************************** $11,703 $11,873
As a percent of tangible assets ******************************************************************************** 5.5% 5.9%
BANK SUBSIDIARIES
U.S. Bank National Association
Tier 1 capital ******************************************************************************************* 6.5% 6.5%
Total risk-based capital *********************************************************************************** 10.8 10.7
Leverage*********************************************************************************************** 6.1 5.9
U.S. Bank National Association ND
Tier 1 capital ******************************************************************************************* 12.9% 12.9%
Total risk-based capital *********************************************************************************** 16.7 17.0
Leverage*********************************************************************************************** 11.3 11.2
Well-
BANK REGULATORY CAPITAL REQUIREMENTS Minimum Capitalized
Tier 1 capital ******************************************************************************************* 4.0% 6.0%
Total risk-based capital *********************************************************************************** 8.0 10.0
Leverage*********************************************************************************************** 4.0 5.0
its financial statements. The conduit held assets of continually assesses its business risks and capital position.
$2.2 billion at December 31, 2006, and $3.8 billion at The Company also manages its capital to exceed regulatory
December 31, 2005. These investment securities include capital requirements for well-capitalized bank holding
primarily (i) private label asset-backed securities, which are companies. To achieve these capital goals, the Company
insurance ‘‘wrapped’’ by AAA/Aaa–rated mono-line insurance employs a variety of capital management tools including
companies and (ii) government agency mortgage-backed dividends, common share repurchases, and the issuance of
securities and collateralized mortgage obligations. The subordinated debt and other capital instruments. Total
conduit had commercial paper liabilities of $2.2 billion at shareholders’ equity was $21.2 billion at December 31,
December 31, 2006, and $3.8 billion at December 31, 2005. 2006, compared with $20.1 billion at December 31, 2005.
The Company provides a liquidity facility to the conduit. The increase was the result of corporate earnings and the
Utilization of the liquidity facility would be triggered if the issuance of $1.0 billion of non-cumulative perpetual
conduit is unable to, or does not, issue commercial paper to preferred stock on March 27, 2006, partially offset by share
fund its assets. A liability for the estimate of the potential repurchases and dividends.
risk of loss for the Company as the liquidity facility provider On December 12, 2006, the Company increased its
is recorded on the balance sheet in other liabilities. The dividend rate per common share by 21.2 percent, from
liability is adjusted downward over time as the underlying $.33 per quarter to $.40 per quarter. On December 20,
assets pay down with the offset recognized as other 2005, the Company increased its dividend rate per common
noninterest income. The liability for the liquidity facility was share by 10.0 percent, from $.30 per quarter to $.33 per
$10 million and $20 million at December 31, 2006 and quarter.
2005, respectively. In addition, the Company recorded at fair On December 21, 2004, the Board of Directors
value its retained residual interest in the investment securities approved and announced an authorization to
conduit of $13 million and $28 million at December 31, repurchase 150 million shares of common stock during the
2006 and 2005, respectively. next 24 months. In 2005, the Company repurchased
62 million shares under the 2004 authorization. The
average price paid for the shares repurchased in 2005 was
Capital Management The Company is committed to $29.37 per share. On August 3, 2006, the Company
managing capital for maximum shareholder benefit and announced that the Board of Directors approved an
maintaining strong protection for depositors and creditors. authorization to repurchase 150 million shares of common
The Company has targeted returning 80 percent of earnings stock through December 31, 2008. This new authorization
to its common shareholders through a combination of replaced the December 21, 2004, share repurchase program.
dividends and share repurchases. During 2006, the During 2006, the Company repurchased 62 million shares
Company returned 112 percent of earnings. The Company
50 U.S. BANCORP
Table 21