MINNEAPOLIS (Jan. 24, 2014) — U.S. Bancorp (NYSE:USB) today reported net income of $1,456 million for the fourth quarter of 2013, or $.76 per diluted common share, compared with $1,420 million, or $.72 per diluted common share, in the fourth quarter of 2012.
Highlights for the full year 2013 included:
• Record full year 2013 net income of $5.8 billion, 3.3 percent higher than 2012
- • Record full year diluted earnings per common share of $3.00, 5.6 percent higher than 2012
- • Industry-leading performance measures, including return on average assets of 1.65 percent, return on average common equity of 15.8 percent and efficiency ratio of 52.4 percent
- • Returned 71 percent of 2013 earning to shareholders through dividend and share buybacks
Highlights for the fourth quarter of 2013 included:
Industry-leading performance ratios, including:
- • Return on average assets of 1.62 percent
- • Return on average common equity of 15.4 percent
- • Efficiency ratio of 54.9 percent
• Growth in average total loans of 5.7 percent over the fourth quarter of 2012 (7.3 percent excluding covered loans) and 1.5 percent on a linked quarter basis (1.9 percent excluding covered loans)
- • Growth in average total commercial loans of 7.8 percent over the fourth quarter of 2012 and 1.3 percent over the third quarter of 2013
- • Growth in average total commercial real estate loans of 6.7 percent over the fourth quarter of 2012 and 2.1 percent over the third quarter of 2013
- • Growth in average commercial and commercial real estate commitments of 10.1 percent year-over-year and 2.7 percent over the prior quarter
• Strong new lending activity of $58.4 billion during the fourth quarter, including:
- • $40.6 billion of new and renewed commercial and commercial real estate commitments
- • $2.7 billion of lines related to new credit card accounts
- • $15.1 billion of mortgage and other retail loan originations
• Continued strong growth in average total deposits of 5.4 percent over the fourth quarter of 2012 and 1.8 percent on a linked quarter basis.
- • Average low cost deposits, including noninterest-bearing and total savings deposits, grew by 8.5 percent year-over-year and 4.8 percent linked quarter
• Net charge-offs declined on both a linked quarter and year-over-year basis. Provision for credit losses was $35 million less than net charge-offs
- Net charge-offs were $16 million (4.9 percent) lower than the third quarter of 2013
- Annualized net charge-offs to average total loans ratio decreased to .53 percent
- Allowance to period-end loans was 1.93 percent at December 31, 2013
• Nonperforming assets decreased on both a linked quarter and year-over-year basis
- Nonperforming assets (excluding covered assets) decreased 3.6 percent from the third quarter of 2013
- Allowance to nonperforming assets (excluding covered assets) was 242 percent at December 31, 2013, compared with 235 percent at September 30, 2013, and 218 percent at December 31, 2012
• Tax rate on a taxable-equivalent basis was 23.8 percent for the fourth quarter, compared with 29.5 percent for the third quarter of 2013, principally reflecting the impact of accounting presentation changes related to investments in tax-advantaged projects
- Change had no impact on net income attributable to U.S. Bancorp
- Change increased other expense by $31 million, decreased net (income) loss attributable to noncontrolling interests by $53 million and decreased income tax expense by $84 million compared with the third quarter of 2013
• Capital generation continues to reinforce capital position and return. Ratios at December 31, 2013, were:
- Tier 1 capital ratio of 11.2 percent
- Total risk based capital ratio of 13.2 percent
- Tier 1 common equity to risk-weighted assets ratio of 9.4 percent
- Common equity tier 1 ratio of 8.8 percent estimated using final rules for the Basel III standardized approach
- Returned 65 percent of fourth quarter earnings to shareholders through dividends and the buyback of 13 million common shares
Net income attributable to U.S. Bancorp was $1,456 million for the fourth quarter of 2013, 2.5 percent higher than the $1,420 million for the fourth quarter of 2012, and .8 percent lower than the $1,468 million for the third quarter of 2013. Diluted earnings per common share of $.76 in the fourth quarter of 2013 were $.04 higher than the fourth quarter of 2012 and equal to the previous quarter. Return on average assets and return on average common equity were 1.62 percent and 15.4 percent, respectively, for the fourth quarter of 2013, compared with 1.62 percent and 15.6 percent, respectively, for the fourth quarter of 2012. The provision for credit losses was lower than net charge-offs by $35 million in the fourth quarter of 2013, $30 million lower in the third quarter of 2013 and $25 million lower in the fourth quarter of 2012.
U.S. Bancorp Chairman, President and CEO Richard K. Davis said, “Today U.S. Bancorp reported record earnings for full year 2013 of $5.8 billion, or $3.00 per diluted common share. The 2013 results included top-tier returns on average assets and average common equity of 1.65 percent and 15.8 percent, respectively, and an efficiency ratio of 52.4 percent. I am particularly proud to have achieved these results during a year marked by slow economic growth, a significant pullback in mortgage activity and continued regulatory and legislative change and uncertainty. Our results clearly demonstrate the benefits we derive from our diverse mix of businesses and conservative risk profile.
“Our fourth quarter earnings per diluted common share were $.76, a 5.6 percent increase over the same quarter of 2012. The company’s balance sheet continued to expand during the quarter with average loans higher by 5.7 percent over the prior year and, as expected, 1.5 percent, or 6 percent annualized, on a linked quarter basis. Virtually all loan categories posted growth versus comparable time periods. Fee-based revenue was negatively impacted this quarter on both a year-over-year and linked quarter basis by the reduction in mortgage banking activity, but the impact was muted by growth in other fee businesses and, overall, by prudent expense management.
“Credit quality continues to be strong, as total net charge-offs and nonperforming assets declined, again, in the fourth quarter. Net charge-offs were .53 percent of average total loans, compared with .57 percent in the previous quarter and .85 percent in the same quarter of 2012. Nonperforming assets, excluding covered assets, declined by $67 million, or 3.6 percent from the prior quarter.
“We continue to generate significant capital each quarter, while returning a majority of our earnings to shareholders in the form of share buybacks and dividends. Our tier 1 capital ratio at December 31st was 11.2 percent, and our tier 1 common equity ratio was 9.4 percent. Further, our common equity tier 1 ratio at December 31st, estimated using final rules for the Basel III standardized approach, was 8.8 percent. During 2013, we returned $4.0 billion, or 71 percent, of our earnings to shareholders through dividends and the repurchase of 65 million shares of stock. We completed and submitted our 2014 Comprehensive Capital Plan to the Federal Reserve in early January, and await regulatory approval to raise our dividend and continue our stock buyback program in 2014.
“On Jan. 7h we announced the purchase of a Chicago branch franchise owned by RBS Citizens Financial Group. The investment will nearly double our market share in this important market within our footprint, strengthening our position and adding products, services and convenience for new and existing customers, as well as value for our shareholders.
“Our company’s results are directly tied to the hard work and dedication of our employees, and I want to take the opportunity today to thank them for their contribution to our success. On January 14th, we held our 8th annual All Employee Meeting. The great majority of our employees attended one of seventy-four meetings scheduled to accommodate numerous time zones across the U.S., Canada and Europe. Employees gathered in person, on the phone, via the web and by satellite connection to hear about our 2013 accomplishments and our new initiatives for 2014. It was a pleasure to once again make this annual connection with our employees. Our employees are engaged and passionate about serving our customers and communities, and I am proud to serve with them.
“I am very pleased with our record full year 2013 earnings. As we look forward to the coming year, we are mindful of the strength of our Company and how we, as a bank, remain an integral part of the growth and vibrancy of the nation’s economy, our communities and the customers we serve and support. We are focused on the future and confident in our ability to deliver outstanding products, service and results for the benefit of our customers, communities, employees and, most importantly, our shareholders.”