U.S. Bancorp Reports Third Quarter 2018 Results

October 17, 2018
  • Record net revenue of $5,699 million, record net income of $1,815 million and record diluted earnings per share of $1.06
  • Industry leading return on average assets of 1.58% and return on average common equity of 15.5%

MINNEAPOLIS--(BUSINESS WIRE)--Oct. 17, 2018-- U.S. Bancorp (NYSE: USB):

3Q18 Key Financial Data

             
PROFITABILITY METRICS   3Q18   2Q18   3Q17
Return on average assets (%)   1.58   1.54   1.38
Return on average common equity (%) 15.5 15.3 13.6
Return on tangible common equity (%) (a) 19.9 19.8 17.3
Net interest margin (%) 3.15 3.13 3.14
Efficiency ratio (%) (a) 53.5 54.8 53.9
             
INCOME STATEMENT (b)   3Q18   2Q18   3Q17
Net interest income (taxable-equivalent basis) $3,281 $3,226 $3,227
Noninterest income $2,418 $2,414 $2,340
Net income attributable to U.S. Bancorp $1,815 $1,750 $1,563
Diluted earnings per common share $1.06 $1.02 $.88
Dividends declared per common share $.37 $.30 $.30
             
BALANCE SHEET (b)   3Q18   2Q18   3Q17
Average total loans $281,065 $278,624 $277,626
Average total deposits $330,121 $334,822 $335,151
Net charge-off ratio .46% .48% .47%
Book value per common share (period end) $27.35 $27.02 $25.98
Basel III standardized CET1 (c) 9.0% 9.1% 9.4%
             
(a) See Non-GAAP Financial Measures reconciliation on pages 16-17
(b) Dollars in millions, except per share data
(c) CET1 = Common equity tier 1 capital ratio, 3Q17 as if fully implemented
 

3Q18 Highlights

  • Net income of $1,815 million and diluted earnings per common share of $1.06
  • Industry leading return on average assets of 1.58% and return on average common equity of 15.5%
  • Return on tangible common equity of 19.9%
  • Returned 78% of 3Q earnings to shareholders through dividends and share buybacks
  • Year-over-year positive operating leverage with net revenue increase of 2.4% and noninterest expense increase of 1.5%
  • Net interest income grew 2.4% year-over-year (1.7% on a taxable-equivalent basis) and 1.7% linked quarter on both a reported and tax-equivalent basis
  • Total noninterest income grew 3.3% year-over year
    • Payment services revenue grew 7.1%
    • Trust and investment management fees increased 8.2%
  • Nonperforming assets decreased 19.7% on a year-over-year basis and 8.0% on a linked quarter basis

CEO Commentary

“Strong underlying momentum in each of our business lines drove record revenue, net income and EPS this quarter. We remain vigilant in our expense discipline while continuing to prudently invest in our core businesses as well as in our digital and payments capabilities. In the third quarter, we expanded our commercial banking presence, launched a new digital platform to serve our small business customers and acquired new capabilities in our payments business. At the same time, our focus on optimization allowed us to deliver positive operating leverage and a best-in-class efficiency ratio, while growing our industry leading return on tangible common equity ratio to 19.9%. I am thankful for our U.S. Bank team members who work every day to put the customer in the center with the goal of delivering outstanding results for each of our stakeholders.”

Andy Cecere, Chairman, President and CEO, U.S. Bancorp

In the Spotlight

Most Powerful Women in Banking and Finance
Three of our Vice Chairmen, Leslie Godridge, Corporate & Commercial Banking, Gunjan Kedia, Wealth Management and Investment Services and Kate Quinn, chief administrative officer at U.S. Bank, were honored by American Banker magazine among the "Most Powerful Women in Banking and Finance" for 2018.

Launch of Digital Small Business Lending
U.S. Bank has created a new, fully digital option for small businesses to apply for and receive a loan or line of credit. The entire process, from application to funding, can be completed same day, often within an hour or less, dramatically improving the experience for busy entrepreneurs.

Expansion of Commercial Banking Team
U.S. Bank has built a strong presence in the greater New York metropolitan area over the past 10 years, and has recently announced the expansion of its Commercial Banking team into this market, focusing on serving middle market clients in New York, New Jersey and Connecticut.

Meeting Customers’ Short-Term Cash Needs
U.S. Bank recently launched a new small-dollar loan product called Simple Loan, designed to help customers deal with unexpected or short-term cash needs with a transparent, easy-to-understand installment loan. U.S. Bank worked closely with its regulators when developing this product and is the first national bank to offer this type of short-term loan solution.

                                 
INCOME STATEMENT HIGHLIGHTS

($ in millions, except per-share data)

        Percent Change      
3Q 2Q 3Q 3Q18 vs   3Q18 vs YTD YTD Percent
  2018   2018   2017   2Q18   3Q17   2018   2017   Change
 
Net interest income $3,251 $3,197 $3,176 1.7 2.4 $9,616 $9,205 4.5
Taxable-equivalent adjustment 30     29     51   3.4 (41.2 ) 88     152   (42.1 )
Net interest income (taxable-equivalent basis) 3,281 3,226 3,227 1.7 1.7 9,704 9,357 3.7
Noninterest income 2,418     2,414     2,340   .2 3.3 7,104     6,947   2.3
Total net revenue 5,699 5,640 5,567 1.0 2.4 16,808 16,304 3.1
Noninterest expense 3,044     3,085     2,998   (1.3 ) 1.5 9,184     8,891   3.3
Income before provision and income taxes 2,655 2,555 2,569 3.9 3.3 7,624 7,413 2.8
Provision for credit losses 343     327     360   4.9 (4.7 ) 1,011     1,055   (4.2 )
Income before taxes 2,312 2,228 2,209 3.8 4.7 6,613 6,358 4.0

Income taxes and taxable-equivalent adjustment

490     470     640   4.3 (23.4 ) 1,351     1,791   (24.6 )
Net income 1,822 1,758 1,569 3.6 16.1 5,262 4,567 15.2

Net (income) loss attributable to noncontrolling interests

(7 )   (8 )   (6 ) 12.5 (16.7 ) (22 )   (31 ) 29.0
Net income attributable to U.S. Bancorp $1,815     $1,750     $1,563   3.7 16.1 $5,240     $4,536   15.5

Net income applicable to U.S. Bancorp common shareholders

$1,732     $1,678     $1,485   3.2 16.6 $5,007     $4,302   16.4
Diluted earnings per common share $1.06     $1.02     $.88   3.9 20.5 $3.04     $2.55   19.2
                                                 
 

Net income attributable to U.S. Bancorp was $1,815 million for the third quarter of 2018, which was 16.1 percent higher than the $1,563 million for the third quarter of 2017, and 3.7 percent higher than the $1,750 million for the second quarter of 2018. Diluted earnings per common share were $1.06 in the third quarter of 2018, compared with $0.88 in the third quarter of 2017 and $1.02 in the second quarter of 2018.

The increase in net income year-over-year was largely due to total net revenue growth of 2.4 percent partially offset by noninterest expense growth of 1.5 percent. Net interest income increased 2.4 percent (1.7 percent on a taxable-equivalent basis), mainly a result of the impact of rising interest rates, earning assets growth, and higher yields on reinvestment of securities, partially offset by higher rates on deposits and funding mix. Noninterest income increased 3.3 percent compared with a year ago, driven by strong growth in payment services revenue, trust and investment management fees, and other noninterest revenue, partially offset by decreases in mortgage banking revenue and commercial products revenue. Noninterest expense increased 1.5 percent primarily due to increased compensation expense related to supporting business growth and compliance programs, merit increases, and variable compensation related to revenue growth, higher employee benefits expense, and higher technology and communications expense in support of business growth. Partially offsetting these increases was lower other noninterest expense driven by lower costs related to tax-advantaged projects, lower FDIC insurance expense, a reduction in mortgage servicing costs, and lower pension related costs.

Net income increased on a linked quarter basis primarily due to total net revenue growth of 1.0 percent and a decrease in noninterest expense of 1.3 percent. The increase in total net revenue reflected an increase in net interest income of 1.7 percent due to the impact of rising interest rates, earning assets growth, and an additional day in the third quarter, partially offset by higher rates on deposits and funding mix. Noninterest income increased 0.2 percent driven by seasonally higher payment services revenue and deposit services charges, along with higher trust and investment management fees and other noninterest income. These increases were partially offset by decreases in commercial products revenue and mortgage banking revenue. The decrease in noninterest expense of 1.3 percent was primarily driven by lower other noninterest expense due to lower costs related to tax-advantaged projects driven by syndicating tax credits following tax reform and the change in accruals related to legal and insurance matters, as well as a reduction in compensation expense due to lower incentives and seasonally lower contract labor costs.

                                 
NET INTEREST INCOME

(Taxable-equivalent basis; $ in millions)

        Change      
3Q 2Q 3Q 3Q18 vs   3Q18 vs YTD YTD
  2018   2018   2017   2Q18   3Q17   2018   2017   Change
Components of net interest income
Income on earning assets $4,155 $3,980 $3,758 $175 $397 $11,957 $10,774 $1,183
Expense on interest-bearing liabilities 874     754     531     120     343     2,253     1,417     836  
Net interest income $3,281     $3,226     $3,227     $55     $54     $9,704     $9,357     $347  
 
Average yields and rates paid
Earning assets yield 3.98 % 3.86 % 3.66 % .12 % .32 % 3.86 % 3.56 % .30 %
Rate paid on interest-bearing liabilities 1.10     .97     .69     .13     .41     .96     .63     .33  
Gross interest margin 2.88 %   2.89 %   2.97 %   (.01 )%   (.09 )%   2.90 %   2.93 %   (.03 )%
Net interest margin 3.15 %   3.13 %   3.14 %   .02 %   .01 %   3.14 %   3.09 %   .05 %
 
Average balances
Investment securities (a) $113,547 $114,578 $111,832 $(1,031 ) $1,715 $113,873 $111,325 $2,548
Loans 281,065 278,624 277,626 2,441 3,439 279,699 275,454 4,245
Earning assets 415,177 412,676 408,825 2,501 6,352 413,246 404,031 9,215
Interest-bearing liabilities 314,816 312,217 304,236 2,599 10,580 312,894 299,922 12,972
 
(a) Excludes unrealized gain (loss)
 
 

Net interest income on a taxable-equivalent basis in the third quarter of 2018 was $3,281 million, an increase of $54 million (1.7 percent) over the third quarter of 2017. The increase was principally driven by the impact of rising interest rates, earning assets growth, and higher yields on securities, partially offset by lower spread due to loan mix, higher rates on deposits and funding mix shift as well as the impact of tax reform which reduced the taxable-equivalent adjustment benefit related to tax exempt assets and higher interest recoveries in the prior year quarter. Average earning assets were $6.4 billion (1.6 percent) higher than the third quarter of 2017, reflecting increases of $3.4 billion (1.2 percent) in average total loans, $1.7 billion (1.5 percent) in average investment securities, and $2.0 billion (13.1 percent) in average other earning assets.

Net interest income on a taxable-equivalent basis increased $55 million (1.7 percent) on a linked quarter basis primarily driven by the impact of higher interest rates on assets, earning asset growth, and an additional day in the third quarter, partially offset by deposits and funding mix shift. Average earning assets were $2.5 billion (0.6 percent) higher on a linked quarter basis, reflecting increases of $2.4 billion (0.9 percent) in average total loans and $1.5 billion (9.6 percent) in average other earning assets. Average investment securities decreased $1.0 billion (0.9 percent).

The net interest margin in the third quarter of 2018 was 3.15 percent, compared with 3.14 percent in the third quarter of 2017 and 3.13 percent in the second quarter of 2018. The increase in the net interest margin year-over-year was primarily due to higher interest rates, partially offset by deposit and funding mix, lower loan spreads due to mix, and the impact of tax reform. The increase in net interest margin on a linked quarter basis was primarily due to the impact of higher rates on assets, partially offset by deposit and funding mix, as well as higher cash balances.

Average investment securities in the third quarter of 2018 increased $1.7 billion (1.5 percent) from the third quarter of 2017, due to purchases of U.S. Treasury, mortgage-backed and state and political securities, net of prepayments and maturities. Average investment securities decreased $1.0 billion (0.9 percent) from the second quarter of 2018 as a portion of the proceeds received on maturities of securities in the current quarter were not reinvested.

                                 
AVERAGE LOANS
($ in millions)         Percent Change      
3Q 2Q 3Q 3Q18 vs   3Q18 vs YTD YTD Percent
    2018   2018   2017   2Q18   3Q17   2018   2017   Change
 
Commercial $93,541 $92,835 $91,077 .8 2.7 $92,776 $89,817 3.3
Lease financing 5,507   5,518   5,556 (.2 ) (.9 ) 5,519   5,530 (.2 )
Total commercial 99,048 98,353 96,633 .7 2.5 98,295 95,347 3.1
 
Commercial mortgages 28,362 28,710 30,114 (1.2 ) (5.8 ) 28,746 30,729 (6.5 )
Construction and development 11,180   11,147   11,507 .3 (2.8 ) 11,172   11,708 (4.6 )
Total commercial real estate 39,542 39,857 41,621 (.8 ) (5.0 ) 39,918 42,437 (5.9 )
 
Residential mortgages 62,042 60,834 59,030 2.0 5.1 61,023 58,496 4.3
 
Credit card 21,774 21,220 20,926 2.6 4.1 21,428 20,801 3.0
 
Retail leasing 8,383 8,150 7,762 2.9 8.0 8,173 7,142 14.4
Home equity and second mortgages 16,000 16,048 16,299 (.3 ) (1.8 ) 16,080 16,270 (1.2 )
Other 31,520   31,265   32,008 .8 (1.5 ) 31,882   31,423 1.5
Total other retail 55,903   55,463   56,069 .8 (.3 ) 56,135   54,835 2.4
 
Total loans, excluding covered loans 278,309   275,727   274,279 .9 1.5 276,799   271,916 1.8
 
Covered loans 2,756   2,897   3,347 (4.9 ) (17.7 ) 2,900   3,538 (18.0 )
 
Total loans $281,065   $278,624   $277,626 .9 1.2 $279,699   $275,454 1.5
                                 
 

Average total loans were $3.4 billion (1.2 percent) higher than the third quarter of 2017 (1.8 percent excluding the impact of the second quarter of 2018 student loan portfolio sale). The increase was due to growth in residential mortgages (5.1 percent), total commercial loans (2.5 percent), credit card loans (4.1 percent), and retail leasing (8.0 percent). These increases were partially offset by a decrease in total commercial real estate loans (5.0 percent) due to disciplined underwriting and customers paying down balances over the past year. Loan growth was also impacted by continued run-off of the covered loans portfolio (17.7 percent) and the sale of the student loan portfolio in the second quarter of 2018. Average total loans were $2.4 billion (0.9 percent) higher than the second quarter of 2018 driven by growth in residential mortgages (2.0 percent), total commercial loans (0.7 percent), credit card loans (2.6 percent) and retail leasing (2.9 percent), partially offset by continued pay-offs of commercial real estate loans (0.8 percent) and run-off of covered loans (4.9 percent). At the end of the third quarter, approximately $1.3 billion of covered loans were transferred from the loan portfolio to loans held for sale.

                                 
AVERAGE DEPOSITS                                
($ in millions)         Percent Change      
3Q 2Q 3Q 3Q18 vs   3Q18 vs YTD YTD Percent
    2018   2018   2017   2Q18   3Q17   2018   2017   Change
 
Noninterest-bearing deposits $77,192 $78,987 $81,964 (2.3 ) (5.8 ) $78,546 $81,808 (4.0 )
Interest-bearing savings deposits
Interest checking 69,330 69,918 68,066 (.8 ) 1.9 69,865 67,021 4.2
Money market savings 100,688 103,333 105,072 (2.6 ) (4.2 ) 102,453 106,856 (4.1 )
Savings accounts 44,848   45,069   43,649 (.5 ) 2.7 44,770   43,265 3.5
Total savings deposits 214,866 218,320 216,787 (1.6 ) (.9 ) 217,088 217,142 --
Time deposits 38,063   37,515   36,400 1.5 4.6 37,525   32,660 14.9
Total interest-bearing deposits 252,929   255,835   253,187 (1.1 ) (.1 ) 254,613   249,802 1.9
Total deposits $330,121   $334,822   $335,151 (1.4 ) (1.5 ) $333,159   $331,610 .5
                                       
 

Average total deposits for the third quarter of 2018 were $5.0 billion (1.5 percent) lower than the third quarter of 2017. Average noninterest-bearing deposits decreased $4.8 billion (5.8 percent) year-over-year primarily due to decreases in business deposits within Corporate and Commercial Banking and corporate trust balances within Wealth Management and Investment Services. Average total savings deposits were $1.9 billion (0.9 percent) lower year-over-year driven by decreases in Wealth Management and Investment Services and Corporate and Commercial Banking, partially offset by an increase in Consumer and Business Banking. Average time deposits were $1.7 billion (4.6 percent) higher than the prior year quarter. Changes in time deposits are largely related to those deposits managed as an alternative to other funding sources such as wholesale borrowing, based largely on relative pricing and liquidity characteristics.

Average total deposits decreased $4.7 billion (1.4 percent) from the second quarter of 2018. On a linked quarter basis, average noninterest-bearing deposits decreased $1.8 billion (2.3 percent) primarily due to decreases in Wealth Management and Investment Services and Corporate and Commercial Banking, partially offset by an increase in consumer balances within Consumer and Business Banking. Noninterest bearing deposit declines were primarily a result of business customers deploying deposit balances to support business growth, the migration of balances to alternative investment vehicles, and the change in deposit balances associated with the timing of receipt and distribution of funds in the corporate trust business.

Average total savings deposits decreased $3.5 billion (1.6 percent) on a linked quarter basis primarily due to decreases in Corporate and Commercial Banking as well as Wealth Management and Investment Services. The decline in Corporate and Commercial Banking savings balances reflects expected run-off related to the business merger of a large financial customer. The decline is expected to moderate in future quarters. Average time deposits, which are managed based on funding needs, relative pricing and liquidity characteristics, increased $548 million (1.5 percent). Time deposits are experiencing some growth as customers search for higher yield.

                 
NONINTEREST INCOME
($ in millions) Percent Change
3Q 2Q 3Q 3Q18 vs 3Q18 vs YTD YTD Percent
      2018   2018   2017   2Q18   3Q17   2018   2017   Change
 
Credit and debit card revenue $344 $351 $318 (2.0 ) 8.2 $1,019 $947 7.6
Corporate payment products revenue 169 158 150 7.0 12.7 481 427 12.6
Merchant processing services 392 387 377 1.3 4.0 1,142 1,112 2.7
ATM processing services 85 90 77 (5.6 ) 10.4 254 223 13.9
Trust and investment management fees 411 401 380 2.5 8.2 1,210 1,128 7.3
Deposit service charges 198 183 187 8.2 5.9 563 538 4.6
Treasury management fees 146 155 153 (5.8 ) (4.6 ) 451 466 (3.2 )
Commercial products revenue 216 234 240 (7.7 ) (10.0 ) 670 730 (8.2 )
Mortgage banking revenue 174 191 213 (8.9 ) (18.3 ) 549 632 (13.1 )
Investment products fees 47 47 42 -- 11.9 140 128 9.4
Securities gains (losses), net 10 10 9 -- 11.1 25 47 (46.8 )
Other 226   207   194 9.2 16.5 600   569 5.4
 
Total noninterest income $2,418   $2,414   $2,340 .2 3.3 $7,104   $6,947 2.3
                                         
 

Third quarter noninterest income of $2,418 million was $78 million (3.3 percent) higher than the third quarter of 2017 led by strong growth in payment services revenue and trust and investment management fees. Other noninterest income also increased year-over-year primarily due to higher equity investment income and tax-advantaged syndication revenue. These increases were partially offset by lower mortgage banking revenue and commercial products revenue, which were impacted by industry trends in these revenue categories. Payment services revenue increased $60 million (7.1 percent) due to higher credit and debit card revenue of $26 million (8.2 percent), an increase in corporate payment products revenue of $19 million (12.7 percent), and higher merchant processing services of $15 million (4.0 percent) all driven by higher sales volumes. Trust and investment management fees increased $31 million (8.2 percent) due to business growth and favorable market conditions. The decrease in mortgage banking revenue of $39 million (18.3 percent) was primarily due to lower mortgage production and the adverse impact on gain on sale margins due to excess capacity in the industry in the near term. Commercial products revenue decreased $24 million (10.0 percent) primarily due to lower corporate bond underwriting fees and loan syndication fees.

Noninterest income was $4 million (0.2 percent) higher in the third quarter of 2018 compared with the second quarter of 2018 reflecting higher payment services revenue as corporate payment products revenue grew $11 million (7.0 percent) due to seasonally higher sales volumes and merchant processing services increased $5 million (1.3 percent) primarily due to seasonally higher fee revenue, partially offset by a seasonal decrease of $7 million (2.0 percent) in credit and debit card revenue. Deposit service charges increased $15 million (8.2 percent) as a result of seasonally higher incidence rates and other noninterest income increased $19 million (9.2 percent) primarily due to higher equity investment income and tax-advantaged syndication revenue. Partially offsetting these increases were a decrease in commercial products revenue of $18 million (7.7 percent) due mainly to lower corporate bond underwriting fees and a decrease in mortgage banking revenue of $17 million (8.9 percent) driven by an unfavorable change in the valuation of mortgage servicing rights, net of hedging activities.

                                 
NONINTEREST EXPENSE                                
($ in millions)         Percent Change      
3Q 2Q 3Q 3Q18 vs   3Q18 vs YTD YTD Percent
    2018   2018   2017   2Q18   3Q17   2018   2017   Change
 
Compensation $1,529 $1,542 $1,440 (.8 ) 6.2 $4,594 $4,247 8.2
Employee benefits 294 299 268 (1.7 ) 9.7 923 843 9.5
Net occupancy and equipment 270 262 258 3.1 4.7 797 760 4.9
Professional services 96 95 104 1.1 (7.7 ) 274 305 (10.2 )
Marketing and business development 106 111 92 (4.5 ) 15.2 314 291 7.9
Technology and communications 247 242 227 2.1 8.8 724 667 8.5
Postage, printing and supplies 84 80 82 5.0 2.4 244 244 --
Other intangibles 41 40 44 2.5 (6.8 ) 120 131 (8.4 )
Other 377   414   483 (8.9 ) (21.9 ) 1,194   1,403 (14.9 )
 
Total noninterest expense $3,044   $3,085   $2,998 (1.3 ) 1.5 $9,184   $8,891 3.3
                                 
 

Third quarter noninterest expense of $3,044 million was $46 million (1.5 percent) higher than the third quarter of 2017 primarily due to higher personnel costs and technology investment, partially offset by lower other noninterest expense. Compensation expense increased $89 million (6.2 percent) principally due to the impact of hiring to support business growth and compliance programs, merit increases, and higher variable compensation related to business production. Employee benefits expense increased $26 million (9.7 percent) primarily driven by increased medical costs and staffing. Other noninterest expense decreased $106 million (21.9 percent) due to lower costs related to tax-advantaged projects, lower FDIC insurance expense, a reduction in mortgage servicing costs, and lower pension related costs.

Noninterest expense decreased $41 million (1.3 percent) on a linked quarter basis primarily due to a reduction in compensation expense including lower incentives and a seasonal decline in contract labor costs as well as lower other noninterest expense as a result of lower costs related to tax-advantaged projects driven by syndicating tax credits following tax reform and the change in accruals related to legal and insurance matters.

Provision for Income Taxes

The provision for income taxes for the third quarter of 2018 resulted in a tax rate of 21.2 percent on a taxable-equivalent basis (effective tax rate of 20.2 percent), compared with 29.0 percent (effective tax rate of 27.3 percent) in the third quarter of 2017, and 21.1 percent on a taxable-equivalent basis (effective tax rate of 20.1 percent) in the second quarter of 2018. The lower 2018 tax rates reflect the tax reform legislation enacted during the fourth quarter of 2017.

 
ALLOWANCE FOR CREDIT LOSSES
($ in millions)   3Q     2Q     1Q     4Q     3Q  
    2018   % (b)   2018   % (b)   2018   % (b)   2017   % (b)   2017   % (b)
 
Balance, beginning of period $4,411 $4,417 $4,417 $4,407 $4,377
 
Net charge-offs
Commercial 63 .27 54 .23 56 .25 22 .09 79 .34
Lease financing 3   .22 4   .29 4   .29 6   .44 4   .29
Total commercial 66 .26 58 .24 60 .25 28 .11 83 .34
Commercial mortgages (5 ) (.07 ) -- -- (4 ) (.06 ) 18 .24 (2 ) (.03 )
Construction and development (4 ) (.14 ) --   -- 1   .04 --   -- (5 ) (.17 )
Total commercial real estate (9 ) (.09 ) -- -- (3 ) (.03 ) 18 .17 (7 ) (.07 )
 
Residential mortgages 4 .03 4 .03 7 .05 10 .07 7 .05
 
Credit card 206 3.75 210 3.97 211 4.02 205 3.83 187 3.55
 
Retail leasing 3 .14 3 .15 3 .15 3 .15 2 .10
Home equity and second mortgages (1 ) (.02 ) (2 ) (.05 ) (1 ) (.03 ) (2 ) (.05 ) (1 ) (.02 )
Other 59   .74 59   .76 64   .79 63   .76 59   .73
Total other retail 61 .43 60 .43 66 .47 64 .44 60 .42

Total net charge-offs,

 

         

excluding covered loans

328 .47 332 .48 341 .50 325 .47 330 .48
Covered loans --   -- --   -- --   -- --   -- --   --
Total net charge-offs 328 .46 332 .48 341 .49 325 .46 330 .47
Provision for credit losses 343 327 341 335 360
Other changes (a) --   (1 ) --   --   --  
Balance, end of period $4,426   $4,411   $4,417   $4,417   $4,407  
 
Components
Allowance for loan losses $3,954 $3,920 $3,918 $3,925 $3,908

Liability for unfunded credit commitments

472   491   499   492   499  
Total allowance for credit losses $4,426   $4,411   $4,417   $4,417   $4,407  
 
Gross charge-offs $428 $437 $453 $464 $433
Gross recoveries $100 $105 $112 $139 $103
 
Allowance for credit losses as a percentage of
Period-end loans 1.57 1.57 1.59 1.58 1.58
Nonperforming loans 544 484 431 438 426
Nonperforming assets 441 404 367 368 352
 

(a) Includes net changes in credit losses to be reimbursed by the FDIC and reductions in the allowance for covered loans where the reversal of a previously recorded allowance was offset by an associated decrease in the indemnification asset, and the impact of any loan sales.

(b) Annualized and calculated on average loan balances
 
 

Credit quality was relatively stable on a linked quarter and year-over-year basis. The Company’s provision for credit losses for the third quarter of 2018 was $343 million, which was $16 million (4.9 percent) higher than the prior quarter and $17 million (4.7 percent) lower than the third quarter of 2017.

Total net charge-offs in the third quarter of 2018 were $328 million, compared with $332 million in the second quarter of 2018, and $330 million in the third quarter of 2017. Net charge-offs decreased $4 million (1.2 percent) compared with the second quarter of 2018 mainly due to lower total commercial real estate net charge-offs, partially offset by higher total commercial net charge-offs. Net charge-offs decreased $2 million (0.6 percent) compared with the third quarter of 2017 primarily due to lower total commercial net charge-offs and lower residential mortgage net charge-offs mostly offset by higher credit card net charge-offs. The net charge-off ratio was 0.46 percent in the third quarter of 2018, compared with 0.48 percent in the second quarter of 2018 and 0.47 percent in the third quarter of 2017.

The allowance for credit losses was $4,426 million at September 30, 2018, compared with $4,411 million at June 30, 2018, and $4,407 million at September 30, 2017. The ratio of the allowance for credit losses to period-end loans was 1.57 percent at September 30, 2018, and at June 30, 2018, compared with 1.58 percent at September 30, 2017. The ratio of the allowance for credit losses to nonperforming loans was 544 percent at September 30, 2018, compared with 484 percent at June 30, 2018, and 426 percent at September 30, 2017.

Nonperforming assets were $1,004 million at September 30, 2018, compared with $1,091 million at June 30, 2018, and $1,251 million at September 30, 2017. The ratio of nonperforming assets to loans and other real estate was 0.36 percent at September 30, 2018, compared with 0.39 percent at June 30, 2018, and 0.45 percent at September 30, 2017. The year-over-year decrease in nonperforming assets was driven by improvements in nonperforming residential mortgages, total commercial loans, and other real estate owned, partially offset by increases in nonperforming other retail loans and other nonperforming assets. Accruing loans 90 days or more past due were $551 million at September 30, 2018, compared with $640 million at June 30, 2018, and $649 million at September 30, 2017.

 
DELINQUENT LOAN RATIOS AS A PERCENT OF ENDING LOAN BALANCES
(Percent)   Sep 30   Jun 30   Mar 31   Dec 31   Sep 30
    2018   2018   2018   2017   2017
 
Delinquent loan ratios - 90 days or more past due excluding nonperforming loans
Commercial .06 .06 .06 .06 .05
Commercial real estate .01 .01 .01 .01 .01
Residential mortgages .19 .18 .22 .22 .18
Credit card 1.18 1.15 1.29 1.28 1.20
Other retail .17 .16 .18 .17 .15
Total loans, excluding covered loans .19 .19 .21 .21 .18
Covered loans (a) .86 4.46 4.57 4.74 4.66
Total loans .20 .23 .25 .26 .23
 
Delinquent loan ratios - 90 days or more past due including nonperforming loans
Commercial .28 .28 .37 .31 .33
Commercial real estate .27 .27 .31 .37 .30
Residential mortgages .69 .84 .93 .96 .98
Credit card 1.18 1.15 1.29 1.28 1.20
Other retail .49 .48 .48 .46 .43
Total loans, excluding covered loans .48 .51 .58 .57 .55
Covered loans (a) .86 4.68 4.77 4.93 4.84
Total loans .48 .55 .62 .62 .60
 
(a) Effective September 30, 2018, the Company transferred $1.3 billion of covered loans to loans held for sale.

Included in the amount transferred were $108 million of loans 90 days or more past due and $6 million that were nonperforming.

 

                   
 
 
ASSET QUALITY (a)
($ in millions)          
Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
    2018   2018   2018   2017   2017
Nonperforming loans
Commercial $193 $199 $274 $225 $231
Lease financing 23   25   27   24   38
Total commercial 216 224 301 249 269
 
Commercial mortgages 77 72 86 108 89
Construction and development 28   32   33   34   33
Total commercial real estate 105 104 119 142 122
 
Residential mortgages 317 400 430 442 474
Credit card -- -- -- 1 1
Other retail 175   178   168   168   163
Total nonperforming loans, excluding covered loans 813 906 1,018 1,002 1,029
 
Covered loans --   6   6   6   6
Total nonperforming loans 813 912 1,024 1,008 1,035
 
Other real estate 100 108 124 141 164
Covered other real estate 19 20 20 21 26
Other nonperforming assets 72   51   36   30   26
Total nonperforming assets $1,004   $1,091   $1,204   $1,200   $1,251
 
Accruing loans 90 days or more past due $551   $640   $702   $720   $649
 

Performing restructured loans, excluding GNMA and covered loans

$2,262   $2,164   $2,190   $2,306   $2,419
Performing restructured GNMA and covered loans $1,678   $1,695   $1,598   $1,713   $1,600
 
Nonperforming assets to loans plus ORE (%) .36 .39 .43 .43 .45
 
(a) Throughout this document, nonperforming assets and related ratios do not include accruing loans 90 days or more past due
 
 
                     
COMMON SHARES
(Millions)   3Q   2Q   1Q   4Q   3Q
    2018   2018   2018   2017   2017
 
Beginning shares outstanding 1,636 1,649 1,656 1,667 1,679

Shares issued for stock incentive plans, acquisitions and other corporate purposes

1 -- 4 1 --
Shares repurchased (14 )   (13 )   (11 )   (12 )   (12 )
Ending shares outstanding 1,623     1,636     1,649     1,656     1,667  
                               
 
 
CAPITAL POSITION
($ in millions)   Sep 30   Jun 30   Mar 31   Dec 31   Sep 30
    2018     2018     2018     2017     2017  
 
Total U.S. Bancorp shareholders' equity $50,375 $49,628 $49,187 $49,040 $48,723
 
Basel III Standardized Approach (a)
Common equity tier 1 capital $34,097 $34,161 $33,539 $34,369 $34,876
Tier 1 capital 40,114 39,611 38,991 39,806 40,411
Total risk-based capital 47,531 47,258 46,640 47,503 48,104
 
Fully implemented common equity tier 1 capital ratio (a) 9.0 % 9.1 % 9.0 % 9.1 % (b) 9.4 % (b)
Tier 1 capital ratio 10.6 10.5 10.4 10.8 11.1
Total risk-based capital ratio 12.6 12.6 12.5 12.9 13.2
Leverage ratio 9.0 8.9 8.8 8.9 9.1
 
Basel III Advanced Approaches (a)
Fully implemented common equity tier 1 capital ratio (a) 11.8 11.6 11.5 11.6 (b) 11.8 (b)
 
Tangible common equity to tangible assets (b) 7.7 7.8 7.7 7.6 7.7
Tangible common equity to risk-weighted assets (b) 9.3 9.3 9.3 9.4 9.5
 

Common equity tier 1 capital ratio calculated under the transitional standardized approach (a)

-- -- -- 9.3 9.6

Common equity tier 1 capital ratio calculated under the transitional advanced approaches (a)

-- -- -- 12.0 12.1
 

(a) Beginning January 1, 2018, the regulatory capital requirements fully reflect implementation of Basel III. Prior to 2018, the Company's capital ratios reflected certain transitional adjustments. Basel III includes two comprehensive methodologies for calculating risk-weighted assets: a general standardized approach and more risk-sensitive advanced approaches, with the Company's capital adequacy being evaluated against the methodology that is most restrictive.

(b) See Non-GAAP Financial Measures reconciliation on page 16
 
 

Total U.S. Bancorp shareholders’ equity was $50.4 billion at September 30, 2018, compared with $49.6 billion at June 30, 2018, and $48.7 billion at September 30, 2017. During the third quarter, the Company returned 78 percent of earnings to shareholders through dividends and share buybacks.

All regulatory ratios continue to be in excess of “well-capitalized” requirements. The common equity tier 1 capital to risk-weighted assets ratio using the Basel III standardized approach was 9.0 percent at September 30, 2018, compared with 9.1 percent at June 30, 2018, and 9.6 percent at September 30, 2017. The common equity tier 1 capital to risk-weighted assets ratio using the Basel III advanced approaches method was 11.8 percent at September 30, 2018, compared with 11.6 percent at June 30, 2018, and 12.1 percent at September 30, 2017.

Investor Conference Call

On Wednesday, October 17, 2018, at 8:00 a.m. CDT, Andy Cecere, chairman, president and chief executive officer, and Terry Dolan, vice chairman and chief financial officer, will host a conference call to review the financial results. The conference call will be available online or by telephone. To access the webcast and presentation, visit U.S. Bancorp’s website at usbank.com and click on “About US”, “Investor Relations” and “Webcasts & Presentations.” To access the conference call from locations within the United States and Canada, please dial 866-316-1409. Participants calling from outside the United States and Canada, please dial 706-634-9086. The conference ID number for all participants is 7338239. For those unable to participate during the live call, a recording will be available at approximately 11:00 a.m. CDT on Wednesday, October 17 and will be accessible until Wednesday, October 24 at 11:00 p.m. CDT. To access the recorded message within the United States and Canada, please dial 855-859-2056. If calling from outside the United States and Canada, please dial 404-537-3406 to access the recording. The conference ID is 7338239.

About U.S. Bancorp

U.S. Bancorp, with 74,000 employees and $465 billion in assets as of September 30, 2018, is the parent company of U.S. Bank, the fifth-largest commercial bank in the United States. The Minneapolis-based bank blends its relationship teams, branches and ATM network with mobile and online tools that allow customers to bank how, when and where they prefer. U.S. Bank is committed to serving its millions of retail, business, wealth management, payment, commercial and corporate, and investment services customers across the country and around the world as a trusted financial partner, a commitment recognized by the Ethisphere Institute naming the bank a 2018 World’s Most Ethical Company. Visit U.S. Bank at www.usbank.com or follow on social media to stay up to date with company news.

Forward-looking Statements

The following information appears in accordance with the Private Securities Litigation Reform Act of 1995:

This press release contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of U.S. Bancorp. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. Deterioration in general business and economic conditions or turbulence in domestic or global financial markets could adversely affect U.S. Bancorp’s revenues and the values of its assets and liabilities, reduce the availability of funding to certain financial institutions, lead to a tightening of credit, and increase stock price volatility. Stress in the commercial real estate markets, as well as a downturn in the residential real estate markets, could cause credit losses and deterioration in asset values. In addition, changes to statutes, regulations, or regulatory policies or practices could affect U.S. Bancorp in substantial and unpredictable ways. U.S. Bancorp’s results could also be adversely affected by changes in interest rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of its investment securities; legal and regulatory developments; litigation; increased competition from both banks and non-banks; changes in customer behavior and preferences; breaches in data security; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputational risk.

For discussion of these and other risks that may cause actual results to differ from expectations, refer to U.S. Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2017, on file with the Securities and Exchange Commission, including the sections entitled “Corporate Risk Profile” and “Risk Factors” contained in Exhibit 13, and all subsequent filings with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. However, factors other than these also could adversely affect U.S. Bancorp’s results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.

Non-GAAP Financial Measures

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
  • Tangible common equity to risk-weighted assets
  • Return on tangible common equity

These capital measures are viewed by management as useful additional methods of evaluating the Company’s utilization of its capital held and the level of capital available to withstand unexpected negative market or economic conditions. Additionally, presentation of these measures allows investors, analysts and banking regulators to assess the Company’s capital position relative to other financial services companies. These capital measures are not defined in generally accepted accounting principles (“GAAP”), or are not defined in banking regulations. As a result, these capital measures disclosed by the Company may be considered non-GAAP financial measures. In addition, certain capital measures related to prior periods are presented on the same basis as those capital measures in the current period. The effective capital ratios defined by banking regulations for these periods were subject to certain transitional provisions. Management believes this information helps investors assess trends in the Company’s capital adequacy.

The Company also discloses net interest income and related ratios and analysis on a taxable-equivalent basis, which may also be considered non-GAAP financial measures. The Company believes this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison of net interest income arising from taxable and tax-exempt sources. In addition, certain performance measures, including the efficiency ratio and net interest margin utilize net interest income on a taxable-equivalent basis.

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 press release in their entirety, and not to rely on any single financial measure. A table follows that shows the Company’s calculation of these non-GAAP financial measures.

 
CONSOLIDATED STATEMENT OF INCOME
(Dollars and Shares in Millions, Except Per Share Data)  

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(Unaudited)   2018   2017   2018   2017
Interest Income      
Loans $3,353 $3,049 $9,645 $8,728
Loans held for sale 36 40 108 104
Investment securities 661 568 1,927 1,653
Other interest income 73     47     182     131  
Total interest income 4,123 3,704 11,862 10,616
Interest Expense
Deposits 491 293 1,263 730
Short-term borrowings 104 39 265 96
Long-term debt 277     196     718     585  
Total interest expense 872     528     2,246     1,411  
Net interest income 3,251 3,176 9,616 9,205
Provision for credit losses 343     360     1,011     1,055  
Net interest income after provision for credit losses 2,908 2,816 8,605 8,150
Noninterest Income
Credit and debit card revenue 344 318 1,019 947
Corporate payment products revenue 169 150 481 427
Merchant processing services 392 377 1,142 1,112
ATM processing services 85 77 254 223
Trust and investment management fees 411 380 1,210 1,128
Deposit service charges 198 187 563 538
Treasury management fees 146 153 451 466
Commercial products revenue 216 240 670 730
Mortgage banking revenue 174 213 549 632
Investment products fees 47 42 140 128
Securities gains (losses), net 10 9 25 47
Other 226     194     600     569  
Total noninterest income 2,418 2,340 7,104 6,947
Noninterest Expense
Compensation 1,529 1,440 4,594 4,247
Employee benefits 294 268 923 843
Net occupancy and equipment 270 258 797 760
Professional services 96 104 274 305
Marketing and business development 106 92 314 291
Technology and communications 247 227 724 667
Postage, printing and supplies 84 82 244 244
Other intangibles 41 44 120 131
Other 377     483     1,194     1,403  
Total noninterest expense 3,044     2,998     9,184     8,891  
Income before income taxes 2,282 2,158 6,525 6,206
Applicable income taxes 460     589     1,263     1,639  
Net income 1,822 1,569 5,262 4,567
Net (income) loss attributable to noncontrolling interests (7 )   (6 )   (22 )   (31 )
Net income attributable to U.S. Bancorp $1,815     $1,563     $5,240     $4,536  
Net income applicable to U.S. Bancorp common shareholders $1,732     $1,485     $5,007     $4,302  
 
Earnings per common share $1.06 $.89 $3.05 $2.56
Diluted earnings per common share $1.06 $.88 $3.04 $2.55
Dividends declared per common share $.37 $.30 $.97 $.86
Average common shares outstanding 1,629 1,672 1,641 1,683
Average diluted common shares outstanding   1,633     1,678     1,645     1,689  
 
 
CONSOLIDATED ENDING BALANCE SHEET
     
(Dollars in Millions) September 30, December 31, September 30,
  2018   2017   2017
Assets (Unaudited) (Unaudited)
Cash and due from banks $20,082 $19,505 $20,540
Investment securities
Held-to-maturity 46,046 44,362 44,018
Available-for-sale 64,912 68,137 67,772
Loans held for sale 4,533 3,554 3,757
Loans
Commercial 99,273 97,561 96,928
Commercial real estate 39,966 40,463 41,430
Residential mortgages 62,904 59,783 59,317
Credit card 21,869 22,180 20,923
Other retail 56,049     57,324     56,859  
Total loans, excluding covered loans 280,061 277,311 275,457
Covered loans 1,400     3,121     3,262  
Total loans 281,461 280,432 278,719
Less allowance for loan losses (3,954 )   (3,925 )   (3,908 )
Net loans 277,507 276,507 274,811
Premises and equipment 2,438 2,432 2,402
Goodwill 9,530 9,434 9,370
Other intangible assets 3,544 3,228 3,193
Other assets 36,015     34,881     33,364  
Total assets $464,607     $462,040     $459,227  
 
Liabilities and Shareholders' Equity
Deposits
Noninterest-bearing $77,146 $87,557 $82,152
Interest-bearing 254,032     259,658     260,437  
Total deposits 331,178 347,215 342,589
Short-term borrowings 23,868 16,651 15,856
Long-term debt 40,894 32,259 34,515
Other liabilities 17,660     16,249     16,916  
Total liabilities 413,600 412,374 409,876
Shareholders' equity
Preferred stock 5,984 5,419 5,419
Common stock 21 21 21
Capital surplus 8,479 8,464 8,457
Retained earnings 57,878 54,142 53,023
Less treasury stock (19,414 ) (17,602 ) (16,978 )
Accumulated other comprehensive income (loss) (2,573 )   (1,404 )   (1,219 )
Total U.S. Bancorp shareholders' equity 50,375 49,040 48,723
Noncontrolling interests 632     626     628  
Total equity 51,007     49,666     49,351  
Total liabilities and equity   $464,607     $462,040     $459,227  
 
           
NON-GAAP FINANCIAL MEASURES

(Dollars in Millions, Unaudited)

 

 

 

 

 

 

 

 

 

 

 

September 30,
2018

   

June 30,
2018

   

March 31,
2018

   

December 31,
2017

   

September 30,
2017

 
Total equity $51,007 $50,257 $49,812 $49,666 $49,351
Preferred stock (5,984 ) (5,419 ) (5,419 )

(5,419

)

(5,419 )
Noncontrolling interests (632 ) (629 ) (625 ) (626 ) (628 )
Goodwill (net of deferred tax liability) (1) (8,682 ) (8,585 ) (8,609 ) (8,613 ) (8,141 )
Intangible assets, other than mortgage servicing rights (627 )   (571 )   (608 )   (583 )   (595 )
Tangible common equity (a) 35,082 35,053 34,551 34,425 34,568
 
Total assets 464,607 461,329 460,119 462,040 459,227
Goodwill (net of deferred tax liability) (1) (8,682 ) (8,585 ) (8,609 ) (8,613 ) (8,141 )
Intangible assets, other than mortgage servicing rights (627 )   (571 )   (608 )   (583 )   (595 )
Tangible assets (b) 455,298 452,173 450,902 452,844 450,491
 

Risk-weighted assets, determined in accordance with the Basel III standardized approach (c)

377,713

*

375,466 373,141 367,771 363,957
 
Tangible common equity (as calculated above) 34,425 34,568
Adjustments (2) (550 )   (52 )

Common equity tier 1 capital estimated for the Basel III fully implemented standardized and advanced approaches (d)

33,875 34,516
 

Risk-weighted assets, determined in accordance with prescribed transitional standardized approach regulatory requirements

367,771 363,957
Adjustments (3) 4,473     3,907  

Risk-weighted assets estimated for the Basel III fully implemented standardized approach (e)

372,244 367,864

 

Risk-weighted assets, determined in accordance with prescribed transitional advanced approaches regulatory requirements

287,211 287,800
Adjustments (4) 4,769     4,164  

Risk-weighted assets estimated for the Basel III fully implemented advanced approaches (f)

291,980 291,964
 
Ratios *
Tangible common equity to tangible assets (a)/(b) 7.7 % 7.8 % 7.7 % 7.6 % 7.7 %
Tangible common equity to risk-weighted assets (a)/(c) 9.3

9.3

9.3 9.4 9.5

Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented standardized approach (d)/(e)

9.1 9.4

Common equity tier 1 capital to risk-weighted assets estimated for the Basel III fully implemented advanced approaches (d)/(f)

11.6 11.8
 
 
Three Months Ended
September 30, June 30, March 31, December 31, September 30,
2018     2018     2018     2017     2017  
Net income applicable to U.S. Bancorp common shareholders $1,732 $1,678 $1,597 $1,611 $1,485
Intangibles amortization (net-of-tax) 32     32     31     28     29  

Net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization

1,764 1,710 1,628 1,639 1,514

Annualized net income applicable to U.S. Bancorp common shareholders, excluding intangibles amortization (g)

6,998

6,859 6,602 6,503 6,007
 
Average total equity 50,768 49,950 49,450 49,461 49,447
Less: Average preferred stock 5,714 5,419 5,419 5,419 5,419
Less: Average noncontrolling interests 630 628 625 627 628
Less: Average goodwill (net of deferred tax liability) (1) 8,620 8,602 8,627 8,154 8,153
Less: Average intangible assets, other than mortgage servicing rights 584     588     603     591     615  

Average U.S. Bancorp common shareholders' equity, excluding intangible assets (h)

35,220 34,713 34,176 34,670 34,632
 
Return on tangible common equity (g)/(h)   19.9 %   19.8 %   19.3 %   18.8 %   17.3 %
 
*Preliminary data. Subject to change prior to filings with applicable regulatory agencies.
(1) Includes goodwill related to certain investments in unconsolidated financial institutions per prescribed regulatory requirements.
(2) Includes net losses on cash flow hedges included in accumulated other comprehensive income (loss) and other adjustments.
(3) Includes higher risk-weighting for unfunded loan commitments, investment securities, residential mortgages, mortgage servicing rights and other adjustments.
(4) Primarily reflects higher risk-weighting for mortgage servicing rights.
 
                                               
NON-GAAP FINANCIAL MEASURES
  Three Months Ended       Nine Months Ended

(Dollars in Millions, Unaudited)

September 30,
2018

 

June 30,
2018

 

March 31,
2018

 

December 31,
2017

 

September 30,
2017

     

September 30,
2018

 

September 30,
2017

                               
Net interest income $3,251 $3,197 $3,168 $3,175 $3,176 $9,616 $9,205
Taxable-equivalent adjustment (1) 30     29     29     53     51         88     152  
Net interest income, on a taxable-equivalent basis 3,281 3,226 3,197 3,228 3,227 9,704 9,357
 
Net interest income, on a taxable-equivalent basis (as calculated above) 3,281 3,226 3,197 3,228 3,227 9,704 9,357
Noninterest income 2,418 2,414 2,272 2,370 2,340 7,104 6,947
Less: Securities gains (losses), net 10     10     5     10     9         25     47  
Total net revenue, excluding net securities gains (losses) (a) 5,689 5,630 5,464 5,588 5,558 16,783 16,257
 
Noninterest expense (b) 3,044 3,085 3,055 3,899 2,998 9,184 8,891
Less: Intangible amortization 41     40     39     44     44         120     131  
Noninterest expense, excluding intangible amortization (c) 3,003 3,045 3,016 3,855 2,954 9,064 8,760
 
Efficiency ratio (b)/(a) 53.5 % 54.8 % 55.9 % 69.8 % 53.9 % 54.7 % 54.7 %
Tangible efficiency ratio (c)/(a)   52.8     54.1     55.2     69.0     53.1         54.0     53.9  
 

(1) Interest and rates are presented on a fully taxable-equivalent basis based on a federal income tax rate of 21 percent for 2018 and 35 percent for 2017.

 

Source: U.S. Bancorp

U.S. Bancorp
Investor contact:
Jennifer Thompson, 612-303-0778
or
Media contact:
Stacey Wempen, 612-303-7620

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