US Bank 2012 Annual Report Download - page 63

As an approved mortgage seller and servicer, U.S. Bank
National Association, through its mortgage banking division,
is required to maintain various levels of shareholders’ equity,
as specified by various agencies, including the United States
Department of Housing and Urban Development,
Government National Mortgage Association, Federal Home
Loan Mortgage Corporation and the Federal National
Mortgage Association. At December 31, 2012, U.S. Bank
National Association met these requirements.
Table 22 provides a summary of regulatory capital ratios
defined by banking regulators under the FDIC Improvement
Act prompt corrective action provisions applicable to all
banks, as of December 31, 2012 and 2011, including Tier 1
and total risk-based capital ratios. In 2010, the Basel
Committee on Banking Supervision issued Basel III, a global
regulatory framework, proposed to enhance international
capital standards. In June 2012, U.S. banking regulators
proposed regulatory enhancements to the regulatory capital
requirements for U.S. banks, which implement aspects of
Basel III and the Dodd-Frank Act, such as redefining the
regulatory capital elements and minimum capital ratios,
introducing regulatory capital buffers above those minimums,
revising the rules for calculating risk-weighted assets and
introducing a new Tier 1 common equity ratio. The Company
continues to evaluate these proposals, but does not expect
their impact to be material to the financial statements.
The Company believes certain capital ratios in addition to
regulatory capital ratios defined by banking regulators under
the FDIC Improvement Act prompt corrective action
provisions are useful in evaluating its capital adequacy. The
Company’s Tier 1 common equity (using Basel I definition)
and tangible common equity, as a percent of risk-weighted
assets, were 9.0 percent and 8.6 percent, respectively, at
December 31, 2012, compared with 8.6 percent and 8.1
percent, respectively, at December 31, 2011. The Company’s
tangible common equity divided by tangible assets was 7.2
percent at December 31, 2012, compared with 6.6 percent at
December 31, 2011. Additionally, the Company’s
approximate Tier 1 common equity to risk-weighted assets
ratio using proposed rules for the Basel III standardized
approach released June 2012, was 8.1 percent at
December 31, 2012. Refer to “Non-GAAP Financial
Measures” for further information regarding the calculation
of these ratios.
Fourth Quarter Summary
The Company reported net income attributable to
U.S. Bancorp of $1.4 billion for the fourth quarter of 2012, or
$.72 per diluted common share, compared with $1.4 billion,
or $.69 per diluted common share, for the fourth quarter of
2011. Return on average assets and return on average
common equity were 1.62 percent and 15.6 percent,
respectively, for the fourth quarter of 2012, compared with
returns of 1.62 percent and 16.8 percent, respectively, for the
fourth quarter of 2011. Included in the fourth quarter 2012
results were the $80 million expense accrual for a mortgage
foreclosure-related regulatory settlement and a provision for
credit losses less than net charge-offs by $25 million. Included
in the fourth quarter 2011 results were the $263 million
TABLE 22 Regulatory Capital Ratios
At December 31 (Dollars in Millions) 2012 2011
U.S. Bancorp
Tier 1 capital ................................................................................................... $31,203 $29,173
As a percent of risk-weighted assets ........................................................................ 10.8% 10.8%
As a percent of adjusted quarterly average assets (leverage ratio) .......................................... 9.2% 9.1%
Total risk-based capital ........................................................................................ $37,780 $36,067
As a percent of risk-weighted assets ........................................................................ 13.1% 13.3%
Bank Subsidiaries
U.S. Bank National Association
Tier 1 capital .............................................................................................. 10.6% 9.6%
Total risk-based capital ................................................................................... 12.7 12.5
Leverage .................................................................................................. 9.0 8.1
U.S. Bank National Association ND
Tier 1 capital .............................................................................................. 15.8% 13.4%
Total risk-based capital ................................................................................... 18.8 16.4
Leverage .................................................................................................. 14.7 12.9
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
U.S. BANCORP 59