US Bank 2010 Annual Report Download - page 62

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higher litigation-related expenses, partially offset by the
FDIC special assessment in 2009.
Income taxes are assessed to each line of business at a
managerial tax rate of 36.4 percent with the residual tax
expense or benefit to arrive at the consolidated effective tax
rate included in Treasury and Corporate Support.
NON-REGULATORY CAPITAL RATIOS
In addition to capital ratios defined by banking regulators,
the Company considers various other measures when
evaluating capital utilization and adequacy, including:
• Tangible common equity to tangible assets,
• Tier 1 common equity to risk-weighted assets, and
• Tangible common equity to risk-weighted assets.
These non-regulatory capital ratios are viewed by
management as useful additional methods of reflecting the
level of capital available to withstand unexpected market
conditions. Additionally, presentation of these ratios allows
readers to compare the Company’s capitalization to other
financial services companies. These ratios differ from capital
ratios defined by banking regulators principally in that the
numerator excludes trust preferred securities and preferred
stock, the nature and extent of which varies among different
financial services companies. These ratios are not defined in
generally accepted accounting principles (“GAAP”) or
federal banking regulations. As a result, these non-regulatory
capital ratios disclosed by the Company may be considered
non-GAAP financial measures.
Because there are no standardized definitions for these
non-regulatory capital ratios, the Company’s calculation
methods may differ from those used by other financial
services companies. Also, there may be limits in the
usefulness of these measures to investors. As a result, the
Company encourages readers to consider the consolidated
financial statements and other financial information
contained in this report in their entirety, and not to rely on
any single financial measure.
60 U.S. BANCORP
The following table shows the Company’s calculation of the non-regulatory capital ratios:
December 31 (Dollars in Millions) 2010 2009 2008 2007 2006
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,322 $ 26,661 $ 27,033 $ 21,826 $ 21,919
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,930) (1,500) (7,931) (1,000) (1,000)
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . (803) (698) (733) (780) (722)
Goodwill (net of deferred tax liability) . . . . . . . . . . . . . . . . . . . (8,337) (8,482) (8,153) (7,534) (7,423)
Intangible assets, other than mortgage servicing rights . . . . . . . (1,376) (1,657) (1,640) (1,581) (1,800)
Tangible common equity (a). . . . . . . . . . . . . . . . . . . . . . . 17,876 14,324 8,576 10,931 10,974
Tier 1 capital, determined in accordance with prescribed
regulatory requirements . . . . . . . . . . . . . . . . . . . . . . . . . 25,947 22,610 24,426 17,539 17,036
Trust preferred securities . . . . . . . . . . . . . . . . . . . . . . . . (3,949) (4,524) (4,024) (4,024) (3,639)
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,930) (1,500) (7,931) (1,000) (1,000)
Noncontrolling interests, less preferred stock not eligible for
Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (692) (692) (693) (695) (694)
Tier 1 common equity (b) . . . . . . . . . . . . . . . . . . . . . . . . . . 19,376 15,894 11,778 11,820 11,703
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307,786 281,176 265,912 237,615 219,232
Goodwill (net of deferred tax liability) . . . . . . . . . . . . . . . . . . . (8,337) (8,482) (8,153) (7,534) (7,423)
Intangible assets, other than mortgage servicing rights . . . . . . . (1,376) (1,657) (1,640) (1,581) (1,800)
Tangible assets (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298,073 271,037 256,119 228,500 210,009
Risk-weighted assets, determined in accordance with
prescribed regulatory requirements (d) . . . . . . . . . . . . . . 247,619 235,233 230,628 212,592 194,659
Ratios
Tangible common equity to tangible assets (a)/(c) . . . . . . . . . . 6.0% 5.3% 3.3% 4.8% 5.2%
Tier 1 common equity to risk-weighted assets (b)/(d) . . . . . . . . 7.8 6.8 5.1 5.6 6.0
Tangible common equity to risk-weighted assets (a)/(d) . . . . . . 7.2 6.1 3.7 5.1 5.6
Note: Tier 1 capital and Tier 1 common equity amounts are presented using qualifying capital elements as specified in current regulatory guidance (“Basel I”) and do not reflect
adjustments for changes to those elements proposed in December 2010.