e10vk
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 31,
2010
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or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission file number: 1-6880
U.S. Bancorp
(Exact name of registrant as
specified in its charter)
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Delaware
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41-0255900
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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800 Nicollet Mall, Minneapolis, Minnesota 55402
(Address of principal executive
offices) (Zip Code)
(651) 446-3000
(Registrants telephone
number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Name of each exchange on which registered
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Common Stock, $.01 par value per share
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New York Stock Exchange
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Depositary Shares (each representing 1/100th interest in a
share of Series A Non-Cumulative Perpetual Preferred Stock,
par value $1.00)
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New York Stock Exchange
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Depositary Shares (each representing 1/1,000th interest in
a share of Series B Non-Cumulative Preferred Stock, par
value $1.00)
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New York Stock Exchange
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Depositary Shares (each representing 1/1,000th interest in
a share of Series D Non-Cumulative Preferred Stock, par
value $1.00)
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act: None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes þ No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files). Yes þ No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated
filer þ
Non-accelerated
filer o
(Do not check if a smaller reporting company)
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Accelerated
filer o
Smaller reporting company
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Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes o No þ
As of June 30, 2010, the aggregate market value of the
registrants common stock held by non-affiliates of the
registrant was $42.8 billion based on the closing sale
price as reported on the New York Stock Exchange.
Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest
practicable date.
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Outstanding at
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Class
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January 31, 2011
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Common Stock, $.01 par value per share
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1,921,945,830 shares
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DOCUMENTS
INCORPORATED BY REFERENCE
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Document
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Parts Into Which Incorporated
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1.
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Portions of the Annual Report to Shareholders for the Fiscal
Year Ended December 31, 2010
(2010 Annual Report)
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Parts I and II
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2.
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Portions of the Proxy Statement for the Annual Meeting of
Shareholders to be held April 19, 2011 (Proxy Statement)
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Part III
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TABLE OF CONTENTS
PART I
General
Business Description
U.S. Bancorp (U.S. Bancorp or the
Company) is a multi-state financial services holding
company headquartered in Minneapolis, Minnesota.
U.S. Bancorp was incorporated in Delaware in 1929 and
operates as a financial holding company and a bank holding
company under the Bank Holding Company Act of 1956.
U.S. Bancorp provides a full range of financial services,
including lending and depository services, cash management,
foreign exchange and trust and investment management services.
It also engages in credit card services, merchant and ATM
processing, mortgage banking, insurance, brokerage and leasing.
U.S. Bancorps banking subsidiaries are engaged in the
general banking business, principally in domestic markets. The
subsidiaries range in size from $53 million to
$211 billion in deposits and provide a wide range of
products and services to individuals, businesses, institutional
organizations, governmental entities and other financial
institutions. Commercial and consumer lending services are
principally offered to customers within the Companys
domestic markets, to domestic customers with foreign operations
and within certain niche national venues. Lending services
include traditional credit products as well as credit card
services, financing and import/export trade, asset-backed
lending, agricultural finance and other products. Leasing
products are offered through bank leasing subsidiaries.
Depository services include checking accounts, savings accounts
and time certificate contracts. Ancillary services such as
foreign exchange, treasury management and receivable lock-box
collection are provided to corporate customers.
U.S. Bancorps bank and trust subsidiaries provide a
full range of asset management and fiduciary services for
individuals, estates, foundations, business corporations and
charitable organizations.
U.S. Bancorps non-banking subsidiaries primarily
offer investment and insurance products to the Companys
customers principally within its markets, and mutual fund
processing services to a broad range of mutual funds.
Banking and investment services are provided through a network
of 3,031 banking offices principally operating in the Midwest
and West regions of the United States. The Company operates a
network of 5,310 ATMs and provides
24-hour,
seven day a week telephone customer service. Mortgage banking
services are provided through banking offices and loan
production offices throughout the Companys markets.
Consumer lending products may be originated through banking
offices, indirect correspondents, brokers or other lending
sources, and a consumer finance division. The Company is also
one of the largest providers of
Visa®
corporate and purchasing card services and corporate trust
services in the United States. A wholly-owned subsidiary,
Elavon, Inc. (Elavon), provides merchant processing
services directly to merchants and through a network of banking
affiliations. Affiliates of Elavon provide similar merchant
services in Canada and segments of Europe. These foreign
operations are not significant to the Company.
On a full-time equivalent basis, as of December 31, 2010,
U.S. Bancorp employed 60,584 people.
Competition
The commercial banking business is highly competitive.
Subsidiary banks compete with other commercial banks and with
other financial institutions, including savings and loan
associations, mutual savings banks, finance companies, mortgage
banking companies, credit unions and investment companies. In
recent years, competition has increased from institutions not
subject to the same regulatory restrictions as domestic banks
and bank holding companies.
Government
Policies
The operations of the Companys various operating units are
affected by federal and state legislative changes and by
policies of various regulatory authorities, including those of
the numerous states in which they operate, the United States and
foreign governments. These policies include, for example,
statutory maximum legal lending rates, domestic monetary
policies of the Board of Governors of the Federal Reserve
System, United States fiscal
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policy, international currency regulations and monetary
policies, U.S. Patriot Act and capital adequacy and
liquidity constraints imposed by bank regulatory agencies.
Supervision
and Regulation
U.S. Bancorp and its subsidiaries are subject to the
extensive regulatory framework applicable to bank holding
companies and their subsidiaries. This regulatory framework is
intended primarily for the protection of depositors, the deposit
insurance fund of the Federal Deposit Insurance Corporation (the
FDIC), consumers and the banking system as a whole,
and not necessarily for investors in bank holding companies such
as the Company.
This section summarizes certain provisions of the principal laws
and regulations applicable to the Company and its subsidiaries.
The descriptions are not intended to be complete and are
qualified in their entirety by reference to the full text of the
statutes and regulations described below.
Substantial changes to the regulation of bank holding companies
and their subsidiaries will also be forthcoming from the bank
regulatory agencies as a result of the enactment in 2010 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (the
Dodd-Frank Act). Changes in applicable law or
regulation, and in their application by regulatory agencies,
cannot be predicted, but they may have a material effect on the
business and results of the Company and its subsidiaries.
Dodd-Frank Act The Dodd-Frank Act was enacted
into law on July 21, 2010. The Dodd-Frank Act significantly
changes the regulatory framework for financial services
companies, and requires significant rulemaking and numerous
studies and reports over the next several years. Among other
things, it creates a new Financial Stability Oversight Council
with broad authority to make recommendations or require enhanced
prudential standards and more stringent supervision for large
bank holding companies and certain non-bank financial services
companies. The Dodd-Frank Act provides regulators with the power
to require a company to sell or transfer assets and terminate
activities, if they determine that the size or scope of the
companys activities pose a threat to the safety and
soundness of the company or the financial stability of the
United States.
The Dodd-Frank Act establishes the Bureau of Consumer Financial
Protection, which has broad authority to regulate providers of
credit, savings, payment and other consumer financial products
and services. In addition, the Dodd-Frank Act does the
following: creates a new structure for resolving troubled or
failed financial institutions; requires certain
over-the-counter
derivative transactions to be cleared in a central clearinghouse
and/or
effected on an exchange; revises the assessment base for the
calculation of the FDIC insurance assessments; restricts the
amount of interchange fees on debit card transactions; restricts
securities trading activities and support for and investments in
private funds; increases capital requirements; and enhances the
regulation of consumer mortgage banking and predatory lending
activities. The Dodd-Frank Act also limits the pre-emption of
local laws applicable to national banks.
In addition to the Dodd-Frank Act, other legislative proposals
have been made both domestically and internationally. Among
other things, these proposals include additional capital and
liquidity requirements and limitations on size or types of
activity in which banks may engage.
Federal Reserve Regulation The Company elected
to become a financial holding company as of March 13, 2000,
pursuant to the provisions of the Gramm-Leach-Bliley Act (the
GLBA). Under the GLBAs system of
functional regulation, the Board of Governors of the
Federal Reserve System (the Federal Reserve) acts as
an umbrella regulator for the Company, and certain
of the Companys subsidiaries are regulated directly by
additional agencies based on the particular activities of those
subsidiaries. The Companys banking subsidiaries are
regulated by the Office of the Comptroller of the Currency (the
OCC) and also by the Federal Reserve and the FDIC in
certain areas. Supervision and regulation by the responsible
regulatory agency generally includes comprehensive annual
reviews of all major aspects of a banks business and
condition, and imposition of periodic reporting requirements and
limitations on investments and certain types of activities.
If a financial holding company or a depository institution
controlled by a financial holding company ceases to meet certain
capital or management standards, the Federal Reserve may impose
corrective capital and managerial requirements on the financial
holding company, and place limitations on its ability to conduct
all of the business activities that financial holding companies
are generally permitted to conduct. See Permissible
Business
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Activities below. If the failure to meet these standards
persists, a financial holding company may be required to divest
its depository institution subsidiaries, or cease all activities
other than those activities that may be conducted by bank
holding companies that are not financial holding companies.
Federal Reserve regulations also provide that, if any depository
institution controlled by a financial holding company fails to
maintain a satisfactory rating under the Community Reinvestment
Act (CRA), the Federal Reserve must prohibit the
financial holding company and its subsidiaries from engaging in
the additional activities in which only financial holding
companies may engage. See Community Reinvestment Act
below. At December 31, 2010, the Companys
depository-institution subsidiaries met the capital, management
and CRA requirements necessary to permit the Company to conduct
the broader activities permitted for financial holding companies
under the GLBA.
The Dodd-Frank Act codified existing Federal Reserve policy
requiring the Company to act as a source of financial strength
to its bank subsidiaries, and to commit resources to support
these subsidiaries in circumstances where it might not otherwise
do so. However, because the GLBA provides for functional
regulation of financial holding company activities by various
regulators, the GLBA prohibits the Federal Reserve from
requiring payment by a holding company to a depository
institution if the functional regulator of the depository
institution objects to the payment. In those cases, the Federal
Reserve could instead require the divestiture of the depository
institution and impose operating restrictions pending the
divestiture. As a result of the Dodd-Frank Act, non-bank
subsidiaries of a holding company that engage in activities
permissible for an insured depository institution must be
examined and regulated in a manner that is at least as stringent
as if the activities were conducted by the lead depository
institution of the holding company.
Permissible Business Activities As a financial
holding company, the Company may affiliate with securities firms
and insurance companies and engage in other activities that are
financial in nature or incidental or complementary to activities
that are financial in nature. Financial in nature
activities include the following: securities underwriting,
dealing and market making; sponsoring mutual funds and
investment companies; insurance underwriting and agency;
merchant banking; and activities that the Federal Reserve, in
consultation with the Secretary of the U.S. Treasury,
determines to be financial in nature or incidental to such
financial activity. Complementary activities are
activities that the Federal Reserve determines upon application
to be complementary to a financial activity and that do not pose
a safety and soundness risk.
The Company generally does not need Federal Reserve approval to
acquire a company (other than a bank holding company, bank or
savings association) engaged in activities that are financial in
nature or incidental to activities that are financial in nature,
as determined by the Federal Reserve. However, the Dodd-Frank
Act added a provision requiring that approval if the total
consolidated assets to be acquired exceed $10 billion.
Financial holding companies are also required to obtain the
approval of the Federal Reserve before they may acquire more
than 5 percent of the voting shares or substantially all of
the assets of an unaffiliated bank holding company, bank or
savings association.
Interstate Banking Under the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the
Riegle-Neal Act), a bank holding company may acquire
banks in states other than its home state, subject to any state
requirement that the bank has been organized and operating for a
minimum period of time (not to exceed five years). Also, such an
acquisition is not permitted if the bank holding company
controls, prior to or following the proposed acquisition, more
than 10 percent of the total amount of deposits of insured
depository institutions nationwide, or, if the acquisition is
the bank holding companys initial entry into the state,
more than 30 percent of the deposits of insured depository
institutions in the state (or any lesser or greater amount set
by the state).
The Riegle-Neal Act also authorizes banks to merge across state
lines to create interstate branches. Under the Dodd-Frank Act,
banks are permitted to establish new branches in another state
to the same extent as banks chartered in the other state.
Regulatory Approval for Acquisitions In
determining whether to approve a proposed bank acquisition,
federal bank regulators will consider a number of factors,
including the following: the effect of the acquisition on
competition, financial condition and future prospects (including
current and projected capital ratios and levels); the
competence, experience and integrity of management and its
record of compliance with laws and regulations; the
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convenience and needs of the communities to be served (including
the acquiring institutions record of compliance under the
CRA); and the effectiveness of the acquiring institution in
combating money laundering activities. In addition, under the
Dodd-Frank Act, approval of interstate transactions requires
that the acquiror satisfy regulatory standards for well
capitalized and well managed institutions.
Dividend Restrictions The Company is a legal
entity separate and distinct from its subsidiaries. Typically,
the majority of the Companys operating funds are received
in the form of dividends paid to the Company by U.S. Bank
National Association, its principal banking subsidiary. Federal
law imposes limitations on the payment of dividends by national
banks.
Dividends payable by U.S. Bank National Association,
U.S. Bank National Association ND and the Companys
trust bank subsidiaries, as national banking associations, are
limited to the lesser of the amounts calculated under a
recent earnings test and an undivided
profits test. Under the recent earnings test, a dividend
may not be paid if the total of all dividends declared by a bank
in any calendar year is in excess of the current years net
income combined with the retained net income of the two
preceding years, unless the bank obtains the approval of the
OCC. Under the undivided profits test, a dividend may not be
paid in excess of a banks undivided profits.
See Note 23 of the Notes to Consolidated Financial
Statements included in the Companys 2010 Annual Report for
the amount of dividends that the Companys principal
banking subsidiaries could pay to the Company at
December 31, 2010, without the approval of their banking
regulators.
In addition to the dividend restrictions described above, the
OCC, the Federal Reserve and the FDIC have authority to prohibit
or limit the payment of dividends by the banking organizations
they supervise (including the Company and its bank
subsidiaries), if, in the banking regulators opinion,
payment of a dividend would constitute an unsafe or unsound
practice in light of the financial condition of the banking
organization. Subject to exceptions for well capitalized and
well managed holding companies, Federal Reserve regulations also
require approval of holding company purchases and redemptions of
its securities if the gross consideration paid exceeds
10 percent of consolidated net worth for any
12-month
period.
In addition, Federal Reserve policy on the payment of dividends,
stock redemptions and stock repurchases requires that bank
holding companies consult with and inform the Federal Reserve in
advance of doing any of the following: declaring and paying
dividends that could raise safety and soundness concerns
(e.g., declaring and paying dividends that exceed
earnings for the period for which dividends are being paid);
redeeming or repurchasing capital instruments when experiencing
financial weakness; and redeeming or repurchasing common stock
and perpetual preferred stock, if the result will be a net
reduction in the amount of such capital instruments outstanding
for the quarter in which the reduction occurs.
In November 2010, the Federal Reserve issued an addendum to its
policy on dividends, stock redemptions and stock repurchases
that is specifically applicable to the 19 largest bank holding
companies (including the Company) that are covered by the
Supervisory Capital Assessment Program (SCAP). The
addendum provides for Federal Reserve review of dividend
increases, implementation of capital repurchase programs and
other capital repurchases or redemptions. The addendum also
requires that holding companies subject to SCAP prepare and file
a comprehensive capital plan that includes a stress testing
framework. These plans will be evaluated by the Federal Reserve
based on the holding companys risk profile, currently
applicable capital standards and the reasonableness of plans to
address future capital standards, including Basel III
(discussed below) and relevant requirements under the Dodd-Frank
Act.
Capital Requirements Federal banking
regulators have adopted risk-based capital and leverage
guidelines that require the
capital-to-assets
ratios of financial institutions to meet certain minimum
standards. The risk-based capital ratio is calculated by
allocating assets and specified off-balance sheet financial
instruments into risk weighted categories (with higher levels of
capital being required for the categories perceived as
representing greater risk), and is used to determine the amount
of a financial institutions total risk-weighted assets
(RWA).
Under the guidelines, capital is divided into two tiers:
Tier 1 capital and Tier 2 capital. The amount of
Tier 2 capital may not exceed the amount of Tier 1
capital. Total capital is the sum of Tier 1 capital and
Tier 2 capital. Under the guidelines, banking organizations
are required to maintain a total capital ratio (total capital to
RWA) of 8 percent and a Tier 1 capital ratio
(Tier 1 capital to RWA) of 4 percent. At
December 31, 2010, the Companys
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consolidated total capital ratio was 13.3 percent and its
Tier 1 capital ratio was 10.5 percent. For a further
description of these guidelines, see Note 15 of the Notes
to Consolidated Financial Statements in the Companys 2010
Annual Report.
The federal banking regulators also have established minimum
leverage ratio guidelines. The leverage ratio is defined as
Tier 1 capital divided by adjusted average total assets.
The minimum leverage ratio is 3 percent for bank holding
companies that are considered strong under Federal
Reserve guidelines or which have implemented the Federal
Reserves risk-based capital measure for market risk. Other
bank holding companies must have a minimum leverage ratio of
4 percent. Bank holding companies may be expected to
maintain ratios well above the minimum levels, depending upon
their particular condition, risk profile and growth plans. At
December 31, 2010, the Companys leverage ratio was
9.1 percent.
The minimum risk-based capital requirements adopted by the
federal banking agencies follow the Capital Accord of the Basel
Committee on Banking Supervision. In 2004, the Basel Committee
published a revision to the accord (Basel II).
U.S. banking regulators published a final Basel II
rule in December 2007, which requires the Company to implement
Basel II at the holding company level, as well as at its
key U.S. bank subsidiaries. A further revision to the
accord was published in December 2010 (Basel III),
with implementation to be phased in beginning in 2013. Although
banking regulators have not yet issued regulations implementing
Basel III, the domestic implementation of Basel III will
increase the Companys capital requirements.
The Dodd-Frank Act contained amendments to holding company
capital requirements. These amendments effectively eliminated
differences between the minimum capital requirements applicable
to insured depository institutions and their holding companies
by phasing out the use of hybrid debt instruments (such as trust
preferred securities) in determining holding company regulatory
capital.
For additional information regarding the Companys
regulatory capital, see Capital Management in the Companys
2010 Annual Report on pages 53 to 54.
Federal Deposit Insurance Corporation Improvement
Act The Federal Deposit Insurance Corporation
Improvement Act of 1991 (the FDICIA) provides a
framework for regulation of depository institutions and their
affiliates (including parent holding companies) by federal
banking regulators. As part of that framework, the FDICIA
requires the relevant federal banking regulator to take
prompt corrective action with respect to a
depository institution, if that institution does not meet
certain capital adequacy standards.
Supervisory actions by the appropriate federal banking regulator
under the prompt corrective action rules generally
depend upon an institutions classification within five
capital categories. The regulations apply only to banks and not
to bank holding companies such as the Company; however, subject
to limitations that may be imposed pursuant to the GLBA, the
Federal Reserve is authorized to take appropriate action at the
holding company level, based on the undercapitalized status of
the holding companys subsidiary banking institutions. In
certain instances relating to an undercapitalized banking
institution, the bank holding company would be required to
guarantee the performance of the undercapitalized
subsidiarys capital restoration plan, and could be liable
for civil money damages for failure to fulfill those guarantee
commitments.
Deposit Insurance Under current FDIC
regulations, each depository institution is assigned to a risk
category based on capital and supervisory measures. In 2009, the
FDIC revised the method for calculating the assessment rate for
depository institutions by introducing several adjustments to an
institutions initial base assessment rate. A depository
institution is assessed premiums by the FDIC based on its risk
category and the amount of deposits held. Higher levels of banks
failures have dramatically increased FDIC resolution costs and
depleted the deposit insurance fund. In addition, in 2008, the
amount of FDIC insurance coverage for insured deposits was
generally increased from $100,000 per depositor account
ownership type to $250,000.
In light of the increased stress on the deposit insurance fund
caused by these developments, and in order to maintain a strong
funding position and restore the reserve ratios of the deposit
insurance fund, the FDIC (a) imposed a special assessment
in June 2009, (b) has increased assessment rates of insured
institutions generally, and (c) required insured
institutions to prepay on December 30, 2009 the premiums
that were expected to become due for 2010, 2011 and 2012. In
addition, the Dodd-Frank Act alters the assessment base for
deposit insurance assessments from a deposit to an asset base,
and seeks to fund part of the cost of the Dodd-Frank Act by
increasing
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the deposit insurance reserve fund to 1.35 percent of
estimated insured deposits. The Dodd-Frank Act also requires
that FDIC assessments be set in a manner that offsets the cost
of the assessment increases for institutions with consolidated
assets of less than $10 billion. This provision effectively
places the increased assessment costs on larger financial
institutions such as the Company.
The Dodd-Frank Act also permanently increased deposit insurance
coverage from $100,000 per account ownership type to $250,000,
and extended the unlimited insurance of non-interest bearing
transaction accounts under the FDIC Transaction Account Guaranty
program to January 1, 2013.
Powers of the FDIC Upon Insolvency of an Insured
Institution If the FDIC is appointed the
conservator or receiver of an insured depository institution
upon its insolvency or in certain other events, the FDIC has the
power to (a) transfer any of the depository
institutions assets and liabilities to a new obligor
without the approval of the depository institutions
creditors; (b) enforce the terms of the depository
institutions contracts pursuant to their terms; or
(c) repudiate or disaffirm any contracts (if the FDIC
determines that performance of the contract is burdensome and
that the repudiation or disaffirmation is necessary to promote
the orderly administration of the depository institution). These
provisions would be applicable to obligations and liabilities of
the Companys subsidiaries that are insured depository
institutions, such as U.S. Bank National Association.
Depositor Preference Under federal law, in the
event of the liquidation or other resolution of an insured
depository institution, the claims of a receiver of the
institution for administrative expense and the claims of holders
of U.S. deposit liabilities (including the FDIC, as
subrogee of the depositors) have priority over the claims of
other unsecured creditors of the institution, including holders
of publicly issued senior or subordinated debt and depositors in
non-U.S. offices.
As a result, those noteholders and depositors would be treated
differently from, and could receive, if anything, substantially
less than, the depositors in U.S. offices of the depository.
Orderly Liquidation of Bank Holding
Companies The Dodd-Frank Act provides for the
orderly liquidation of certain financial services companies
(including bank holding companies) through the appointment of
the FDIC as receiver upon insolvency and the occurrence of
certain other events. Although these provisions became effective
upon enactment of the Dodd-Frank Act, only some of the
regulations have been proposed, and none have been adopted, to
date.
In preparation for the potential exercise of this authority, the
FDIC created the Office of Complex Financial Institutions. Its
duties include the continuous review and oversight of bank
holding companies with assets of more than $100 billion.
The Dodd-Frank Act also requires each bank holding company with
$50 billion or more in assets to prepare a living
will to facilitate the companys rapid and orderly
liquidation in the event of material financial distress or
failure.
Liability of Commonly Controlled
Institutions An FDIC-insured depository
institution can be held liable for any loss incurred or expected
to be incurred by the FDIC in connection with another
FDIC-insured institution under common control with that
institution being in default or in danger of
default (commonly referred to as
cross-guarantee
liability). An FDIC claim for cross-guarantee liability against
a depository institution is generally superior in right of
payment to claims of the holding company and its affiliates
against the depository institution.
Transactions with Affiliates There are various
legal restrictions on the extent to which the Company and its
non-bank subsidiaries may borrow or otherwise obtain funding
from the Companys banking subsidiaries, including
U.S. Bank National Association and U.S. Bank National
Association ND. Under the Federal Reserve Act and
Regulation W of the Federal Reserve, the Companys
banking subsidiaries (and their subsidiaries) may only engage in
lending and other covered transactions with non-bank
and non-savings bank affiliates to the following extent:
(a) in the case of any single affiliate, the aggregate
amount of covered transactions may not exceed 10 percent of
the capital stock and surplus of the banking subsidiary; and
(b) in the case of all affiliates, the aggregate amount of
covered transactions may not exceed 20 percent of the
capital stock and surplus of the banking subsidiary.
Covered transactions between the Companys banking
subsidiaries and their affiliates are also subject to certain
collateralization requirements. All covered transactions,
including transactions with a third party in which an affiliate
of the banking subsidiary has a financial interest, must be
conducted on market terms. Covered transactions are
defined to include (a) a loan or extension of credit by a
bank subsidiary to an affiliate, (b) a purchase of
securities issued to a banking subsidiary by an affiliate,
(c) a purchase of assets (unless otherwise
7
exempted by the Federal Reserve) by the banking subsidiary from
an affiliate, (d) the acceptance of securities issued by an
affiliate to the banking subsidiary as collateral for a loan,
and (e) the issuance of a guarantee, acceptance or letter
of credit by the banking subsidiary on behalf of an affiliate.
Anti-Money Laundering and Suspicious
Activity Several federal laws, including the Bank
Secrecy Act, the Money Laundering Control Act and the Uniting
and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (the
Patriot Act) require all financial institutions
(including banks and securities broker-dealers) to, among other
things, implement policies and procedures relating to anti-money
laundering, compliance, suspicious activities, and currency
transaction reporting and due diligence on customers. The
Patriot Act also requires federal bank regulators to evaluate
the effectiveness of an applicant in combating money laundering
when determining whether to approve a proposed bank acquisition.
Community Reinvestment Act The Companys
banking subsidiaries are subject to the provisions of the CRA.
Under the terms of the CRA, the banks have a continuing and
affirmative obligation, consistent with safe and sound
operation, to help meet the credit needs of their communities,
including providing credit to individuals residing in low- and
moderate-income neighborhoods. The CRA does not establish
specific lending requirements or programs for financial
institutions, and does not limit an institutions
discretion to develop the types of products and services that it
believes are best suited to its particular community in a manner
consistent with the CRA.
The OCC regularly assesses each of the Companys banking
subsidiaries on its record in meeting the credit needs of the
community served by that institution, including low-income and
moderate-income neighborhoods. The assessment also is considered
when the Federal Reserve reviews applications by banking
institutions to acquire, merge or consolidate with another
banking institution or its holding company, to establish a new
branch office that will accept deposits or to relocate an
office. In the case of a bank holding company applying for
approval to acquire a bank or other bank holding company, the
Federal Reserve will assess the records of each subsidiary
depository institution of the applicant bank holding company,
and those records may be the basis for denying the application.
U.S. Bank National Association received an
outstanding CRA rating and U.S. Bank National
Association ND received a satisfactory CRA rating in
their most recent examinations, covering the periods from
January 1, 2006 through December 31, 2008.
Regulation of Brokerage, Investment Advisory and Insurance
Activities The Company conducts securities
underwriting, dealing and brokerage activities in the United
States through U.S. Bancorp Investments, Inc.
(USBII) and other subsidiaries. These activities are
subject to regulations of the Securities and Exchange Commission
(the SEC), the Financial Industry Regulatory
Authority and other authorities, including state regulators.
These regulations generally include licensing of securities
personnel, interactions with customers, trading operations and
periodic examinations.
Securities regulators impose capital requirements on USBII and
monitor its financial operations with periodical financial
reviews. In addition, USBII is a member of the Securities
Investor Protection Corporation.
The operations of First American Funds mutual funds also are
subject to regulation by the SEC. The Companys operations
in the areas of insurance brokerage and reinsurance of credit
life insurance are subject to regulation and supervision by
various state insurance regulatory authorities, including the
licensing of insurance brokers and agents.
Financial Privacy Under the requirements
imposed by the GLBA, the Company and its subsidiaries are
required periodically to disclose to their retail customers the
Companys policies and practices with respect to the
sharing of nonpublic customer information with its affiliates
and others, and the confidentiality and security of that
information. Under the GLBA, retail customers also must be given
the opportunity to opt out of information-sharing
arrangements with nonaffiliates, subject to certain exceptions
set forth in the GLBA.
Other Supervision and Regulation The
activities of U.S. Bank National Association and
U.S. Bank National Association ND as consumer lenders also
are subject to regulation under various U.S. federal laws,
including the
Truth-in-Lending,
Equal Credit Opportunity, Fair Credit Reporting, Fair Debt
Collection Practice and Electronic Funds Transfer acts, as well
as various state laws. These statutes impose requirements on
consumer loan origination and collection practices.
8
The Company is subject to the disclosure and regulatory
requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, both as
administered by the SEC, by virtue of the Companys status
as a public company. As a listed company on the New York Stock
Exchange (the NYSE), the Company is subject to the
rules of the NYSE for listed companies.
Website
Access to SEC Reports
U.S. Bancorps internet website can be found at
usbank.com. U.S. Bancorp makes available free of
charge on its website its annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
and amendments to those reports filed or furnished pursuant to
Section 13 or 15(d) of the Exchange Act, as well as all
other reports filed by U.S. Bancorp with the SEC as soon as
reasonably practicable after electronically filed with, or
furnished to, the United States Securities and Exchange
Commission.
Additional
Information
Additional information in response to this Item 1 can be
found in the Companys 2010 Annual Report on page 20
under the heading Acquisitions; and on pages 55 to
60 under the heading Line of Business Financial
Review. That information is incorporated into this report
by reference.
Information in response to this Item 1A can be found in the
Companys 2010 Annual Report on pages 131 to 138 under the
heading Risk Factors. That information is
incorporated into this report by reference.
|
|
Item 1B.
|
Unresolved
Staff Comments
|
None.
U.S. Bancorp and its significant subsidiaries occupy
headquarter offices under a long-term lease in Minneapolis,
Minnesota. The Company also leases nine freestanding operations
centers in Cincinnati, Denver, Milwaukee, Minneapolis, Overland
Park, Portland and St. Paul. The Company owns 11 principal
operations centers in Cincinnati, Coeur dAlene, Fargo,
Milwaukee, Olathe, Owensboro, Portland, St. Louis and St.
Paul. At December 31, 2010, the Companys subsidiaries
owned and operated a total of 1,507 facilities and leased an
additional 1,975 facilities, all of which are well maintained.
The Company believes its current facilities are adequate to meet
its needs. Additional information with respect to premises and
equipment is presented in Notes 9 and 22 of the Notes to
Consolidated Financial Statements included in the Companys
2010 Annual Report. That information is incorporated into this
report by reference.
|
|
Item 3.
|
Legal
Proceedings
|
During 2010, the Company paid an $800,000 penalty imposed under
section 6707 A(b)(2) of the Internal Revenue Code for
failure to include certain reportable transaction information in
its 2004 2007 federal income tax returns related to
a listed transaction.
|
|
Item 4.
|
(Removed
and Reserved)
|
Capital
Covenants
The Company has entered into several transactions involving the
issuance of capital securities (Capital Securities)
by Delaware statutory trusts formed by the Company (the
Trusts), the issuance by the Company of preferred
stock (Preferred Stock) or the issuance by an
indirect subsidiary of U.S. Bank National Association of
preferred stock exchangeable for the Companys Preferred
Stock under certain circumstances (Exchangeable Preferred
Stock). Simultaneously with the closing of each of those
transactions, the Company entered into a replacement capital
covenant (each, a Replacement Capital Covenant and
collectively, the Replacement Capital Covenants) for
the benefit of persons that buy, hold or sell a specified series
of long-term indebtedness of the
9
Company or U.S. Bank National Association (the
Covered Debt). Each of the Replacement Capital
Covenants provides that neither the Company nor any of its
subsidiaries (including any of the Trusts) will repay, redeem or
purchase any of the Preferred Stock, Exchangeable Preferred
Stock or the Capital Securities and the securities held by the
Trust (the Other Securities), as applicable, on or
before the date specified in the applicable Replacement Capital
Covenant, with certain limited exceptions, except to the extent
that, during the 180 days prior to the date of that
repayment, redemption or purchase, the Company has received
proceeds from the sale of qualifying securities that
(i) have equity-like characteristics that are the same as,
or more equity-like than, the applicable characteristics of the
Preferred Stock, the Exchangeable Preferred Stock, the Capital
Securities or Other Securities, as applicable, at the time of
repayment, redemption or purchase, and (ii) the Company has
obtained the prior approval of the Federal Reserve Board, if
such approval is then required by the Federal Reserve Board or,
in the case of the Exchangeable Preferred Stock, the approval of
the Office of the Comptroller of the Currency.
The Company will provide a copy of any Replacement Capital
Covenant to a holder of the relevant Covered Debt. For copies of
any of these documents, holders should write to Investor
Relations, U.S. Bancorp, 800 Nicollet Mall,
Minneapolis, Minnesota 55402, or call
(866) 775-9668.
The following table identifies the (i) closing date for
each transaction, (ii) issuer, (iii) series of Capital
Securities, Preferred Stock or Exchangeable Preferred Stock
issued in the relevant transaction, (iv) Other Securities,
if any, and (v) applicable Covered Debt.
|
|
|
|
|
|
|
|
|
Closing
|
|
|
|
Capital Securities or
|
|
|
|
|
Date
|
|
Issuer
|
|
Preferred Stock
|
|
Other Securities
|
|
Covered Debt
|
|
12/29/05
|
|
USB Capital
VIII and
U.S. Bancorp
|
|
USB Capital VIIIs
$375,000,000 6.35% Trust
Preferred Securities
|
|
U.S. Bancorps $375,000,000
6.35% Income Capital
Obligation Notes due 2065
|
|
U.S. Bancorps 5.875% junior
subordinated debentures due
2035, underlying the 5.875% trust
preferred securities of USB Capital
VII (CUSIP No. 903301208)
|
3/17/06
|
|
USB Capital
IX and
U.S. Bancorp
|
|
USB Capital IXs
$675,378,000 of 6.189%
Fixed-to-Floating Rate
Normal Income Trust
Securities
|
|
(i) U.S. Bancorps
Remarketed Junior
Subordinated Notes and
(ii) Stock Purchase Contract
to Purchase U.S. Bancorps
Series A Non-Cumulative
Perpetual Preferred Stock
|
|
U.S. Bancorps 5.875% junior
subordinated debentures due 2035,
underlying the 5.875% trust
preferred securities of USB Capital
VII (CUSIP No. 903301208)
|
3/27/06
|
|
U.S. Bancorp
|
|
U.S. Bancorps 40,000,000
Depositary Shares ($25 per
Depositary Share) each
representing a
1/1000th
interest in a share of Series B
Non-Cumulative Preferred Stock
|
|
Not Applicable
|
|
U.S. Bancorps 5.875% junior
subordinated debentures due 2035,
underlying the 5.875% trust
preferred securities of USB Capital
VII (CUSIP No. 903301208)
|
4/12/06
|
|
USB Capital
X and
U.S. Bancorp
|
|
USB Capital Xs
$500,000,000 6.50% Trust Preferred Securities
|
|
U.S. Bancorps 6.50%
Income Capital Obligation
Notes due 2066
|
|
U.S. Bancorps 5.875% junior
subordinated debentures due 2035,
underlying the 5.875% trust
preferred securities of USB Capital
VII (CUSIP No. 903301208)
|
8/30/06
|
|
USB Capital
XI and
U.S. Bancorp
|
|
USB Capital XIs
$765,000,000 6.60% Trust
Preferred Securities
|
|
U.S. Bancorps 6.60%
Income Capital Obligation
Notes due 2066
|
|
U.S. Bancorps 5.875% junior
subordinated debentures due 2035,
underlying the 5.875% trust
preferred securities of USB Capital
VII (CUSIP No. 903301208)
|
12/22/06
|
|
USB Realty
Corp(a)
and
U.S. Bancorp
|
|
USB Realty Corp.s
5,000 shares of Fixed-
Floating-Rate Exchangeable
Non-cumulative Perpetual
Series A Preferred Stock
exchangeable for shares of
U.S. Bancorps Series C
Non-cumulative Perpetual
Preferred
Stock(b)
|
|
Not applicable
|
|
U.S. Bancorps 6.60% junior
subordinated debentures due 2066,
underlying 6.60% trust
preferred securities of USB Capital
XI (CUSIP No. 903300200)
|
10
|
|
|
|
|
|
|
|
|
Closing
|
|
|
|
Capital Securities or
|
|
|
|
|
Date
|
|
Issuer
|
|
Preferred Stock
|
|
Other Securities
|
|
Covered Debt
|
|
2/1/07
|
|
USB Capital
XII and
U.S. Bancorp
|
|
USB Capital XIIs
$535,000,000 6.30% Trust
Preferred Securities
|
|
U.S. Bancorps 6.30%
Income Capital Obligation
Notes due 2067
|
|
U.S. Bancorps 5.875% junior
subordinated debentures due 2035,
underlying the 5.875% trust
preferred securities of USB Capital
VII (CUSIP No. 903301208)
|
3/17/08
|
|
U.S. Bancorp
|
|
U.S. Bancorps 20,000,000 Depositary Shares ($25 per
Depositary Share) each representing a
1/1000th
interest in a share of Series D
Non-Cumulative Perpetual Preferred Stock
|
|
Not Applicable
|
|
U.S. Bancorps 5.875% junior
subordinated debentures due 2035,
underlying the 5.875% trust
preferred securities of USB Capital
VII (CUSIP No. 903301208)
|
6/10/10
|
|
U.S. Bancorp
|
|
U.S. Bancorps 574,622 Depositary Shares ($1,000 per
Depositary Share) each representing a
1/100th
interest in a share of Series A
Non-Cumulative Perpetual Preferred Stock
|
|
Not Applicable
|
|
U.S. Bancorps 5.875% junior
subordinated debentures due 2035,
underlying the 5.875% trust
preferred securities of USB Capital
VII (CUSIP No. 903301208)
|
|
|
|
(a) |
|
USB Realty Corp. is an indirect subsidiary of U.S. Bank
National Association. |
|
(b) |
|
Under certain circumstances, upon the direction of the Office
of the Comptroller of the Currency, each share of USB Realty
Corp.s Series A Preferred Stock will be automatically
exchanged for one share of the U.S. Bancorps
Series C Non-cumulative Perpetual Preferred Stock. |
PART II
|
|
Item 5.
|
Market
for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|
The following table provides a detailed analysis of all shares
repurchased by the Company during the fourth quarter of 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number
|
|
|
|
|
|
|
|
|
of Shares
|
|
Maximum Number
|
|
|
|
|
|
|
Purchased as
|
|
of Shares that May
|
|
|
Total Number
|
|
Average
|
|
Part of Publicly
|
|
Yet Be Purchased
|
|
|
of Shares
|
|
Price Paid
|
|
Announced
|
|
Under the
|
Time Period
|
|
Purchased
|
|
per Share
|
|
Programs
|
|
Programs
|
|
October 1-31(a)
|
|
|
8,100
|
|
|
$
|
22.94
|
|
|
|
8,100
|
|
|
|
19,022,336
|
|
November 1-30(a)
|
|
|
964
|
|
|
|
24.87
|
|
|
|
964
|
|
|
|
19,021,372
|
|
December 1-31(b)
|
|
|
171
|
|
|
|
22.10
|
|
|
|
171
|
|
|
|
19,999,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,235
|
|
|
$
|
23.12
|
|
|
|
9,235
|
|
|
|
19,999,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
On December 9, 2008, the Company announced that the
Board of Directors approved an authorization to repurchase
20 million shares of common stock through December 31,
2010. All shares purchased during October and November of 2010
were purchased under the publicly announced December 9,
2008 authorization. |
|
(b) |
|
On December 13, 2010, the Company announced that the
Board of Directors approved an authorization to repurchase
20 million shares of common stock through December 31,
2011. The December 2010 authorization replaced the December 2008
authorization. All shares purchased during December of 2010 were
purchased under the publicly announced December 13, 2010
authorization. |
11
Additional
Information
Additional information in response to this Item 5 can be
found in the Companys 2010 Annual Report on page 130 under
the heading U.S. Bancorp Supplemental Financial Data
(Unaudited). That information is incorporated into this
report by reference.
|
|
Item 6.
|
Selected
Financial Data
|
Information in response to this Item 6 can be found in the
Companys 2010 Annual Report on page 19 under the
heading Table 1 Selected Financial Data.
That information is incorporated into this report by reference.
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
Information in response to this Item 7 can be found in the
Companys 2010 Annual Report on pages 18 to 64 under the
heading Managements Discussion and Analysis.
That information is incorporated into this report by reference.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
Information in response to this Item 7A can be found in the
Companys 2010 Annual Report on pages 33 to 54 under the
heading Corporate Risk Profile. That information is
incorporated into this report by reference.
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
Information in response to this Item 8 can be found in the
Companys 2010 Annual Report on pages 65 to 130 under the
headings Report of Management, Report of
Independent Registered Public Accounting Firm on the
Consolidated Financial Statements, Report of
Independent Registered Public Accounting Firm on Internal
Control Over Financial Reporting, U.S. Bancorp
Consolidated Balance Sheet, U.S. Bancorp
Consolidated Statement of Income, U.S. Bancorp
Consolidated Statement of Shareholders Equity,
U.S. Bancorp Consolidated Statement of Cash
Flows, Notes to Consolidated Financial
Statements, U.S. Bancorp Consolidated Balance
Sheet Five Year Summary (Unaudited),
U.S. Bancorp Consolidated Statement of
Income Five Year Summary (Unaudited),
U.S. Bancorp Quarterly Consolidated Financial Data
(Unaudited), U.S. Bancorp Consolidated Daily
Average Balance Sheet and Related Yields and Rates
(Unaudited) and U.S. Bancorp Supplemental
Financial Data (Unaudited). That information is
incorporated into this report by reference.
|
|
Item 9.
|
Changes
in and Disagreements With Accountants on Accounting and
Financial Disclosure
|
None.
|
|
Item 9A.
|
Controls
and Procedures
|
Information in response to this Item 9A can be found in the
Companys 2010 Annual Report on page 64 under the
heading Controls and Procedures and on pages 65 and
67 under the headings Report of Management and
Report of Independent Registered Public Accounting Firm on
Internal Control Over Financial Reporting. That
information is incorporated into this report by reference.
|
|
Item 9B.
|
Other
Information
|
None.
12
PART III
|
|
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
Executive
Officers of the Registrant
Richard
K. Davis
Mr. Davis is Chairman, President and Chief Executive
Officer of U.S. Bancorp. Mr. Davis, 53, has served as
Chairman of U.S. Bancorp since December 2007, Chief
Executive Officer since December 2006 and President since
October 2004. He also served as Chief Operating Officer from
October 2004 until December 2006. From the time of the merger of
Firstar Corporation and U.S. Bancorp in February 2001 until
October 2004, Mr. Davis served as Vice Chairman of
U.S. Bancorp. From the time of the merger, Mr. Davis
was responsible for Consumer Banking, including Retail Payment
Solutions (card services), and he assumed additional
responsibility for Commercial Banking in 2003. Mr. Davis
has held management positions with the Company since joining
Star Banc Corporation, one of its predecessors, in 1993 as
Executive Vice President.
Jennie
P. Carlson
Ms. Carlson is Executive Vice President, Human Resources,
of U.S. Bancorp. Ms. Carlson, 50, has served in this
position since January 2002. Until that time, she served as
Executive Vice President, Deputy General Counsel and Corporate
Secretary of U.S. Bancorp since the merger of Firstar
Corporation and U.S. Bancorp in February 2001. From 1995
until the merger, she was General Counsel and Secretary of
Firstar Corporation and Star Banc Corporation.
Andrew
Cecere
Mr. Cecere is Vice Chairman and Chief Financial Officer of
U.S. Bancorp. Mr. Cecere, 50, has served in this
position since February 2007. Until that time, he served as Vice
Chairman, Wealth Management and Securities Services, since the
merger of Firstar Corporation and U.S. Bancorp in February
2001. Previously, he had served as an executive officer of the
former U.S. Bancorp, including as Chief Financial Officer
from May 2000 through February 2001.
Terrance
R. Dolan
Mr. Dolan is Vice Chairman, Wealth Management and
Securities Services, of U.S. Bancorp. Mr. Dolan, 49,
has served in this position since July 2010. From September 1998
to July 2010, Mr. Dolan served as U.S. Bancorps
Controller. He additionally held the title of Executive Vice
President from January 2002 until June 2010 and Senior Vice
President from September 1998 until January 2002.
Richard
C. Hartnack
Mr. Hartnack is Vice Chairman, Consumer and Small Business
Banking, of U.S. Bancorp. Mr. Hartnack, 65, has served
in this position since April 2005, when he joined
U.S. Bancorp. Prior to joining U.S. Bancorp, he served
as Vice Chairman of Union Bank of California from 1991 to 2005
with responsibility for Community Banking and Investment
Services.
Richard
J. Hidy
Mr. Hidy is Executive Vice President and Chief Risk Officer
of U.S. Bancorp. Mr. Hidy, 48, has served in this
position since 2005. From 2003 until 2005, he served as Senior
Vice President and Deputy General Counsel of U.S. Bancorp,
having served as Senior Vice President and Associate General
Counsel of U.S. Bancorp and Firstar Corporation since 1999.
13
Joseph
C. Hoesley
Mr. Hoesley is Vice Chairman, Commercial Real Estate, of
U.S. Bancorp. Mr. Hoesley, 56, has served in this
position since June 2006. From June 2002 until June 2006, he
served as Executive Vice President and National Group Head of
Commercial Real Estate at U.S. Bancorp, having previously
served as Senior Vice President and Group Head of Commercial
Real Estate since joining U.S. Bancorp in 1992.
Pamela
A. Joseph
Ms. Joseph is Vice Chairman, Payment Services, of
U.S. Bancorp. Ms. Joseph, 52, has served in this
position since December 2004. Since November 2004, she has been
Chairman and Chief Executive Officer of Elavon Inc., a wholly
owned subsidiary of U.S. Bancorp. Prior to that time, she
had been President and Chief Operating Officer of Elavon Inc.
since February 2000.
Howell
D. McCullough III
Mr. McCullough is Executive Vice President and Chief
Strategy Officer of U.S. Bancorp and Head of
U.S. Bancorps Enterprise Revenue Office.
Mr. McCullough, 54, has served in these positions since
September 2007. From July 2005 until September 2007, he served
as Director of Strategy and Acquisitions of the Payment Services
business of U.S. Bancorp. He also served as Chief Financial
Officer of the Payment Services business from October 2006 until
September 2007. From March 2001 until July 2005, he served as
Senior Vice President and Director of Investor Relations at
U.S. Bancorp.
Lee R.
Mitau
Mr. Mitau is Executive Vice President and General Counsel
of U.S. Bancorp. Mr. Mitau, 62, has served in this
position since 1995. Mr. Mitau also serves as Corporate
Secretary. Prior to 1995 he was a partner at the law firm of
Dorsey & Whitney LLP.
P.W.
Parker
Mr. Parker is Executive Vice President and Chief Credit
Officer of U.S. Bancorp. Mr. Parker, 54, has served in
this position since October 2007. From March 2005 until October
2007, he served as Executive Vice President of Credit Portfolio
Management of U.S. Bancorp, having served as Senior Vice
President of Credit Portfolio Management of U.S. Bancorp
since January 2002.
Richard
B. Payne, Jr.
Mr. Payne is Vice Chairman, Wholesale Banking, of
U.S. Bancorp. Mr. Payne, 63, has served in this
position since November 2010, when he assumed the additional
responsibility for Commercial Banking at U.S. Bancorp. From
July 2006, when he joined U.S. Bancorp, until November
2010, Mr. Payne served as Vice Chairman, Corporate Banking
at U.S. Bancorp. Prior to joining U.S. Bancorp, he
served as Executive Vice President for National City Corporation
in Cleveland, with responsibility for Capital Markets, from 2001
to 2006.
Jeffry
H. von Gillern
Mr. von Gillern is Vice Chairman, Technology and Operations
Services, of U.S. Bancorp. Mr. von Gillern, 45, has served
in this position since July 2010. From April 2001, when he
joined U.S. Bancorp, until July 2010, Mr. von Gillern
served as Executive Vice President of U.S. Bancorp,
additionally serving as Chief Information Officer from July 2007
until July 2010.
Code of
Ethics and Business Conduct
The Company has adopted a Code of Ethics and Business Conduct
that applies to its principal executive officer, principal
financial officer and principal accounting officer. The
Companys Code of Ethics and Business Conduct can be found
at www.usbank.com by clicking on About
U.S. Bank and then clicking on Ethics
under the Investor/Shareholder Information heading,
which is located at the left side of the bottom of the page. The
14
Company intends to satisfy the disclosure requirements under
Item 5.05 of
Form 8-K
regarding amendments to, or waivers from, certain provisions of
the Code of Ethics and Business Conduct that apply to its
principal executive officer, principal financial officer and
principal accounting officer by posting such information on its
website, at the address and location specified above.
Additional
Information
Additional information in response to this Item 10 can be
found in the Companys Proxy Statement under the headings
Section 16(a) Beneficial Ownership Reporting
Compliance, Proposal 1 Election of
Directors and Board Meetings and Committees.
That information is incorporated into this report by reference.
|
|
Item 11.
|
Executive
Compensation
|
Information in response to this Item 11 can be found in the
Companys Proxy Statement under the headings
Executive Compensation and Director
Compensation. That information is incorporated into this
report by reference.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
Equity
Compensation Plan Information
The following table summarizes information regarding the
Companys equity compensation plans in effect as of
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
|
|
|
Weighted-average
|
|
|
Future Issuance under
|
|
|
|
Number of Securities to
|
|
|
Exercise Price of
|
|
|
Equity Compensation
|
|
|
|
be Issued upon Exercise
|
|
|
Outstanding Options,
|
|
|
Plans (Excluding Securities
|
|
|
|
of Outstanding Options,
|
|
|
Warrants
|
|
|
Reflected in the First
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
and Rights
|
|
|
Column)(1)
|
|
|
Equity compensation plans approved by security
holders(2)
|
|
|
87,572,874
|
|
|
$
|
26.65
|
|
|
|
68,908,298
|
|
Equity compensation plans not approved by security
holders(3)(4)
|
|
|
3,745,529
|
|
|
$
|
23.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
91,318,403
|
|
|
$
|
25.87
|
|
|
|
68,908,298
|
|
|
|
|
(1) |
|
No shares are available for granting future awards under the
U.S. Bancorp 2001 Stock Incentive Plan or the U.S. Bancorp 1998
Executive Stock Incentive Plan. |
|
|
|
The 68,908,298 shares available under the Amended and
Restated 2007 Stock Incentive Plan are available for future
awards in the form of stock options, stock appreciation rights,
restricted stock, restricted stock units, performance awards or
other stock-based awards, except that only 23,408,818 of these
shares are available for future grants of awards other than
stock options or stock appreciation rights. |
|
(2) |
|
Includes shares underlying stock options, performance-based
restricted stock units (awarded to the members of the
Companys managing committee in 2010 and 2009 and
convertible into shares of the Companys common stock on a
one-for-one
basis), and restricted stock units (convertible into shares of
the Companys common stock on a
one-for-one
basis) under the Amended and Restated 2007 Stock Incentive Plan,
the U.S. Bancorp 2001 Stock Incentive Plan and the U.S. Bancorp
1998 Executive Stock Incentive Plan. Excludes
194,202 shares, with a weighted-average exercise price of
$18.87, underlying outstanding stock options and warrants
assumed by U.S. Bancorp in connection with acquisitions by
U.S. Bancorp. Of the excluded shares, 22,431 underlie stock
options granted under equity compensation plans of the former
U.S. Bancorp that were approved by the shareholders of the
former U.S. Bancorp. |
|
(3) |
|
Includes 2,513,904 shares of common stock issuable
pursuant to various current and former deferred compensation
plans of U.S. Bancorp and its predecessor entities. All of the
remaining identified shares |
15
|
|
|
|
|
underlie stock options granted to a broad-based employee
population pursuant to the U.S. Bancorp 2001 Employee Stock
Incentive Plan (2001 Stock Plan). |
|
(4) |
|
The weighted-average exercise price does not include any
assumed price at issuance of shares that may be issuable
pursuant to the deferred compensation plans. |
As of December 31, 2010, options to purchase an aggregate
of 1,231,625 shares were outstanding under the 2001 Stock
Plan. Under the 2001 Stock Plan, nonqualified stock options were
granted to full-time or part-time employees actively employed by
U.S. Bancorp on the grant date, other than individuals eligible
to participate in any of the Companys executive stock
incentive plans. All options outstanding under the plan were
granted on February 27, 2001.
No further options will be granted under the 2001 Stock Plan.
Under this plan the exercise price of the options equals the
fair market value of the underlying common stock on the grant
date. All options granted under the plan have a term of
10 years from the grant date and become exercisable over a
period of time set forth in the relevant plan or as determined
by the committee administering the relevant plan. Options
granted under the plan are nontransferable and, during the
optionees lifetime, are exercisable only by the optionee.
If an optionee is terminated as a result of his or her gross
misconduct or offense, all options terminate immediately,
whether or not vested. Under the 2001 Stock Plan in the event an
optionee is terminated immediately following a
change-in-control
(as defined in the plan) of U.S. Bancorp, and the termination is
due to business needs resulting from the
change-in-control
and not as a result of the optionees performance or
conduct, all of the optionees outstanding options will
become immediately vested and exercisable as of the date of
termination.
If the outstanding shares of the Companys common stock are
changed into or exchanged for a different number or kind of
stock or other securities as a result of a reorganization,
recapitalization, stock dividend, stock split, combination of
shares, reclassification, merger, consolidation or similar
event, the number of shares underlying outstanding options also
may be adjusted. The plans may be terminated, amended or
modified by the Board of Directors at any time.
The deferred compensation plans allow non-employee directors and
members of the Companys senior management to defer all or
part of their compensation until the earlier of retirement or
termination of employment. The deferred compensation is deemed
to be invested in one of several investment alternatives at the
option of the participant, including shares of U.S. Bancorp
common stock. Deferred compensation deemed to be invested in
U.S. Bancorp stock may be received at the time of distribution
at the election of the participant, in the form of shares of
U.S. Bancorp common stock. The 2,513,904 shares included in
the table assume that participants in the plans whose deferred
compensation had been deemed to be invested in U.S. Bancorp
common stock had elected to receive all of that deferred
compensation in shares of U.S. Bancorp common stock on
December 31, 2010. The U.S. Bank Executive Employee
Deferred Compensation Plan (2005 Statement) and the U.S. Bank
Outside Directors Deferred Compensation Plan (2005 Statement)
are the Companys only deferred compensation plans under
which compensation may currently be deferred.
Additional
Information
Additional information in response to this Item 12 can be
found in the Companys Proxy Statement under the heading
Security Ownership of Certain Beneficial Owners and
Management. That information is incorporated into this
report by reference.
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
Information in response to this Item 13 can be found in the
Companys Proxy Statement under the headings Director
Independence and Certain Relationships and Related
Transactions. That information is incorporated into this
report by reference.
16
|
|
Item 14.
|
Principal
Accounting Fees and Services
|
Information in response to this Item 14 can be found in the
Companys Proxy Statement under the headings Fees to
Independent Auditor and Administration of Engagement
of Independent Auditor. That information is incorporated
into this report by reference.
PART IV
|
|
Item 15.
|
Exhibits,
Financial Statement Schedules
|
List of documents filed as part of this report
|
|
|
|
|
Report of Management
|
|
|
|
Report of Independent Registered Public Accounting Firm on the
Consolidated Financial Statements
|
|
|
|
Report of Independent Registered Public Accounting Firm on
Internal Control Over Financial Reporting
|
|
|
|
U.S. Bancorp Consolidated Balance Sheet as of
December 31, 2010 and 2009
|
|
|
|
U.S. Bancorp Consolidated Statement of Income for each of
the three years in the period ended December 31, 2010
|
|
|
|
U.S. Bancorp Consolidated Statement of Shareholders
Equity for each of the three years in the period ended
December 31, 2010
|
|
|
|
U.S. Bancorp Consolidated Statement of Cash Flows for each
of the three years in the period ended December 31, 2010
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
U.S. Bancorp Consolidated Balance Sheet Five
Year Summary (Unaudited)
|
|
|
|
U.S. Bancorp Consolidated Statement of Income
Five Year Summary (Unaudited)
|
|
|
|
U.S. Bancorp Quarterly Consolidated Financial Data
(Unaudited)
|
|
|
|
U.S. Bancorp Consolidated Daily Average Balance Sheet and
Related Yields and Rates (Unaudited)
|
|
|
|
U.S. Bancorp Supplemental Financial Data (Unaudited)
|
|
|
2.
|
Financial
Statement Schedules
|
All financial statement schedules for the Company have been
included in the consolidated financial statements or the related
footnotes, or are either inapplicable or not required.
17
Shareholders may obtain a copy of any of the exhibits to this
report upon payment of a fee covering the Companys
reasonable expenses in furnishing the exhibits. You can request
exhibits by writing to Investor Relations, U.S. Bancorp,
800 Nicollet Mall, Minneapolis, Minnesota 55402.
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
(1)3
|
.1
|
|
Restated Certificate of Incorporation, as amended. Filed as
Exhibit 3.1 to
Form 10-Q
for the quarterly period ended June 30, 2010.
|
|
(1)3
|
.2
|
|
Amended and Restated Bylaws. Filed as Exhibit 3.2 to
Form 8-K
filed on January 20, 2010.
|
|
4
|
.1
|
|
[Pursuant to Item 601(b)(4)(iii)(A) of
Regulation S-K,
copies of instruments defining the rights of holders of
long-term debt are not filed. U.S. Bancorp agrees to furnish a
copy thereof to the SEC upon request.]
|
|
(1)(2)10
|
.1(a)
|
|
U.S. Bancorp 2001 Stock Incentive Plan. Filed as
Exhibit 10.1 to
Form 10-K
for the year ended December 31, 2001.
|
|
(1)(2)10
|
.1(b)
|
|
Amendment No. 1 to U.S. Bancorp 2001 Stock Incentive Plan.
Filed as Exhibit 10.2 to
Form 10-K
for the year ended December 31, 2002.
|
|
(1)(2)10
|
.2(a)
|
|
U.S. Bancorp 1998 Executive Stock Incentive Plan. Filed as
Exhibit 10.3 to
Form 10-K
for the year ended December 31, 2002.
|
|
(1)(2)10
|
.3(a)
|
|
Summary of U.S. Bancorp 1991 Executive Stock Incentive Plan.
Filed as Exhibit 10.4 to
Form 10-K
for the year ended December 31, 2002.
|
|
(1)(2)10
|
.4(a)
|
|
U.S. Bancorp 2001 Employee Stock Incentive Plan. Filed as
Exhibit 10.5 to
Form 10-K
for the year ended December 31, 2002.
|
|
(1)(2)10
|
.5(a)
|
|
Firstar Corporation 1999 Employee Stock Incentive Plan. Filed as
Exhibit 10.6 to
Form 10-K
for the year ended December 31, 2002.
|
|
(1)(2)10
|
.6(a)
|
|
Firstar Corporation 1998 Employee Stock Incentive Plan. Filed as
Exhibit 10.7 to
Form 10-K
for the year ended December 31, 2002.
|
|
(1)(2)10
|
.7(a)
|
|
U.S. Bancorp 2006 Executive Incentive Plan. Filed as
Exhibit 10.1 to
Form 8-K
filed on April 21, 2006.
|
|
(1)(2)10
|
.8(a)
|
|
U.S. Bancorp Executive Deferral Plan, as amended. Filed as
Exhibit 10.7 to
Form 10-K
for the year ended December 31, 1999.
|
|
(1)(2)10
|
.9(a)
|
|
Summary of Nonqualified Supplemental Executive Retirement Plan,
as amended, of the former U.S. Bancorp. Filed as
Exhibit 10.4 to
Form 10-K
for the year ended December 31, 2001.
|
|
(1)(2)10
|
.10(a)
|
|
Form of Director Indemnification Agreement entered into with
former directors of the former U.S. Bancorp. Filed as
Exhibit 10.15 to
Form 10-K
for the year ended December 31, 1997.
|
|
(1)(2)10
|
.11(a)
|
|
U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed as
Exhibit 10.16 to
Form 10-K
for the year ended December 31, 2002.
|
|
(1)(2)10
|
.11(b)
|
|
First, Second and Third Amendments of U.S. Bancorp Non-Qualified
Executive Retirement Plan. Filed as Exhibit 10.17 to
Form 10-K
for the year ended December 31, 2003.
|
|
(1)(2)10
|
.11(c)
|
|
Fourth Amendment of U.S. Bancorp Non-Qualified Executive
Retirement Plan. Filed as Exhibit 10.1 to
Form 8-K
filed on December 23, 2004.
|
|
(1)(2)10
|
.11(d)
|
|
Appendix B-10
to U.S. Bancorp Non-Qualified Executive Retirement Plan. Filed
as Exhibit 10.1 to
Form 10-Q
for the quarterly period ended March 31, 2005.
|
|
(1)(2)10
|
.11(e)
|
|
Fifth Amendment of U.S. Bancorp Non-Qualified Executive
Retirement Plan. Filed as Exhibit 10.2 to
Form 10-Q
for the quarterly period ended March 31, 2005.
|
|
(1)(2)10
|
.11(f)
|
|
Sixth Amendment of U.S. Bancorp Non-Qualified Executive
Retirement Plan. Filed as Exhibit 10.1 to
Form 8-K
filed on October 20, 2005.
|
|
(1)(2)10
|
.11(g)
|
|
Seventh Amendment of U.S. Bancorp Non-Qualified Executive
Retirement Plan. Filed as Exhibit 10.1(g) to
Form 8-K
filed on January 7, 2009.
|
|
(1)(2)10
|
.11(h)
|
|
Eighth Amendment of U.S. Bancorp Non-Qualified Executive
Retirement Plan. Filed as Exhibit 10.1(h) to
Form 8-K
filed on January 7, 2009.
|
18
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
(1)(2)10
|
.11(i)
|
|
Ninth Amendment of U.S. Bancorp Non-Qualified Executive
Retirement Plan. Filed as Exhibit 10.1(i) to
Form 8-K
filed on January 7, 2009.
|
|
(1)(2)10
|
.11(j)
|
|
Tenth Amendment of U.S. Bancorp Non-Qualified Executive
Retirement Plan. Filed as Exhibit 10.1(j) to
Form 8-K
filed on January 7, 2009.
|
|
(1)(2)10
|
.11(k)
|
|
Eleventh Amendment of U.S. Bancorp Non-Qualified Executive
Retirement Plan. Filed as Exhibit 10.11(k) to
Form 10-K
for the year ended December 31, 2009.
|
|
(2)10
|
.11(l)
|
|
Twelfth Amendment of U.S. Bancorp Non-Qualified Executive
Retirement Plan.
|
|
(1)(2)10
|
.12(a)
|
|
U.S. Bancorp Executive Employees Deferred Compensation Plan.
Filed as Exhibit 10.18 to
Form 10-K
for the year ended December 31, 2003.
|
|
(1)(2)10
|
.13(a)
|
|
U.S. Bancorp 2005 Executive Employees Deferred Compensation
Plan. Filed as Exhibit 10.2 to
Form 8-K
filed on December 21, 2005.
|
|
(1)(2)10
|
.13(b)
|
|
First Amendment of U.S. Bancorp 2005 Executive Employees
Deferred Compensation Plan effective as of January 31,
2009. Filed as Exhibit 10.2(b) to
Form 8-K
filed on January 7, 2009.
|
|
(2)10
|
.13(c)
|
|
Second Amendment of U.S. Bancorp 2005 Executive Employees
Deferred Compensation Plan effective as of January 1, 2010.
|
|
(1)(2)10
|
.14(a)
|
|
U.S. Bancorp Outside Directors Deferred Compensation Plan. Filed
as Exhibit 10.19 to
Form 10-K
for the year ended December 31, 2003.
|
|
(1)(2)10
|
.15(a)
|
|
U.S. Bancorp 2005 Outside Directors Deferred Compensation Plan.
Filed as Exhibit 10.1 to
Form 8-K
filed on December 21, 2005.
|
|
(1)(2)10
|
.15(b)
|
|
First Amendment of U.S. Bancorp 2005 Outside Directors Deferred
Compensation Plan effective as of January 31, 2009. Filed
as Exhibit 10.3(b) to
Form 8-K
filed on January 7, 2009.
|
|
(1)(2)10
|
.16(a)
|
|
Form of Executive Severance Agreement, effective
November 16, 2001, between U.S. Bancorp and certain
executive officers of U.S. Bancorp. Filed as Exhibit 10.12
to
Form 10-K
for the year ended December 31, 2001.
|
|
(1)(2)10
|
.16(b)
|
|
Form of Amendment to Executive Severance Agreements for IRC
Section 409A Compliance dated as of December 31, 2008.
Filed as Exhibit 10.6(b) to
Form 8-K
filed on January 7, 2009.
|
|
(1)(2)10
|
.17(a)
|
|
Form of Executive Officer Stock Option Agreement with cliff and
performance vesting under U.S. Bancorp 2001 Stock Incentive
Plan. Filed as Exhibit 10.1 to
Form 10-Q
for the quarterly period ended September 30, 2004.
|
|
(1)(2)10
|
.18(a)
|
|
Form of Executive Officer Stock Option Agreement with annual
vesting under U.S. Bancorp 2001 Stock Incentive Plan. Filed as
Exhibit 10.2 to
Form 10-Q
for the quarterly period ended September 30, 2004.
|
|
(1)(2)10
|
.19(a)
|
|
Form of 2006 Executive Officer Stock Option Agreement with
annual vesting under U.S. Bancorp 2001 Stock Incentive Plan.
Filed as Exhibit 10.1 to
Form 8-K
filed on January 17, 2006.
|
|
(1)(2)10
|
.20(a)
|
|
Form of Executive Officer Restricted Stock Award Agreement under
U.S. Bancorp 2001 Stock Incentive Plan. Filed as
Exhibit 10.3 to
Form 10-Q
for the quarterly period ended September 30, 2004.
|
|
(1)(2)10
|
.21(a)
|
|
Form of Director Stock Option Agreement under U.S. Bancorp 2001
Stock Incentive Plan. Filed as Exhibit 10.4 to
Form 10-Q
for the quarterly period ended September 30, 2004.
|
|
(1)(2)10
|
.22(a)
|
|
Form of Director Restricted Stock Unit Award Agreement under
U.S. Bancorp 2001 Stock Incentive Plan. Filed as
Exhibit 10.5 to
Form 10-Q
for the quarterly period ended September 30, 2004.
|
|
(1)(2)10
|
.22(b)
|
|
Form of Amendment to Director Restricted Stock Unit Award
Agreements under U.S. Bancorp 2001 Stock Incentive Plan dated as
of December 31, 2008. Filed as Exhibit 10.5(b) to
Form 8-K
filed on January 7, 2009.
|
|
(1)(2)10
|
.23(a)
|
|
Form of Executive Officer Restricted Stock Unit Award Agreement
under U.S. Bancorp 2001 Stock Incentive Plan. Filed as
Exhibit 10.6 to
Form 10-Q
for the quarterly period ended September 30, 2004.
|
|
(1)(2)10
|
.24(a)
|
|
Offer of Employment to Richard C. Hartnack. Filed as
Exhibit 10.3 to
Form 10-Q
for the quarterly period ended March 31, 2005.
|
19
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
(1)(2)10
|
.25(a)
|
|
Employment Agreement dated May 7, 2001, with Pamela A.
Joseph. Filed as Exhibit 10.37 to
Form 10-K
for the year ended December 31, 2007.
|
|
(1)(2)10
|
.25(b)
|
|
Amendment to Employment Agreement with Pamela A. Joseph dated as
of December 31, 2008. Filed as Exhibit 10.7(b) to
Form 8-K
filed on January 7, 2009.
|
|
(1)(2)10
|
.26(a)
|
|
U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan.
Filed as Exhibit 10.1 to
Form 8-K
filed on April 20, 2010.
|
|
(1)(2)10
|
.27(a)
|
|
Form of 2007 Non-Qualified Stock Option Agreement for Executive
Officers under U.S. Bancorp Amended and Restated 2007 Stock
Incentive Plan. Filed as Exhibit 10.2 to
Form 8-K
filed on April 18, 2007.
|
|
(1)(2)10
|
.28(a)
|
|
Form of Non-Qualified Stock Option Agreement for Executive
Officers under U.S. Bancorp Amended and Restated 2007 Stock
Incentive Plan to be used after December 31, 2008. Filed as
Exhibit 10.8(a) to
Form 8-K
filed on January 7, 2009.
|
|
(1)(2)10
|
.29(a)
|
|
Form of 2007 Restricted Stock Award Agreement for Executive
Officers under U.S. Bancorp Amended and Restated 2007 Stock
Incentive Plan. Filed as Exhibit 10.3 to
Form 8-K
filed on April 18, 2007.
|
|
(1)(2)10
|
.30(a)
|
|
Form of Restricted Stock Award Agreement for Executive Officers
under U.S. Bancorp Amended and Restated 2007 Stock Incentive
Plan to be used after December 31, 2008. Filed as
Exhibit 10.9(a) to
Form 8-K
filed on January 7, 2009.
|
|
(1)(2)10
|
.31(a)
|
|
Form of 2008 Restricted Stock Unit Award Agreement for Executive
Officers under U.S. Bancorp Amended and Restated 2007 Stock
Incentive Plan. Filed as Exhibit 10.1 to
Form 8-K
filed on January 17, 2008.
|
|
(1)(2)10
|
.32(a)
|
|
Form of Restricted Stock Unit Award Agreement for Executive
Officers under U.S. Bancorp Amended and Restated 2007 Stock
Incentive Plan to be used after December 31, 2008. Filed as
Exhibit 10.10(a) to
Form 8-K
filed on January 7, 2009.
|
|
(1)(2)10
|
.33(a)
|
|
Form of Performance Restricted Stock Unit Award Agreement for
Executive Officers under U.S. Bancorp Amended and Restated
2007 Stock Incentive Plan to be used after December 31,
2008. Filed as Exhibit 10.1 to
Form 8-K
filed on March 6, 2009.
|
|
(1)(2)10
|
.34(a)
|
|
Form of Performance Restricted Stock Unit Award Agreement for
Executive Officers (as approved February 14, 2011) under
U.S. Bancorp Amended and Restated 2007 Stock Incentive
Plan. Filed as Exhibit 10.1 to
Form 8-K
filed on February 16, 2011.
|
|
(1)(2)10
|
.35(a)
|
|
Form of 2010 Retention Performance Restricted Stock Unit Award
Agreement for Executive Officers under U.S. Bancorp Amended and
Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.1
to
Form 8-K
filed on February 18, 2010.
|
|
(1)(2)10
|
.36(a)
|
|
Form of 2007 Restricted Stock Unit Award Agreement for
Non-Employee Directors under U.S. Bancorp Amended and
Restated 2007 Stock Incentive Plan. Filed as Exhibit 10.1
to
Form 10-Q/A
filed for the quarterly period ended September 30, 2007.
|
|
(1)(2)10
|
.37(a)
|
|
Form of Restricted Stock Unit Award Agreement for Non-Employee
Directors under U.S. Bancorp Amended and Restated 2007 Stock
Incentive Plan to be used after December 31, 2008. Filed as
Exhibit 10.11(a) to
Form 8-K
filed on January 7, 2009.
|
|
12
|
|
|
Statement re: Computation of Ratio of Earnings to Fixed Charges.
|
|
13
|
|
|
2010 Annual Report, pages 18 through 141.
|
|
21
|
|
|
Subsidiaries of the Registrant.
|
|
23
|
|
|
Consent of Ernst & Young LLP.
|
|
24
|
|
|
Power of Attorney.
|
|
31
|
.1
|
|
Certification of Chief Executive Officer pursuant to
Rule 13a-14(a)
under the Securities Exchange Act of 1934.
|
|
31
|
.2
|
|
Certification of Chief Financial Officer pursuant to
Rule 13a-14(a)
under the Securities Exchange Act of 1934.
|
20
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
32
|
|
|
Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. section 1350 as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101
|
|
|
Financial statements from the Annual Report on
Form 10-K
of the Company for the year ended December 31, 2010,
formatted in Extensible Business Reporting Language:
(i) the Consolidated Balance Sheet, (ii) the
Consolidated Statement of Income, (iii) the Consolidated
Statement of Shareholders Equity, (iv) the
Consolidated Statement of Cash Flows and (v) the Notes to
Consolidated Financial Statements
|
|
|
|
(1) |
|
Exhibit has been previously filed with the Securities and
Exchange Commission and is incorporated herein as an exhibit by
reference to the prior filing. |
|
(2) |
|
Management contracts or compensatory plans or
arrangements. |
21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on February 28, 2011, on its
behalf by the undersigned, thereunto duly authorized.
U.S. BANCORP
Richard K. Davis
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on February 28,
2011, by the following persons on behalf of the registrant and
in the capacities indicated.
|
|
|
|
|
Signature and Title
|
|
|
|
|
|
|
/s/ Richard
K. Davis
Richard
K. Davis,
Chairman, President, and Chief Executive Officer
(principal executive officer)
|
|
|
|
|
|
/s/ Andrew
Cecere
Andrew
Cecere,
Vice Chairman and Chief Financial Officer
(principal financial officer)
|
|
|
|
|
|
/s/ Craig
E. Gifford
Craig
E. Gifford,
Executive Vice President and Controller
(principal accounting officer)
|
|
|
|
|
|
/s/ Douglas
M. Baker, Jr.*
Douglas
M. Baker, Jr., Director
|
|
|
|
|
|
/s/ Y.
Marc Belton*
Y.
Marc Belton, Director
|
|
|
|
|
|
/s/ Victoria
Buyniski Gluckman*
Victoria
Buyniski Gluckman, Director
|
|
|
|
|
|
/s/ Arthur
D. Collins*
Arthur
D. Collins, Jr., Director
|
|
|
|
|
|
/s/ Joel
W. Johnson*
Joel
W. Johnson, Director
|
|
|
|
|
|
/s/ Olivia
F. Kirtley*
Olivia
F. Kirtley, Director
|
|
|
22
|
|
|
|
|
Signature and Title
|
|
|
|
|
|
|
/s/ Jerry
W. Levin*
Jerry
W. Levin, Director
|
|
|
|
|
|
/s/ David
B. OMaley*
David
B. OMaley, Director
|
|
|
|
|
|
/s/ ODell
M. Owens M.D., M.P.H. *
ODell
M. Owens, M.D., M.P.H., Director
|
|
|
|
|
|
/s/ Richard
G. Reiten*
Richard
G. Reiten, Director
|
|
|
|
|
|
/s/ Craig
D. Schnuck*
Craig
D. Schnuck, Director
|
|
|
|
|
|
/s/ Patrick
T. Stokes*
Patrick
T. Stokes, Director
|
|
|
|
|
|
* |
|
Lee R. Mitau, by signing his name hereto, does hereby sign
this document on behalf of each of the above named directors of
the registrant pursuant to powers of attorney duly executed by
such persons. |
Dated: February 28, 2011
Lee R. Mitau
Attorney-In-Fact
Executive Vice President,
General Counsel and Corporate Secretary
23
exv10w11wl
Exhibit 10.11(l)
TWELFTH AMENDMENT
OF
U.S. BANK NON-QUALIFIED RETIREMENT PLAN
The U.S. Bank Non-Qualified Retirement Plan (the Plan) is amended as provided below.
This amendment is intended to clarify the Plan. The amendment below is not intended to make any
changes that would cause a violation of section 409A of the Internal Revenue Code or its
accompanying regulations. If a change in this amendment is determined to be a violation of section
409A, the amendment shall not be effective and shall be disregarded with respect to the rules
governing benefits under the Plan.
1. TERMINATION AND SEPARATION FROM SERVICE. Effective January 1, 2009, to the extent there is
ambiguity with respect to the payment of non-Grandfathered benefits under the Plan, if payment of
the benefits is subject to section 409A and is triggered upon a participants termination of
employment then the term termination and phrase termination of employment shall be interpreted
as being contingent upon a participants separation from service as defined under the Plan.
2. NEW CASH BALANCE PLAN. Effective January 1, 2010, contingent upon receipt of a favorable
determination letter from the Internal Revenue Service, the Employer adopted Appendix I to the U.S.
Bank Pension Plan and that Appendix I contains a cash balance plan formula as an alternative to the
accrual of benefits under the final average pay formula contained in the U.S. Bank Pension Plan.
In general, participants in the U.S. Bank Pension Plan were given an opportunity to elect whether
(i) to accrue future benefits under the new cash balance formula, or (ii) to continue to accrue
benefits under the final average pay formula. With respect to a participant who elected or became
covered under the new cash balance formula, the participants benefits under Article IV of the Plan
(the U.S. Bank Non-Qualified Retirement Plan) that accrue on and after that date the participant
became covered under the new cash balance formula shall be determined as an excess benefit using
the new cash balance benefit formula. With respect to a participant who elected or became covered
under the new cash balance formula, the participants Projected Pension Plan Benefit under
Appendices A of this Plan that accrues on and after that date the participant became covered under
the new cash balance formula shall be determined using the
new cash balance benefit formula (past accruals
are determined under the formula in effect at the time
accrued). The projected interest credits for such a participants benefits under Appendices A that
accrue on and after January 1, 2010 shall be determined by using an annual interest rate that is 3
percentage points greater than the rate at which Projected Compensation is deemed to increase.
Projected annual pay credits for such a participant shall be made
based on Projected Compensation under the
terms of the new cash balance formula
as they exist on the date as
of which the Projected Pension Plan
Benefit is determined.
3. DOMESTIC RELATIONS ORDER. The Benefits Administration Committee has determined that the Plan
should be amended to permit division of vested benefits under the Plan for the Participant named in
Appendix B-11 under a
court-approved domestic relations order that is also approved by the plan administrator.
Therefore, by this amendment, effective as of January 1, 2010, the Plan is amended to permit
division of vested benefits under the Plan for the Participant named in Appendix B-11 under a
court-approved domestic relations order that is also approved by the plan administrator.
4. SAVINGS CLAUSE. Save and except as expressly amended above, the Plan shall continue in full
force and effect.
exv10w13wc
Exhibit 10.13(c)
SECOND AMENDMENT OF
U.S. BANK EXECUTIVE EMPLOYEE DEFERRED COMPENSATION
PLAN (2005 Statement)
The U.S. Bank Executive Employee Deferred Compensation Plan (2005 Statement) (the Plan)
is amended in the following respects:
1. DEFERRALS. Effective January 1, 2010, a new Section 3.3 shall be added to the Plan that reads
as follows:
3.3 Suspension of Deferral. If a Participant obtains a hardship distribution from a
401(k) plan sponsored by the Company (or an entity under common control with the Company for
purposes of sections 414(b) and (c) of the Code), then as required under 26 C.F.R. §
1.401(k)-1(d)(3)(iv)(E)(2) and as permitted under 26 C.F.R. § 1.409A-3(j)(4)(viii), the
Participants contributions this Plan shall be suspended for the minimum period required under the
Code and accompanying regulations.
2. INTERNAL REVENUE CODE. Effective January 1, 2010, Section 10.9 shall be amended to add a new
sentence after the first sentence that reads in full as follows:
Each provision shall be interpreted and administered in accordance with section 409A of the Code
and guidance provided thereunder.
3. SAVINGS CLAUSE. Save and except as expressly amended above, the Plan shall continue in full
force and effect.
exv12
EXHIBIT 12
Computation of Ratio of Earnings to Fixed Charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31 (Dollars in Millions) |
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Net income attributable to U.S. Bancorp |
|
$ |
3,317 |
|
|
$ |
2,205 |
|
|
$ |
2,946 |
|
|
$ |
4,324 |
|
|
$ |
4,751 |
|
2. Applicable income taxes, including expense related to unrecognized tax positions |
|
|
935 |
|
|
|
395 |
|
|
|
1,087 |
|
|
|
1,883 |
|
|
|
2,112 |
|
|
|
|
3. Net income attributable to U.S. Bancorp before income taxes (1 + 2) |
|
$ |
4,252 |
|
|
$ |
2,600 |
|
|
$ |
4,033 |
|
|
$ |
6,207 |
|
|
$ |
6,863 |
|
|
|
|
4. Fixed charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a. Interest expense excluding interest on deposits* |
|
$ |
1,651 |
|
|
$ |
1,818 |
|
|
$ |
2,805 |
|
|
$ |
3,693 |
|
|
$ |
3,133 |
|
b. Portion of rents representative of interest and amortization of debt expense |
|
|
101 |
|
|
|
94 |
|
|
|
83 |
|
|
|
76 |
|
|
|
71 |
|
|
|
|
c. Fixed charges excluding interest on deposits (4a + 4b) |
|
|
1,752 |
|
|
|
1,912 |
|
|
|
2,888 |
|
|
|
3,769 |
|
|
|
3,204 |
|
d. Interest on deposits |
|
|
928 |
|
|
|
1,202 |
|
|
|
1,881 |
|
|
|
2,754 |
|
|
|
2,389 |
|
|
|
|
e. Fixed charges including interest on deposits (4c + 4d) |
|
$ |
2,680 |
|
|
$ |
3,114 |
|
|
$ |
4,769 |
|
|
$ |
6,523 |
|
|
$ |
5,593 |
|
|
|
|
5. Amortization of interest capitalized |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
6. Earnings excluding interest on deposits (3 + 4c + 5) |
|
|
6,004 |
|
|
|
4,512 |
|
|
|
6,921 |
|
|
|
9,976 |
|
|
|
10,067 |
|
7. Earnings including interest on deposits (3 + 4e + 5) |
|
|
6,932 |
|
|
|
5,714 |
|
|
|
8,802 |
|
|
|
12,730 |
|
|
|
12,456 |
|
8. Fixed charges excluding interest on deposits (4c) |
|
|
1,752 |
|
|
|
1,912 |
|
|
|
2,888 |
|
|
|
3,769 |
|
|
|
3,204 |
|
9. Fixed charges including interest on deposits (4e) |
|
|
2,680 |
|
|
|
3,114 |
|
|
|
4,769 |
|
|
|
6,523 |
|
|
|
5,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of Earnings to Fixed Charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10. Excluding interest on deposits (line 6/line 8) |
|
|
3.43 |
|
|
|
2.36 |
|
|
|
2.40 |
|
|
|
2.65 |
|
|
|
3.14 |
|
11. Including interest on deposits (line 7/line 9) |
|
|
2.59 |
|
|
|
1.83 |
|
|
|
1.85 |
|
|
|
1.95 |
|
|
|
2.23 |
|
|
|
|
|
|
|
* |
|
Excludes interest expense related to unrecognized tax positions |
exv13
Managements
Discussion and Analysis
TABLE OF CONTENTS
For the fiscal year ended December
31, 2010
OVERVIEW
The financial performance of U.S. Bancorp and its
subsidiaries (the Company) in 2010 reflected the
strength and quality of its business lines, prudent risk
management and recent investments. In 2010, the Company achieved
record total net revenue, increased its capital, experienced
lower credit costs, and grew both its balance sheet and
fee-based businesses. Though business and consumer customers
continue to be affected by the tepid economic conditions and
high unemployment levels in the United States, the
Companys comparative financial strength and enhanced
product offerings attracted a significant number of new customer
relationships in 2010, resulting in loan growth and significant
increases in deposits as the Company continues to benefit from a
flight-to-quality by customers. Additionally, in
2010 the Company invested opportunistically in businesses and
products that strengthened its presence and ability to serve
customers. Weakness in domestic real estate markets, both
residential and commercial, continued to affect the
Companys loan portfolios, though the Companys credit
costs have declined since late 2009.
Despite significant legislative and regulatory challenges, and
an economic environment which continues to adversely impact the
banking industry, the Company earned $3.3 billion in 2010,
an increase of 50.4 percent over 2009. Growth in total net
revenue of $1.5 billion (8.9 percent) was attributable
to an increase in net interest income, the result of higher
earning assets and expanded net interest margin. Noninterest
income grew
year-over-year
as increases in payments-related revenue and other fee-based
businesses were partially offset by expected decreases from
recent legislative actions and current economic conditions. The
Companys total net charge-offs and nonperforming assets
both peaked in the first quarter of 2010, and declined
throughout the remainder of the year. Additionally, the Company
continued its focus on effectively managing its cost structure
while making investments to increase revenue, improve efficiency
and enhance customer service, with an efficiency ratio (the
ratio of noninterest expense to taxable-equivalent net revenue,
excluding net securities gains and losses) in 2010 of
51.5 percent, one of the lowest in the industry.
The Companys capital position remained strong and grew
during 2010, with a Tier 1 (using Basel I definition)
common equity to risk-weighted assets ratio of 7.8 percent
and a Tier 1 capital ratio of 10.5 percent at
December 31, 2010. In addition, at December 31, 2010,
the Companys total risk-based capital ratio was
13.3 percent, and its tangible common equity to
risk-weighted assets ratio was 7.2 percent (refer to
Non-Regulatory Capital Ratios for further
information on the calculation of the Tier 1 common equity
to risk-weighted assets and tangible common equity to
risk-weighted assets ratios). On January 7, 2011, the
Company submitted its plan to the Federal Reserve System
requesting regulatory approval to increase its dividend, and
expects to receive feedback from the Federal Reserve System late
in the first quarter of 2011. Credit rating organizations rate
the Companys debt among the highest of its large domestic
banking peers. This comparative financial strength provides the
Company with favorable funding costs, and the ability to attract
new customers, leading to growth in loans and deposits.
In 2010, the Company grew its loan portfolio and significantly
increased deposits. Average loans and deposits increased
$7.2 billion (3.9 percent) and $16.9 billion
(10.1 percent), respectively, over 2009, including the
impact of a Federal Deposit Insurance Corporation
(FDIC) assisted transaction in the fourth quarter of
2009. Average loan growth reflected increases in residential
mortgages, retail loans and commercial real estate loans, offset
by a decline in commercial loans, the result of lower
utilization of available commitments.
The Companys provision for credit losses decreased
$1.2 billion (21.6 percent) in 2010, compared with
2009. Real estate markets continue to experience stress, and the
Company had 8 percent higher net charge-offs in 2010 than
in 2009. However, net charge-offs began to decline in early 2010
and the Companys net charge-offs in the fourth quarter of
2010 were 16 percent lower than the fourth quarter of 2009.
The Company recorded a provision in excess of net charge-offs of
$200 million in the first six months of 2010, but improving
credit trends and risk profile of the Companys loan
portfolio resulted in the Company recording a provision that was
less than net charge-offs by $25 million in the fourth
quarter of 2010.
In January, 2011, U.S. federal banking regulators
communicated to the Company the preliminary results of an
interagency examination of the Companys policies,
procedures, and internal controls related to residential
mortgage foreclosure practices. This examination was part of a
review by the regulators of the foreclosure practices of 14
large mortgage servicers. As a result of the review, the Company
expects the regulators will require the Company to address
certain aspects of its foreclosure processes, including
developing plans related to control procedures and monitoring of
loss mitigation and foreclosure activities, and taking certain
other remedial actions. Though the Company
18 U.S. BANCORP
Table
1 SELECTED
FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars and Shares
in Millions, Except Per Share Data)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Condensed Income Statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (taxable-equivalent basis) (a)
|
|
$
|
9,788
|
|
|
$
|
8,716
|
|
|
$
|
7,866
|
|
|
$
|
6,764
|
|
|
$
|
6,790
|
|
Noninterest income
|
|
|
8,438
|
|
|
|
8,403
|
|
|
|
7,789
|
|
|
|
7,281
|
|
|
|
6,938
|
|
Securities gains (losses), net
|
|
|
(78
|
)
|
|
|
(451
|
)
|
|
|
(978
|
)
|
|
|
15
|
|
|
|
14
|
|
|
|
|
|
|
|
Total net revenue
|
|
|
18,148
|
|
|
|
16,668
|
|
|
|
14,677
|
|
|
|
14,060
|
|
|
|
13,742
|
|
Noninterest expense
|
|
|
9,383
|
|
|
|
8,281
|
|
|
|
7,348
|
|
|
|
6,907
|
|
|
|
6,229
|
|
Provision for credit losses
|
|
|
4,356
|
|
|
|
5,557
|
|
|
|
3,096
|
|
|
|
792
|
|
|
|
544
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
4,409
|
|
|
|
2,830
|
|
|
|
4,233
|
|
|
|
6,361
|
|
|
|
6,969
|
|
Taxable-equivalent adjustment
|
|
|
209
|
|
|
|
198
|
|
|
|
134
|
|
|
|
75
|
|
|
|
49
|
|
Applicable income taxes
|
|
|
935
|
|
|
|
395
|
|
|
|
1,087
|
|
|
|
1,883
|
|
|
|
2,112
|
|
|
|
|
|
|
|
Net income
|
|
|
3,265
|
|
|
|
2,237
|
|
|
|
3,012
|
|
|
|
4,403
|
|
|
|
4,808
|
|
Net (income) loss attributable to noncontrolling interests
|
|
|
52
|
|
|
|
(32
|
)
|
|
|
(66
|
)
|
|
|
(79
|
)
|
|
|
(57
|
)
|
|
|
|
|
|
|
Net income attributable to U.S. Bancorp
|
|
$
|
3,317
|
|
|
$
|
2,205
|
|
|
$
|
2,946
|
|
|
$
|
4,324
|
|
|
$
|
4,751
|
|
|
|
|
|
|
|
Net income applicable to U.S. Bancorp common shareholders
|
|
$
|
3,332
|
|
|
$
|
1,803
|
|
|
$
|
2,819
|
|
|
$
|
4,258
|
|
|
$
|
4,696
|
|
|
|
|
|
|
|
Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
$
|
1.74
|
|
|
$
|
.97
|
|
|
$
|
1.62
|
|
|
$
|
2.45
|
|
|
$
|
2.64
|
|
Diluted earnings per share
|
|
$
|
1.73
|
|
|
$
|
.97
|
|
|
$
|
1.61
|
|
|
$
|
2.42
|
|
|
$
|
2.61
|
|
Dividends declared per share
|
|
$
|
.200
|
|
|
$
|
.200
|
|
|
$
|
1.700
|
|
|
$
|
1.625
|
|
|
$
|
1.390
|
|
Book value per share
|
|
$
|
14.36
|
|
|
$
|
12.79
|
|
|
$
|
10.47
|
|
|
$
|
11.60
|
|
|
$
|
11.44
|
|
Market value per share
|
|
$
|
26.97
|
|
|
$
|
22.51
|
|
|
$
|
25.01
|
|
|
$
|
31.74
|
|
|
$
|
36.19
|
|
Average common shares outstanding
|
|
|
1,912
|
|
|
|
1,851
|
|
|
|
1,742
|
|
|
|
1,735
|
|
|
|
1,778
|
|
Average diluted common shares outstanding
|
|
|
1,921
|
|
|
|
1,859
|
|
|
|
1,756
|
|
|
|
1,756
|
|
|
|
1,803
|
|
Financial Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
1.16
|
%
|
|
|
.82
|
%
|
|
|
1.21
|
%
|
|
|
1.93
|
%
|
|
|
2.23
|
%
|
Return on average common equity
|
|
|
12.7
|
|
|
|
8.2
|
|
|
|
13.9
|
|
|
|
21.3
|
|
|
|
23.5
|
|
Net interest margin (taxable-equivalent basis) (a)
|
|
|
3.88
|
|
|
|
3.67
|
|
|
|
3.66
|
|
|
|
3.47
|
|
|
|
3.65
|
|
Efficiency ratio (b)
|
|
|
51.5
|
|
|
|
48.4
|
|
|
|
46.9
|
|
|
|
49.2
|
|
|
|
45.4
|
|
Average Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
193,022
|
|
|
$
|
185,805
|
|
|
$
|
165,552
|
|
|
$
|
147,348
|
|
|
$
|
140,601
|
|
Loans held for sale
|
|
|
5,616
|
|
|
|
5,820
|
|
|
|
3,914
|
|
|
|
4,298
|
|
|
|
3,663
|
|
Investment securities
|
|
|
47,763
|
|
|
|
42,809
|
|
|
|
42,850
|
|
|
|
41,313
|
|
|
|
39,961
|
|
Earning assets
|
|
|
252,042
|
|
|
|
237,287
|
|
|
|
215,046
|
|
|
|
194,683
|
|
|
|
186,231
|
|
Assets
|
|
|
285,861
|
|
|
|
268,360
|
|
|
|
244,400
|
|
|
|
223,621
|
|
|
|
213,512
|
|
Noninterest-bearing deposits
|
|
|
40,162
|
|
|
|
37,856
|
|
|
|
28,739
|
|
|
|
27,364
|
|
|
|
28,755
|
|
Deposits
|
|
|
184,721
|
|
|
|
167,801
|
|
|
|
136,184
|
|
|
|
121,075
|
|
|
|
120,589
|
|
Short-term borrowings
|
|
|
33,719
|
|
|
|
29,149
|
|
|
|
38,237
|
|
|
|
28,925
|
|
|
|
24,422
|
|
Long-term debt
|
|
|
30,835
|
|
|
|
36,520
|
|
|
|
39,250
|
|
|
|
44,560
|
|
|
|
40,357
|
|
Total U.S. Bancorp shareholders equity
|
|
|
28,049
|
|
|
|
26,307
|
|
|
|
22,570
|
|
|
|
20,997
|
|
|
|
20,710
|
|
Period End Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
197,061
|
|
|
$
|
194,755
|
|
|
$
|
184,955
|
|
|
$
|
153,827
|
|
|
$
|
143,597
|
|
Allowance for credit losses
|
|
|
5,531
|
|
|
|
5,264
|
|
|
|
3,639
|
|
|
|
2,260
|
|
|
|
2,256
|
|
Investment securities
|
|
|
52,978
|
|
|
|
44,768
|
|
|
|
39,521
|
|
|
|
43,116
|
|
|
|
40,117
|
|
Assets
|
|
|
307,786
|
|
|
|
281,176
|
|
|
|
265,912
|
|
|
|
237,615
|
|
|
|
219,232
|
|
Deposits
|
|
|
204,252
|
|
|
|
183,242
|
|
|
|
159,350
|
|
|
|
131,445
|
|
|
|
124,882
|
|
Long-term debt
|
|
|
31,537
|
|
|
|
32,580
|
|
|
|
38,359
|
|
|
|
43,440
|
|
|
|
37,602
|
|
Total U.S. Bancorp shareholders equity
|
|
|
29,519
|
|
|
|
25,963
|
|
|
|
26,300
|
|
|
|
21,046
|
|
|
|
21,197
|
|
Capital ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital
|
|
|
10.5
|
%
|
|
|
9.6
|
%
|
|
|
10.6
|
%
|
|
|
8.3
|
%
|
|
|
8.8
|
%
|
Total risk-based capital
|
|
|
13.3
|
|
|
|
12.9
|
|
|
|
14.3
|
|
|
|
12.2
|
|
|
|
12.6
|
|
Leverage
|
|
|
9.1
|
|
|
|
8.5
|
|
|
|
9.8
|
|
|
|
7.9
|
|
|
|
8.2
|
|
Tier 1 common equity to risk-weighted assets (c)
|
|
|
7.8
|
|
|
|
6.8
|
|
|
|
5.1
|
|
|
|
5.6
|
|
|
|
6.0
|
|
Tangible common equity to tangible assets (c)
|
|
|
6.0
|
|
|
|
5.3
|
|
|
|
3.3
|
|
|
|
4.8
|
|
|
|
5.2
|
|
Tangible common equity to risk-weighted assets (c)
|
|
|
7.2
|
|
|
|
6.1
|
|
|
|
3.7
|
|
|
|
5.1
|
|
|
|
5.6
|
|
|
|
|
|
|
(a)
|
|
Presented
on a fully taxable-equivalent basis utilizing a tax rate of
35 percent. |
(b)
|
|
Computed
as noninterest expense divided by the sum of net interest income
on a taxable-equivalent basis and noninterest income excluding
net securities gains (losses). |
(c)
|
|
See
Non-Regulatory Capital Ratios on page 60. |
U.S. BANCORP 19
believes its policies, procedures and internal controls related
to foreclosure practices materially follow established
safeguards and legal requirements, the Company intends to comply
with the expected requirements of the regulators in all
respects. The Company does not believe those requirements will
materially affect its financial position, results of operations,
or ability to conduct normal business activities. In addition,
the Company expects monetary penalties may be assessed but does
not know the amount of any such penalties.
The Companys financial strength, business model, credit
culture and focus on efficiency have enabled it to deliver
consistently profitable financial performance while operating in
a very turbulent environment. Given the current economic
environment, the Company will continue to focus on managing
credit losses and operating costs, while also utilizing its
financial strength to grow market share and profitability.
Despite the expectation of significant impacts to the industry
from recently enacted legislation, the Company believes it is
well positioned for long-term growth in earnings per common
share and an industry-leading return on common equity. The
Company intends to achieve these financial objectives by
providing high-quality customer service, ensuring regulatory
compliance, continuing to carefully manage costs and, where
appropriate, strategically investing in businesses that
diversify and generate revenues, enhance the Companys
distribution network and expand its product offerings.
Earnings Summary
The Company reported net
income attributable to U.S. Bancorp of $3.3 billion in
2010, or $1.73 per diluted common share, compared with
$2.2 billion, or $.97 per diluted common share, in 2009.
Return on average assets and return on average common equity
were 1.16 percent and 12.7 percent, respectively, in
2010, compared with .82 percent and 8.2 percent,
respectively, in 2009. Diluted earnings per common share for
2010 included a non-recurring $.05 benefit related to an
exchange of newly issued perpetual preferred stock for
outstanding income trust securities (ITS exchange),
net of related debt extinguishment costs. Also impacting 2010
were $175 million of provision for credit losses in excess
of net charge-offs, net securities losses of $78 million,
and a $103 million gain ($41 million after tax)
resulting from the exchange of the Companys long-term
asset management business for an equity interest in Nuveen
Investments and cash consideration (Nuveen Gain).
The results for 2009 included $1.7 billion of provision for
credit losses in excess of net charge-offs, net securities
losses of $451 million, a $123 million FDIC special
assessment, a $92 million gain from a corporate real estate
transaction and a reduction to earnings per share from the
recognition of $154 million of unaccreted preferred stock
discount as a result of the redemption of preferred stock
previously issued to the U.S. Department of the Treasury.
Total net revenue, on a taxable-equivalent basis, for 2010 was
$1.5 billion (8.9 percent) higher than 2009,
reflecting a 12.3 percent increase in net interest income
and a 5.1 percent increase in total noninterest income. Net
interest income increased in 2010 as a result of an increase in
average earning assets and continued growth in low cost core
deposit funding. Noninterest income increased principally due to
higher payments-related and commercial products revenue and a
decrease in net securities losses, partially offset by lower
deposit service charges, trust and investment management fees
and mortgage banking revenue.
Total noninterest expense in 2010 increased $1.1 billion
(13.3 percent), compared with 2009, primarily due to the
impact of acquisitions, higher total compensation and employee
benefits expense and costs related to investments in affordable
housing and other tax-advantaged projects, partially offset by
lower FDIC deposit insurance expense due to the special
assessment in 2009.
Acquisitions
In 2009, the Company
acquired the banking operations of First Bank of Oak Park
Corporation (FBOP) in an FDIC assisted transaction,
and in 2008 the Company acquired the banking operations of
Downey Savings and Loan Association, F.A. and PFF Bank and Trust
(Downey and PFF, respectively) in FDIC
assisted transactions. Through these acquisitions, the Company
increased its deposit base and branch franchise. In total, the
Company acquired approximately $35 billion of assets in
these acquisitions, most of which are covered under loss sharing
agreements with the FDIC (covered assets). Under the
terms of the loss sharing agreements, the FDIC will reimburse
the Company for most of the losses on the covered assets.
In 2010, the Company acquired the securitization trust
administration business of Bank of America, N.A. This
transaction included the acquisition of $1.1 trillion of
assets under administration and provided the Company with
approximately $8 billion of deposits as of
December 31, 2010.
In January 2011, the Company acquired the banking operations of
First Community Bank of New Mexico (FCB) from the
FDIC. The FCB transaction did not include a loss sharing
agreement. The Company acquired 38 branch locations and
approximately $2.1 billion in assets, assumed approximately
$1.8 billion in liabilities, and received approximately
$412 million in cash from the FDIC.
20 U.S. BANCORP
Table
2 ANALYSIS
OF NET INTEREST INCOME (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
(Dollars in Millions)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
v 2009
|
|
|
v 2008
|
|
Components of Net Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income on earning assets (taxable-equivalent basis)
|
|
$
|
12,375
|
|
|
$
|
11,748
|
|
|
$
|
12,630
|
|
|
$
|
627
|
|
|
$
|
(882
|
)
|
Expense on interest-bearing liabilities (taxable-equivalent
basis)
|
|
|
2,587
|
|
|
|
3,032
|
|
|
|
4,764
|
|
|
|
(445
|
)
|
|
|
(1,732
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (taxable-equivalent basis)
|
|
$
|
9,788
|
|
|
$
|
8,716
|
|
|
$
|
7,866
|
|
|
$
|
1,072
|
|
|
$
|
850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income, as reported
|
|
$
|
9,579
|
|
|
$
|
8,518
|
|
|
$
|
7,732
|
|
|
$
|
1,061
|
|
|
$
|
786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yields and Rates Paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earning assets yield (taxable-equivalent basis)
|
|
|
4.91
|
%
|
|
|
4.95
|
%
|
|
|
5.87
|
%
|
|
|
(.04
|
)%
|
|
|
(.92
|
)%
|
Rate paid on interest-bearing liabilities (taxable-equivalent
basis)
|
|
|
1.24
|
|
|
|
1.55
|
|
|
|
2.58
|
|
|
|
(.31
|
)
|
|
|
(1.03
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross interest margin (taxable-equivalent basis)
|
|
|
3.67
|
%
|
|
|
3.40
|
%
|
|
|
3.29
|
%
|
|
|
.27
|
%
|
|
|
.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (taxable-equivalent basis)
|
|
|
3.88
|
%
|
|
|
3.67
|
%
|
|
|
3.66
|
%
|
|
|
.21
|
%
|
|
|
.01
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities
|
|
$
|
47,763
|
|
|
$
|
42,809
|
|
|
$
|
42,850
|
|
|
$
|
4,954
|
|
|
$
|
(41
|
)
|
Loans
|
|
|
193,022
|
|
|
|
185,805
|
|
|
|
165,552
|
|
|
|
7,217
|
|
|
|
20,253
|
|
Earning assets
|
|
|
252,042
|
|
|
|
237,287
|
|
|
|
215,046
|
|
|
|
14,755
|
|
|
|
22,241
|
|
Interest-bearing liabilities
|
|
|
209,113
|
|
|
|
195,614
|
|
|
|
184,932
|
|
|
|
13,499
|
|
|
|
10,682
|
|
Net free funds (b)
|
|
|
42,929
|
|
|
|
41,673
|
|
|
|
30,114
|
|
|
|
1,256
|
|
|
|
11,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Interest
and rates are presented on a fully taxable-equivalent basis
utilizing a federal tax rate of 35 percent. |
(b)
|
|
Represents
noninterest-bearing deposits, other noninterest-bearing
liabilities and equity, allowance for loan losses and unrealized
gain (loss) on
available-for-sale
securities less non-earning assets. |
STATEMENT OF INCOME ANALYSIS
Net Interest
Income Net interest
income, on a taxable-equivalent basis, was $9.8 billion in
2010, compared with $8.7 billion in 2009 and
$7.9 billion in 2008. The $1.1 billion
(12.3 percent) increase in net interest income in 2010,
compared with 2009, was primarily the result of continued growth
in lower cost core deposit funding and increases in average
earning assets. Average earning assets were $14.8 billion
(6.2 percent) higher in 2010, compared with 2009, driven by
increases in average loans and investment securities. Average
deposits increased $16.9 billion (10.1 percent) in 2010,
compared with 2009. The net interest margin in 2010 was
3.88 percent, compared with 3.67 percent in 2009 and
3.66 percent in 2008. The increase in net interest margin
was principally due to the impact of favorable funding rates,
the result of the increase in deposits and improved credit
spreads. Refer to the Interest Rate Risk Management
section for further information on the sensitivity of the
Companys net interest income to changes in interest rates.
Average total loans were $193.0 billion in 2010, compared
with $185.8 billion in 2009. The $7.2 billion
(3.9 percent) increase was driven by growth in residential
mortgages, retail loans, commercial real estate loans and
acquisition-related
covered loans, partially offset by a $5.8 billion
(11.0 percent) decline in commercial loans, which was
principally the result of lower utilization of available
commitments by customers. Residential mortgage growth of
$3.2 billion (13.2 percent) reflected increased
origination and refinancing activity throughout most of 2009 and
the second half of 2010 as a result of market interest rate
declines. Average retail loans increased $2.1 billion
(3.3 percent)
year-over-year,
driven by increases in credit card and installment (primarily
automobile) loans. Average credit card balances for 2010 were
$1.5 billion (9.8 percent) higher than 2009,
reflecting growth in existing portfolios and portfolio purchases
during 2009 and the second quarter of 2010. Growth in average
commercial real estate balances of $518 million
(1.5 percent) reflected the impact of new business
activity, partially offset by customer debt deleveraging.
Average covered loans were $19.9 billion in 2010, compared
with $12.7 billion in 2009, reflecting the FBOP acquisition
in the fourth quarter of 2009.
Average investment securities in 2010 were $5.0 billion
(11.6 percent) higher than 2009, primarily due to purchases
of U.S. government agency-backed securities and the
consolidation of $.6 billion of
held-to-maturity
securities held in a variable interest entity (VIE)
due to the adoption of new authoritative accounting guidance
effective January 1, 2010.
Average total deposits for 2010 were $16.9 billion
(10.1 percent) higher than 2009. Of this increase,
U.S. BANCORP 21
Table
3 NET
INTEREST INCOME CHANGES DUE TO RATE AND
VOLUME (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 v 2009
|
|
|
2009 v 2008
|
|
(Dollars in Millions)
|
|
Volume
|
|
|
Yield/Rate
|
|
|
Total
|
|
|
Volume
|
|
|
Yield/Rate
|
|
|
Total
|
|
Increase (Decrease) in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities
|
|
$
|
205
|
|
|
$
|
(212
|
)
|
|
$
|
(7
|
)
|
|
$
|
(2
|
)
|
|
$
|
(388
|
)
|
|
$
|
(390
|
)
|
Loans held for sale
|
|
|
(10
|
)
|
|
|
(21
|
)
|
|
|
(31
|
)
|
|
|
111
|
|
|
|
(61
|
)
|
|
|
50
|
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
|
|
(228
|
)
|
|
|
131
|
|
|
|
(97
|
)
|
|
|
(74
|
)
|
|
|
(554
|
)
|
|
|
(628
|
)
|
Commercial real estate
|
|
|
22
|
|
|
|
55
|
|
|
|
77
|
|
|
|
150
|
|
|
|
(468
|
)
|
|
|
(318
|
)
|
Residential mortgage
|
|
|
182
|
|
|
|
(126
|
)
|
|
|
56
|
|
|
|
75
|
|
|
|
(114
|
)
|
|
|
(39
|
)
|
Retail loans
|
|
|
137
|
|
|
|
10
|
|
|
|
147
|
|
|
|
480
|
|
|
|
(489
|
)
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, excluding covered loans
|
|
|
113
|
|
|
|
70
|
|
|
|
183
|
|
|
|
631
|
|
|
|
(1,625
|
)
|
|
|
(994
|
)
|
Covered loans
|
|
|
327
|
|
|
|
80
|
|
|
|
407
|
|
|
|
534
|
|
|
|
(17
|
)
|
|
|
517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
|
440
|
|
|
|
150
|
|
|
|
590
|
|
|
|
1,165
|
|
|
|
(1,642
|
)
|
|
|
(477
|
)
|
Other earning assets
|
|
|
89
|
|
|
|
(14
|
)
|
|
|
75
|
|
|
|
7
|
|
|
|
(72
|
)
|
|
|
(65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total earning assets
|
|
|
724
|
|
|
|
(97
|
)
|
|
|
627
|
|
|
|
1,281
|
|
|
|
(2,163
|
)
|
|
|
(882
|
)
|
Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest checking
|
|
|
7
|
|
|
|
(8
|
)
|
|
|
(1
|
)
|
|
|
46
|
|
|
|
(219
|
)
|
|
|
(173
|
)
|
Money market accounts
|
|
|
36
|
|
|
|
(49
|
)
|
|
|
(13
|
)
|
|
|
69
|
|
|
|
(254
|
)
|
|
|
(185
|
)
|
Savings accounts
|
|
|
42
|
|
|
|
8
|
|
|
|
50
|
|
|
|
24
|
|
|
|
27
|
|
|
|
51
|
|
Time certificates of deposit less than $100,000
|
|
|
(32
|
)
|
|
|
(126
|
)
|
|
|
(158
|
)
|
|
|
149
|
|
|
|
(160
|
)
|
|
|
(11
|
)
|
Time deposits greater than $100,000
|
|
|
(46
|
)
|
|
|
(106
|
)
|
|
|
(152
|
)
|
|
|
(5
|
)
|
|
|
(356
|
)
|
|
|
(361
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing deposits
|
|
|
7
|
|
|
|
(281
|
)
|
|
|
(274
|
)
|
|
|
283
|
|
|
|
(962
|
)
|
|
|
(679
|
)
|
Short-term borrowings
|
|
|
86
|
|
|
|
(81
|
)
|
|
|
5
|
|
|
|
(272
|
)
|
|
|
(321
|
)
|
|
|
(593
|
)
|
Long-term debt
|
|
|
(199
|
)
|
|
|
23
|
|
|
|
(176
|
)
|
|
|
(121
|
)
|
|
|
(339
|
)
|
|
|
(460
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities
|
|
|
(106
|
)
|
|
|
(339
|
)
|
|
|
(445
|
)
|
|
|
(110
|
)
|
|
|
(1,622
|
)
|
|
|
(1,732
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in net interest income
|
|
$
|
830
|
|
|
$
|
242
|
|
|
$
|
1,072
|
|
|
$
|
1,391
|
|
|
$
|
(541
|
)
|
|
$
|
850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
This
table shows the components of the change in net interest income
by volume and rate on a taxable-equivalent basis utilizing a tax
rate of 35 percent. This table does not take into account
the level of noninterest-bearing funding, nor does it fully
reflect changes in the mix of assets and liabilities. The change
in interest not solely due to changes in volume or rates has
been allocated on a pro-rata basis to volume and
yield/rate. |
$12.0 billion related to deposits assumed in the FBOP
acquisition. Excluding deposits from acquisitions, 2010 average
total deposits increased $6.8 billion (4.1 percent) over
2009. Average noninterest-bearing deposits in 2010 were
$2.3 billion (6.1 percent) higher than 2009, primarily
due to growth in Consumer and Small Business Banking and
Wholesale Banking and Commercial Real Estate balances. Average
total savings deposits were $19.0 billion
(23.2 percent) higher in 2010, compared with 2009, due to
an increase in savings account balances of $7.8 billion
(59.5 percent) resulting from continued strong
participation in a product offered by Consumer and Small
Business Banking, higher money market savings balances of
$7.9 billion (24.8 percent) from higher corporate
trust and Consumer and Small Business Banking balances, and
higher interest checking account balances of $3.3 billion
(9.0 percent) resulting from increases in Consumer and
Small Business Banking and institutional trust accounts. Average
time certificates of deposit less than $100,000 were lower in
2010 by $1.3 billion (7.0 percent), compared with
2009, reflecting the net impact of balances assumed in the FBOP
acquisition, more than offset by expected run-off of balances
assumed in the PFF and Downey acquisitions and lower renewals
given the current interest rate environment. Average time
deposits greater than $100,000 were $3.1 billion
(10.3 percent) lower in 2010, compared with 2009,
reflecting the net impact of acquisitions, more than offset by a
decrease in required overall wholesale funding. Time deposits
greater than $100,000 are managed as an alternative to other
funding sources, such as wholesale borrowing, based largely on
relative pricing.
The $.8 billion (10.8 percent) increase in net
interest income in 2009, compared with 2008, was attributable to
growth in average earning assets and lower cost core deposit
22 U.S. BANCORP
funding. The $22.2 billion (10.3 percent) increase in
average earning assets in 2009 over 2008 was principally a
result of growth in total average loans, including originated
and acquired loans, and loans held for sale.
Average total loans increased $20.3 billion
(12.2 percent) in 2009, compared with 2008, driven by new
loan originations, acquisitions and portfolio purchases. Average
covered loans increased $11.4 billion, due to the timing of
the Downey, PFF and FBOP acquisitions. Average retail loans
increased $6.5 billion (11.6 percent), driven by
increases in credit card, home equity and student loans,
reflecting both growth in existing portfolios and portfolio
purchases during 2009.
Average investment securities in 2009 were essentially unchanged
from 2008, as security purchases offset maturities and sales. In
2009, the composition of the Companys investment portfolio
shifted to a larger proportion in U.S. Treasury, agency and
agency mortgage-backed securities, compared with 2008.
Average noninterest-bearing deposits in 2009 were
$9.1 billion (31.7 percent) higher than 2008. The
increase reflected higher business demand deposit balances,
partially offset by lower trust demand deposits. Average total
savings products increased $18.4 billion
(29.0 percent) in 2009, compared with 2008, principally as
a result of a $7.2 billion increase in savings accounts
from higher Consumer and Small Business Banking balances, a
$5.7 billion (18.4 percent) increase in interest
checking balances from higher government and consumer banking
customer balances and acquisitions, and a $5.5 billion
(20.9 percent) increase in money market savings balances
from higher broker-dealer, corporate trust and institutional
trust customer balances and acquisitions. Average time
certificates of deposit less than $100,000 increased
$4.3 billion (31.6 percent) primarily due to
acquisitions. Average time deposits greater than $100,000
decreased $.2 billion (.7 percent) in 2009, compared
with 2008.
Provision for
Credit Losses The
provision for credit losses reflects changes in the credit
quality of the entire portfolio of loans, and is maintained at a
level considered appropriate by management for probable and
estimable incurred losses, based on factors discussed in the
Analysis and Determination of Allowance for Credit
Losses section.
In 2010, the provision for credit losses was $4.4 billion,
compared with $5.6 billion and $3.1 billion in 2009
and 2008, respectively. The provision for credit losses exceeded
net charge-offs by $175 million in 2010, $1.7 billion
in 2009 and $1.3 billion in 2008. The $1.2 billion
decrease in provision for credit losses in 2010, compared with
2009, reflected improving credit trends and the underlying risk
profile of the loan portfolio as economic conditions continued
to stabilize. Accruing loans ninety days or more past due
decreased by $431 million (excluding covered loans) from
December 31, 2009 to December 31, 2010, reflecting a
moderation in the level of stress in economic conditions during
2010. Delinquencies in most major loan categories began to
decrease in the third quarter of 2010. Nonperforming assets
decreased $553 million (excluding covered assets) from
December 31, 2009 to December 31, 2010, principally in
the construction and land development portfolios, as the Company
continued to resolve and reduce exposure to these assets.
However, net charge-offs increased $313 million
(8.1 percent) over 2009, as borrowers still impacted by
weak economic conditions and real estate markets defaulted on
loans.
The $2.5 billion increase in the provision for credit
losses in 2009, compared with 2008 and the increase in the
allowance for credit losses from December 31, 2008 to
December 31, 2009 reflected deterioration in economic
conditions during most of 2009 and the corresponding impact on
the commercial, commercial real estate and consumer loan
portfolios. It also reflected stress in the residential real
estate markets. Nonperforming assets increased $1.9 billion
(excluding covered assets) from December 31, 2008 to
December 31, 2009. The increase was driven primarily by
stress in residential home construction and related industries,
deterioration in the residential mortgage portfolio, as well as
an increase in foreclosed properties and the impact of the
economic slowdown on commercial and consumer customers. Net
charge-offs increased $2.1 billion in 2009, compared with
2008, primarily due to economic factors affecting the
residential housing markets, including homebuilding and related
industries, commercial real estate properties, and credit card
and other consumer and commercial loans, as the economy weakened
and unemployment increased during the period.
Refer to Corporate Risk Profile for further
information on the provision for credit losses, net charge-offs,
nonperforming assets and other factors considered by the Company
in assessing the credit quality of the loan portfolio and
establishing the allowance for credit losses.
Noninterest
Income Noninterest
income in 2010 was $8.4 billion, compared with
$8.0 billion in 2009 and $6.8 billion in 2008. The
$408 million (5.1 percent) increase in 2010 over 2009,
was due to higher payments-related revenues of 6.3 percent,
principally due to increased
U.S. BANCORP 23
Table
4 NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
(Dollars in Millions)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
v 2009
|
|
|
v 2008
|
|
Credit and debit card revenue
|
|
$
|
1,091
|
|
|
$
|
1,055
|
|
|
$
|
1,039
|
|
|
|
3.4
|
%
|
|
|
1.5
|
%
|
Corporate payment products revenue
|
|
|
710
|
|
|
|
669
|
|
|
|
671
|
|
|
|
6.1
|
|
|
|
(.3
|
)
|
Merchant processing services
|
|
|
1,253
|
|
|
|
1,148
|
|
|
|
1,151
|
|
|
|
9.1
|
|
|
|
(.3
|
)
|
ATM processing services
|
|
|
423
|
|
|
|
410
|
|
|
|
366
|
|
|
|
3.2
|
|
|
|
12.0
|
|
Trust and investment management fees
|
|
|
1,080
|
|
|
|
1,168
|
|
|
|
1,314
|
|
|
|
(7.5
|
)
|
|
|
(11.1
|
)
|
Deposit service charges
|
|
|
710
|
|
|
|
970
|
|
|
|
1,081
|
|
|
|
(26.8
|
)
|
|
|
(10.3
|
)
|
Treasury management fees
|
|
|
555
|
|
|
|
552
|
|
|
|
517
|
|
|
|
.5
|
|
|
|
6.8
|
|
Commercial products revenue
|
|
|
771
|
|
|
|
615
|
|
|
|
492
|
|
|
|
25.4
|
|
|
|
25.0
|
|
Mortgage banking revenue
|
|
|
1,003
|
|
|
|
1,035
|
|
|
|
270
|
|
|
|
(3.1
|
)
|
|
|
|
*
|
Investment products fees and commissions
|
|
|
111
|
|
|
|
109
|
|
|
|
147
|
|
|
|
1.8
|
|
|
|
(25.9
|
)
|
Securities gains (losses), net
|
|
|
(78
|
)
|
|
|
(451
|
)
|
|
|
(978
|
)
|
|
|
82.7
|
|
|
|
53.9
|
|
Other
|
|
|
731
|
|
|
|
672
|
|
|
|
741
|
|
|
|
8.8
|
|
|
|
(9.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest income
|
|
$
|
8,360
|
|
|
$
|
7,952
|
|
|
$
|
6,811
|
|
|
|
5.1
|
%
|
|
|
16.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
transaction volumes and business expansion; an increase in
commercial products revenue of 25.4 percent, attributable
to higher standby letters of credit fees, commercial loan and
syndication fees and other capital markets revenue; a decrease
in net securities losses of 82.7 percent, primarily due to
lower impairments in the current year; and an increase in other
income. The increase in other income of 8.8 percent,
reflected the Nuveen Gain, higher 2010 gains related to the
Companys investment in Visa Inc. and higher retail lease
residual valuation income, partially offset by the
$92 million gain on a corporate real estate transaction in
2009, a payments-related contract termination gain that occurred
in 2009 and lower customer derivative revenue. Mortgage banking
revenue decreased 3.1 percent, principally due to lower
origination and sales revenue and an unfavorable net change in
the valuation of mortgage servicing rights (MSRs)
and related economic hedging activities, partially offset by
higher servicing income. Deposit service charges decreased
26.8 percent as a result of Company-initiated and
regulatory revisions to overdraft fee policies, partially offset
by core account growth. Trust and investment management fees
declined 7.5 percent because low interest rates negatively
impacted money market investment fees and money market fund
balances declined as a result of customers migrating balances
from money market funds to deposits.
The $1.2 billion (16.8 percent) increase in
noninterest income in 2009 over 2008 was principally due to a
$765 million increase in mortgage banking revenue, the
result of strong mortgage loan production, as the Company gained
market share and low interest rates drove refinancing, and an
increase in the valuation of MSRs net of related economic
hedging instruments. Other increases in noninterest income
included higher ATM processing services of 12.0 percent,
related to growth in transaction volumes and business expansion,
higher treasury management fees of 6.8 percent, resulting
from increased new business activity and pricing, and a
25.0 percent increase in commercial products revenue due to
higher letters of credit, capital markets and other commercial
loan fees. Net securities losses in 2009 were 53.9 percent
lower than 2008. Other income decreased 9.3 percent due to
higher gains in 2008 related to the Companys ownership
position in Visa Inc., partially offset by the gain from a
corporate real estate transaction and the payments-related
contract termination gain. Deposit service charges decreased
10.3 percent primarily due to a decrease in the number of
transaction-related fees, which more than offset account growth.
Trust and investment management fees declined 11.1 percent,
reflecting lower assets under management account volume and the
impact of low interest rates on money market investment fees.
Investment product fees and commissions declined
25.9 percent due to lower sales levels in 2009, compared
with 2008.
The Company expects recently enacted legislation will have a
negative impact on noninterest income, principally related to
debit interchange fee revenue, in future years.
Noninterest
Expense Noninterest
expense in 2010 was $9.4 billion, compared with
$8.3 billion in 2009 and $7.3 billion in 2008. The
Companys efficiency ratio was 51.5 percent in 2010,
compared with 48.4 percent in 2009. The $1.1 billion
(13.3 percent) increase in noninterest expense in 2010 over
2009 was principally due to acquisitions, increased total
compensation and employee benefits expense and higher costs
related to investments in affordable housing and other
tax-advantaged projects. Total
24 U.S. BANCORP
Table
5 NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
(Dollars in Millions)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
v 2009
|
|
|
v 2008
|
|
Compensation
|
|
$
|
3,779
|
|
|
$
|
3,135
|
|
|
$
|
3,039
|
|
|
|
20.5
|
%
|
|
|
3.2
|
%
|
Employee benefits
|
|
|
694
|
|
|
|
574
|
|
|
|
515
|
|
|
|
20.9
|
|
|
|
11.5
|
|
Net occupancy and equipment
|
|
|
919
|
|
|
|
836
|
|
|
|
781
|
|
|
|
9.9
|
|
|
|
7.0
|
|
Professional services
|
|
|
306
|
|
|
|
255
|
|
|
|
240
|
|
|
|
20.0
|
|
|
|
6.3
|
|
Marketing and business development
|
|
|
360
|
|
|
|
378
|
|
|
|
310
|
|
|
|
(4.8
|
)
|
|
|
21.9
|
|
Technology and communications
|
|
|
744
|
|
|
|
673
|
|
|
|
598
|
|
|
|
10.5
|
|
|
|
12.5
|
|
Postage, printing and supplies
|
|
|
301
|
|
|
|
288
|
|
|
|
294
|
|
|
|
4.5
|
|
|
|
(2.0
|
)
|
Other intangibles
|
|
|
367
|
|
|
|
387
|
|
|
|
355
|
|
|
|
(5.2
|
)
|
|
|
9.0
|
|
Other
|
|
|
1,913
|
|
|
|
1,755
|
|
|
|
1,216
|
|
|
|
9.0
|
|
|
|
44.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense
|
|
$
|
9,383
|
|
|
$
|
8,281
|
|
|
$
|
7,348
|
|
|
|
13.3
|
%
|
|
|
12.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (a)
|
|
|
51.5
|
%
|
|
|
48.4
|
%
|
|
|
46.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Computed
as noninterest expense divided by the sum of net interest income
on a taxable-equivalent basis and noninterest income excluding
securities gains (losses), net. |
compensation and employee benefits expense increased
20.6 percent, reflecting acquisitions, branch expansion and
other initiatives, the elimination of a five percent cost
reduction program that was in effect during 2009, higher
incentive compensation costs related to the Companys
improved financial results, merit increases, and increased
pension costs associated with previous declines in the value of
pension assets. Net occupancy and equipment expense and
professional services expense increased 9.9 percent and
20.0 percent, respectively, principally due to acquisitions
and other business initiatives. Technology and communications
expense increased 10.5 percent as a result of business
initiatives and volume increases across various business lines.
Postage, printing and supplies expense increased
4.5 percent, principally due to payments-related business
initiatives. Other expense increased 9.0 percent,
reflecting higher costs related to investments in affordable
housing and other tax-advantaged projects, which reduce the
Companys income tax expense, and higher other real estate
owned (OREO) costs, partially offset by the
$123 million FDIC special assessment in 2009. Marketing and
business development expense decreased 4.8 percent, largely
due to payments-related initiatives during 2009. Other
intangibles expense decreased 5.2 percent due to the
declining level or completion of scheduled amortization of
certain intangibles.
The $933 million (12.7 percent) increase in
noninterest expense in 2009, compared with 2008, was principally
due to the impact of acquisitions, higher ongoing FDIC deposit
insurance expense and the $123 million special assessment
in 2009, costs related to affordable housing and other
tax-advantaged investments, and marketing and business
development expense. Compensation expense increased
3.2 percent primarily due to acquisitions, partially offset
by reductions from cost containment efforts. Employee benefits
expense increased 11.5 percent primarily due to increased
pension costs associated with previous declines in the value of
pension assets. Net occupancy and equipment expense, and
professional services expense increased 7.0 percent and
6.3 percent, respectively, primarily due to acquisitions,
as well as branch-based and other business expansion
initiatives. Marketing and business development expense
increased 21.9 percent, principally due to costs related to
the introduction of new credit card products and advertising
related to the Companys national branding strategy, while
technology and business communications expense increased
12.5 percent, primarily due to business expansion
initiatives. Other intangibles expense increased
9.0 percent due to acquisitions. Other expense increased
44.3 percent due to higher FDIC deposit insurance expense,
including the $123 million special assessment in 2009.
Other expense also reflected increased costs related to
investments in affordable housing and other tax-advantaged
projects, higher merchant processing expenses, growth in
mortgage servicing expenses and costs associated with OREO.
The Company expects recently enacted legislation will increase
deposit insurance expense in future years.
Pension Plans
Because of the long-term
nature of pension plans, the related accounting is complex and
can be impacted by several factors, including investment funding
policies, accounting methods, and actuarial assumptions.
The Companys pension accounting reflects the long-term
nature of the benefit obligations and the investment horizon of
plan assets. Amounts recorded in the financial statements
reflect actuarial assumptions about participant benefits and
plan asset returns. Changes in actuarial assumptions, and
differences in actual plan experience compared with actuarial
assumptions, are deferred and recognized in expense in future
periods. Differences related to participant benefits are
U.S. BANCORP 25
Table
6 LOAN
PORTFOLIO DISTRIBUTION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
At December 31
(Dollars in Millions)
|
|
Amount
|
|
|
of Total
|
|
|
Amount
|
|
|
of Total
|
|
|
Amount
|
|
|
of Total
|
|
|
Amount
|
|
|
of Total
|
|
|
Amount
|
|
|
of Total
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
42,272
|
|
|
|
21.5
|
%
|
|
$
|
42,255
|
|
|
|
21.7
|
%
|
|
$
|
49,759
|
|
|
|
26.9
|
%
|
|
$
|
44,832
|
|
|
|
29.1
|
%
|
|
$
|
40,640
|
|
|
|
28.3
|
%
|
Lease financing
|
|
|
6,126
|
|
|
|
3.1
|
|
|
|
6,537
|
|
|
|
3.4
|
|
|
|
6,859
|
|
|
|
3.7
|
|
|
|
6,242
|
|
|
|
4.1
|
|
|
|
5,550
|
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
48,398
|
|
|
|
24.6
|
|
|
|
48,792
|
|
|
|
25.1
|
|
|
|
56,618
|
|
|
|
30.6
|
|
|
|
51,074
|
|
|
|
33.2
|
|
|
|
46,190
|
|
|
|
32.2
|
|
Commercial Real Estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgages
|
|
|
27,254
|
|
|
|
13.8
|
|
|
|
25,306
|
|
|
|
13.0
|
|
|
|
23,434
|
|
|
|
12.7
|
|
|
|
20,146
|
|
|
|
13.1
|
|
|
|
19,711
|
|
|
|
13.7
|
|
Construction and development
|
|
|
7,441
|
|
|
|
3.8
|
|
|
|
8,787
|
|
|
|
4.5
|
|
|
|
9,779
|
|
|
|
5.3
|
|
|
|
9,061
|
|
|
|
5.9
|
|
|
|
8,934
|
|
|
|
6.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate
|
|
|
34,695
|
|
|
|
17.6
|
|
|
|
34,093
|
|
|
|
17.5
|
|
|
|
33,213
|
|
|
|
18.0
|
|
|
|
29,207
|
|
|
|
19.0
|
|
|
|
28,645
|
|
|
|
19.9
|
|
Residential Mortgages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgages
|
|
|
24,315
|
|
|
|
12.3
|
|
|
|
20,581
|
|
|
|
10.6
|
|
|
|
18,232
|
|
|
|
9.9
|
|
|
|
17,099
|
|
|
|
11.1
|
|
|
|
15,316
|
|
|
|
10.7
|
|
Home equity loans, first liens
|
|
|
6,417
|
|
|
|
3.3
|
|
|
|
5,475
|
|
|
|
2.8
|
|
|
|
5,348
|
|
|
|
2.9
|
|
|
|
5,683
|
|
|
|
3.7
|
|
|
|
5,969
|
|
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total residential mortgages
|
|
|
30,732
|
|
|
|
15.6
|
|
|
|
26,056
|
|
|
|
13.4
|
|
|
|
23,580
|
|
|
|
12.8
|
|
|
|
22,782
|
|
|
|
14.8
|
|
|
|
21,285
|
|
|
|
14.8
|
|
Retail
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit card
|
|
|
16,803
|
|
|
|
8.5
|
|
|
|
16,814
|
|
|
|
8.6
|
|
|
|
13,520
|
|
|
|
7.3
|
|
|
|
10,956
|
|
|
|
7.1
|
|
|
|
8,670
|
|
|
|
6.0
|
|
Retail leasing
|
|
|
4,569
|
|
|
|
2.3
|
|
|
|
4,568
|
|
|
|
2.3
|
|
|
|
5,126
|
|
|
|
2.8
|
|
|
|
5,969
|
|
|
|
3.9
|
|
|
|
6,960
|
|
|
|
4.9
|
|
Home equity and second mortgages
|
|
|
18,940
|
|
|
|
9.6
|
|
|
|
19,439
|
|
|
|
10.0
|
|
|
|
19,177
|
|
|
|
10.4
|
|
|
|
16,441
|
|
|
|
10.7
|
|
|
|
15,523
|
|
|
|
10.8
|
|
Other retail
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving credit
|
|
|
3,472
|
|
|
|
1.8
|
|
|
|
3,506
|
|
|
|
1.8
|
|
|
|
3,205
|
|
|
|
1.7
|
|
|
|
2,731
|
|
|
|
1.8
|
|
|
|
2,563
|
|
|
|
1.8
|
|
Installment
|
|
|
5,459
|
|
|
|
2.8
|
|
|
|
5,455
|
|
|
|
2.8
|
|
|
|
5,525
|
|
|
|
3.0
|
|
|
|
5,246
|
|
|
|
3.4
|
|
|
|
4,478
|
|
|
|
3.1
|
|
Automobile
|
|
|
10,897
|
|
|
|
5.5
|
|
|
|
9,544
|
|
|
|
4.9
|
|
|
|
9,212
|
|
|
|
5.0
|
|
|
|
8,970
|
|
|
|
5.8
|
|
|
|
8,693
|
|
|
|
6.1
|
|
Student
|
|
|
5,054
|
|
|
|
2.5
|
|
|
|
4,629
|
|
|
|
2.4
|
|
|
|
4,603
|
|
|
|
2.5
|
|
|
|
451
|
|
|
|
.3
|
|
|
|
590
|
|
|
|
.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other retail
|
|
|
24,882
|
|
|
|
12.6
|
|
|
|
23,134
|
|
|
|
11.9
|
|
|
|
22,545
|
|
|
|
12.2
|
|
|
|
17,398
|
|
|
|
11.3
|
|
|
|
16,324
|
|
|
|
11.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total retail
|
|
|
65,194
|
|
|
|
33.0
|
|
|
|
63,955
|
|
|
|
32.8
|
|
|
|
60,368
|
|
|
|
32.6
|
|
|
|
50,764
|
|
|
|
33.0
|
|
|
|
47,477
|
|
|
|
33.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, excluding covered loans
|
|
|
179,019
|
|
|
|
90.8
|
|
|
|
172,896
|
|
|
|
88.8
|
|
|
|
173,779
|
|
|
|
94.0
|
|
|
|
153,827
|
|
|
|
100.0
|
|
|
|
143,597
|
|
|
|
100.0
|
|
Covered loans
|
|
|
18,042
|
|
|
|
9.2
|
|
|
|
21,859
|
|
|
|
11.2
|
|
|
|
11,176
|
|
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
197,061
|
|
|
|
100.0
|
%
|
|
$
|
194,755
|
|
|
|
100.0
|
%
|
|
$
|
184,955
|
|
|
|
100.0
|
%
|
|
$
|
153,827
|
|
|
|
100.0
|
%
|
|
$
|
143,597
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
recognized over the future service period of the employees.
Differences related to the expected return on plan assets are
included in expense over an approximately twelve-year period.
The Company expects pension expense to increase
$111 million in 2011, primarily driven by a
$34 million increase related to utilizing a lower discount
rate, a $29 million increase related to the amortization of
unrecognized actuarial losses from prior years, a
$6 million increase related to lower expected returns on
plan assets and a $42 million increase related to amortization
of other actuarial losses, including changes in assumptions
based on actuarial review of past experience and compensation
levels. If performance of plan assets equals the
actuarially-assumed long-term rate of return
(LTROR), the cumulative asset return difference of
$255 million at December 31, 2010 will incrementally
increase pension expense $34 million in 2012 and
$47 million in 2013, and incrementally decrease pension
expense $18 million in 2014 and $5 million in 2015.
Because of the complexity of forecasting pension plan
activities, the accounting methods utilized for pension plans,
the Companys ability to respond to factors affecting the
plans and the hypothetical nature of actuarial assumptions,
actual pension expense will differ from these amounts.
Refer to Note 17 of the Notes to the Consolidated Financial
Statements for further information on the Companys pension
plan funding practices, investment policies and asset allocation
strategies, and accounting policies for pension plans.
26 U.S. BANCORP
Table
7 COMMERCIAL
LOANS BY INDUSTRY GROUP AND GEOGRAPHY, EXCLUDING COVERED LOANS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
(Dollars in Millions)
|
|
Loans
|
|
|
Percent
|
|
|
Loans
|
|
|
Percent
|
|
Industry Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer products and services
|
|
$
|
7,599
|
|
|
|
15.7
|
%
|
|
$
|
8,197
|
|
|
|
16.8
|
%
|
Financial services
|
|
|
5,785
|
|
|
|
12.0
|
|
|
|
5,123
|
|
|
|
10.5
|
|
Healthcare
|
|
|
3,744
|
|
|
|
7.7
|
|
|
|
2,000
|
|
|
|
4.1
|
|
Capital goods
|
|
|
3,696
|
|
|
|
7.7
|
|
|
|
3,806
|
|
|
|
7.8
|
|
Commercial services and supplies
|
|
|
3,543
|
|
|
|
7.3
|
|
|
|
3,757
|
|
|
|
7.7
|
|
Agriculture
|
|
|
2,539
|
|
|
|
5.3
|
|
|
|
3,415
|
|
|
|
7.0
|
|
Property management and development
|
|
|
2,489
|
|
|
|
5.1
|
|
|
|
2,586
|
|
|
|
5.3
|
|
Consumer staples
|
|
|
2,438
|
|
|
|
5.0
|
|
|
|
1,659
|
|
|
|
3.4
|
|
Transportation
|
|
|
1,926
|
|
|
|
4.0
|
|
|
|
1,708
|
|
|
|
3.5
|
|
Energy
|
|
|
1,788
|
|
|
|
3.7
|
|
|
|
1,122
|
|
|
|
2.3
|
|
Paper and forestry products, mining and basic materials
|
|
|
1,738
|
|
|
|
3.6
|
|
|
|
1,952
|
|
|
|
4.0
|
|
Private investors
|
|
|
1,712
|
|
|
|
3.5
|
|
|
|
1,757
|
|
|
|
3.6
|
|
Information technology
|
|
|
1,543
|
|
|
|
3.2
|
|
|
|
878
|
|
|
|
1.8
|
|
Other
|
|
|
7,858
|
|
|
|
16.2
|
|
|
|
10,832
|
|
|
|
22.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
48,398
|
|
|
|
100.0
|
%
|
|
$
|
48,792
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California
|
|
$
|
5,588
|
|
|
|
11.5
|
%
|
|
$
|
6,685
|
|
|
|
13.7
|
%
|
Colorado
|
|
|
1,974
|
|
|
|
4.1
|
|
|
|
1,903
|
|
|
|
3.9
|
|
Illinois
|
|
|
2,457
|
|
|
|
5.1
|
|
|
|
3,611
|
|
|
|
7.4
|
|
Minnesota
|
|
|
3,993
|
|
|
|
8.2
|
|
|
|
3,757
|
|
|
|
7.7
|
|
Missouri
|
|
|
2,020
|
|
|
|
4.2
|
|
|
|
1,708
|
|
|
|
3.5
|
|
Ohio
|
|
|
2,464
|
|
|
|
5.1
|
|
|
|
2,196
|
|
|
|
4.5
|
|
Oregon
|
|
|
1,508
|
|
|
|
3.1
|
|
|
|
1,610
|
|
|
|
3.3
|
|
Washington
|
|
|
2,259
|
|
|
|
4.7
|
|
|
|
2,196
|
|
|
|
4.5
|
|
Wisconsin
|
|
|
2,144
|
|
|
|
4.4
|
|
|
|
2,098
|
|
|
|
4.3
|
|
Iowa, Kansas, Nebraska, North Dakota, South Dakota
|
|
|
3,465
|
|
|
|
7.2
|
|
|
|
3,123
|
|
|
|
6.4
|
|
Arkansas, Indiana, Kentucky, Tennessee
|
|
|
2,798
|
|
|
|
5.8
|
|
|
|
1,805
|
|
|
|
3.7
|
|
Idaho, Montana, Wyoming
|
|
|
1,069
|
|
|
|
2.2
|
|
|
|
1,073
|
|
|
|
2.2
|
|
Arizona, Nevada, Utah
|
|
|
1,741
|
|
|
|
3.6
|
|
|
|
2,000
|
|
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total banking region
|
|
|
33,480
|
|
|
|
69.2
|
|
|
|
33,765
|
|
|
|
69.2
|
|
Outside the Companys banking region
|
|
|
14,918
|
|
|
|
30.8
|
|
|
|
15,027
|
|
|
|
30.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
48,398
|
|
|
|
100.0
|
%
|
|
$
|
48,792
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows an analysis of hypothetical changes in
the LTROR and discount rate:
|
|
|
|
|
|
|
|
|
|
|
Down 100
|
|
|
Up 100
|
|
LTROR (Dollars
in Millions)
|
|
Basis Points
|
|
|
Basis Points
|
|
|
|
Incremental benefit (expense)
|
|
$
|
(25
|
)
|
|
$
|
25
|
|
Percent of 2010 net income
|
|
|
(.47
|
)%
|
|
|
.47
|
%
|
|
|
|
|
Down 100
|
|
|
Up 100
|
|
Discount
Rate (Dollars
in Millions)
|
|
Basis Points
|
|
|
Basis Points
|
|
|
|
Incremental benefit (expense)
|
|
$
|
(77
|
)
|
|
$
|
66
|
|
Percent of 2010 net income
|
|
|
(1.44
|
)%
|
|
|
1.23
|
%
|
|
|
Income Tax
Expense The provision
for income taxes was $935 million (an effective rate of
22.3 percent) in 2010, compared with $395 million (an
effective rate of 15.0 percent) in 2009 and
$1.1 billion (an effective rate of 26.5 percent) in
2008. The increase in the effective tax rate over 2009 primarily
reflected the marginal impact of higher pre-tax earnings
year-over-year
and the 2010 Nuveen Gain.
For further information on income taxes, refer to Note 19
of the Notes to Consolidated Financial Statements.
BALANCE
SHEET ANALYSIS
Average earning assets were $252.0 billion in 2010,
compared with $237.3 billion in 2009. The increase in
average earning assets of $14.7 billion (6.2 percent)
was due to growth in total average loans of $7.2 billion
(3.9 percent) and investment securities of
$5.0 billion (11.6 percent).
For average balance information, refer to Consolidated Daily
Average Balance Sheet and Related Yields and Rates on pages 128
and 129.
U.S. BANCORP 27
Table
8 COMMERCIAL
REAL ESTATE BY PROPERTY TYPE AND GEOGRAPHY, EXCLUDING COVERED
LOANS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
(Dollars in Millions)
|
|
Loans
|
|
|
Percent
|
|
|
Loans
|
|
|
Percent
|
|
Property Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business owner occupied
|
|
$
|
11,416
|
|
|
|
32.9
|
%
|
|
$
|
10,944
|
|
|
|
32.1
|
%
|
Commercial property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
|
|
1,530
|
|
|
|
4.4
|
|
|
|
1,500
|
|
|
|
4.4
|
|
Office
|
|
|
3,783
|
|
|
|
10.9
|
|
|
|
3,580
|
|
|
|
10.5
|
|
Retail
|
|
|
4,288
|
|
|
|
12.4
|
|
|
|
4,500
|
|
|
|
13.2
|
|
Other commercial
|
|
|
3,551
|
|
|
|
10.2
|
|
|
|
3,614
|
|
|
|
10.6
|
|
Homebuilders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condominiums
|
|
|
463
|
|
|
|
1.3
|
|
|
|
614
|
|
|
|
1.8
|
|
Other residential
|
|
|
1,144
|
|
|
|
3.3
|
|
|
|
1,704
|
|
|
|
5.0
|
|
Multi-family
|
|
|
6,130
|
|
|
|
17.7
|
|
|
|
5,625
|
|
|
|
16.5
|
|
Hotel/motel
|
|
|
2,134
|
|
|
|
6.2
|
|
|
|
1,807
|
|
|
|
5.3
|
|
Health care facilities
|
|
|
256
|
|
|
|
.7
|
|
|
|
205
|
|
|
|
.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
34,695
|
|
|
|
100.0
|
%
|
|
$
|
34,093
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California
|
|
$
|
7,515
|
|
|
|
21.6
|
%
|
|
$
|
7,432
|
|
|
|
21.8
|
%
|
Colorado
|
|
|
1,524
|
|
|
|
4.4
|
|
|
|
1,568
|
|
|
|
4.6
|
|
Illinois
|
|
|
1,248
|
|
|
|
3.6
|
|
|
|
1,227
|
|
|
|
3.6
|
|
Minnesota
|
|
|
1,805
|
|
|
|
5.2
|
|
|
|
1,739
|
|
|
|
5.1
|
|
Missouri
|
|
|
1,558
|
|
|
|
4.5
|
|
|
|
1,568
|
|
|
|
4.6
|
|
Ohio
|
|
|
1,402
|
|
|
|
4.0
|
|
|
|
1,364
|
|
|
|
4.0
|
|
Oregon
|
|
|
1,809
|
|
|
|
5.2
|
|
|
|
1,773
|
|
|
|
5.2
|
|
Washington
|
|
|
3,488
|
|
|
|
10.1
|
|
|
|
3,307
|
|
|
|
9.7
|
|
Wisconsin
|
|
|
1,724
|
|
|
|
5.0
|
|
|
|
1,568
|
|
|
|
4.6
|
|
Iowa, Kansas, Nebraska, North Dakota, South Dakota
|
|
|
2,205
|
|
|
|
6.4
|
|
|
|
2,216
|
|
|
|
6.5
|
|
Arkansas, Indiana, Kentucky, Tennessee
|
|
|
1,634
|
|
|
|
4.7
|
|
|
|
1,602
|
|
|
|
4.7
|
|
Idaho, Montana, Wyoming
|
|
|
1,185
|
|
|
|
3.4
|
|
|
|
1,227
|
|
|
|
3.6
|
|
Arizona, Nevada, Utah
|
|
|
2,868
|
|
|
|
8.3
|
|
|
|
3,034
|
|
|
|
8.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total banking region
|
|
|
29,965
|
|
|
|
86.4
|
|
|
|
29,625
|
|
|
|
86.9
|
|
Outside the Companys banking region
|
|
|
4,730
|
|
|
|
13.6
|
|
|
|
4,468
|
|
|
|
13.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
34,695
|
|
|
|
100.0
|
%
|
|
$
|
34,093
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
The Companys loan
portfolio was $197.1 billion at December 31, 2010, an
increase of $2.3 billion (1.2 percent) from
December 31, 2009. The increase was driven by growth in
residential mortgages of $4.7 billion (17.9 percent),
retail loans of $1.2 billion (1.9 percent) and
commercial real estate loans of $.6 billion
(1.8 percent), partially offset by decreases in commercial
loans of $.4 billion (.8 percent) and
acquisition-related
covered loans of $3.8 billion (17.5 percent). Table 6
provides a summary of the loan distribution by product type,
while Table 10 provides a summary of the selected loan maturity
distribution by loan category. Average total loans increased
$7.2 billion (3.9 percent) in 2010, compared with
2009. The increase was due to growth in most major loan
categories in 2010.
Commercial
Commercial loans,
including lease financing, decreased $394 million
(.8 percent) as of December 31, 2010, compared with
December 31, 2009. Average commercial loans decreased
$5.8 billion (11.0 percent) in 2010, compared with
2009. These decreases were primarily due to lower utilization by
customers of available commitments, partially offset by new loan
commitments. Table 7 provides a summary of commercial loans by
industry and geographical locations.
Commercial Real
Estate The
Companys portfolio of commercial real estate loans, which
includes commercial mortgages and construction loans, increased
$602 million (1.8 percent) at December 31, 2010,
compared with December 31, 2009. Average commercial real
estate loans increased $518 million (1.5 percent) in
2010, compared with 2009. The growth principally reflected the
impact of new business activity, partially offset by customer
debt deleveraging. Table 8 provides a summary of commercial real
estate by property type and geographical location. The
collateral for $4.5 billion of commercial real estate loans
28 U.S. BANCORP
Table
9 RESIDENTIAL
MORTGAGES AND RETAIL LOANS BY GEOGRAPHY, EXCLUDING COVERED LOANS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2010
|
|
|
December 31,
2009
|
|
(Dollars in Millions)
|
|
Loans
|
|
|
Percent
|
|
|
Loans
|
|
|
Percent
|
|
Residential Mortgages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California
|
|
$
|
3,339
|
|
|
|
10.9
|
%
|
|
$
|
2,487
|
|
|
|
9.5
|
%
|
Colorado
|
|
|
1,947
|
|
|
|
6.3
|
|
|
|
1,755
|
|
|
|
6.7
|
|
Illinois
|
|
|
2,123
|
|
|
|
6.9
|
|
|
|
1,676
|
|
|
|
6.4
|
|
Minnesota
|
|
|
2,457
|
|
|
|
8.0
|
|
|
|
2,216
|
|
|
|
8.5
|
|
Missouri
|
|
|
1,643
|
|
|
|
5.4
|
|
|
|
1,467
|
|
|
|
5.6
|
|
Ohio
|
|
|
1,824
|
|
|
|
5.9
|
|
|
|
1,682
|
|
|
|
6.5
|
|
Oregon
|
|
|
1,246
|
|
|
|
4.1
|
|
|
|
1,065
|
|
|
|
4.1
|
|
Washington
|
|
|
1,726
|
|
|
|
5.6
|
|
|
|
1,414
|
|
|
|
5.4
|
|
Wisconsin
|
|
|
1,171
|
|
|
|
3.8
|
|
|
|
1,067
|
|
|
|
4.1
|
|
Iowa, Kansas, Nebraska, North Dakota, South Dakota
|
|
|
1,522
|
|
|
|
5.0
|
|
|
|
1,393
|
|
|
|
5.4
|
|
Arkansas, Indiana, Kentucky, Tennessee
|
|
|
2,431
|
|
|
|
7.9
|
|
|
|
1,947
|
|
|
|
7.5
|
|
Idaho, Montana, Wyoming
|
|
|
688
|
|
|
|
2.2
|
|
|
|
601
|
|
|
|
2.3
|
|
Arizona, Nevada, Utah
|
|
|
1,857
|
|
|
|
6.0
|
|
|
|
1,657
|
|
|
|
6.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total banking region
|
|
|
23,974
|
|
|
|
78.0
|
|
|
|
20,427
|
|
|
|
78.4
|
|
Outside the Companys banking region
|
|
|
6,758
|
|
|
|
22.0
|
|
|
|
5,629
|
|
|
|
21.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
30,732
|
|
|
|
100.0
|
%
|
|
$
|
26,056
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California
|
|
$
|
7,656
|
|
|
|
11.7
|
%
|
|
$
|
8,442
|
|
|
|
13.2
|
%
|
Colorado
|
|
|
2,984
|
|
|
|
4.6
|
|
|
|
3,390
|
|
|
|
5.3
|
|
Illinois
|
|
|
3,037
|
|
|
|
4.6
|
|
|
|
3,262
|
|
|
|
5.1
|
|
Minnesota
|
|
|
5,940
|
|
|
|
9.1
|
|
|
|
6,396
|
|
|
|
10.0
|
|
Missouri
|
|
|
2,725
|
|
|
|
4.2
|
|
|
|
2,942
|
|
|
|
4.6
|
|
Ohio
|
|
|
3,974
|
|
|
|
6.1
|
|
|
|
3,837
|
|
|
|
6.0
|
|
Oregon
|
|
|
2,592
|
|
|
|
4.0
|
|
|
|
2,878
|
|
|
|
4.5
|
|
Washington
|
|
|
3,029
|
|
|
|
4.6
|
|
|
|
3,262
|
|
|
|
5.1
|
|
Wisconsin
|
|
|
2,926
|
|
|
|
4.5
|
|
|
|
2,878
|
|
|
|
4.5
|
|
Iowa, Kansas, Nebraska, North Dakota, South Dakota
|
|
|
3,277
|
|
|
|
5.0
|
|
|
|
3,581
|
|
|
|
5.6
|
|
Arkansas, Indiana, Kentucky, Tennessee
|
|
|
4,110
|
|
|
|
6.3
|
|
|
|
4,285
|
|
|
|
6.7
|
|
Idaho, Montana, Wyoming
|
|
|
1,606
|
|
|
|
2.5
|
|
|
|
1,791
|
|
|
|
2.8
|
|
Arizona, Nevada, Utah
|
|
|
2,774
|
|
|
|
4.3
|
|
|
|
3,006
|
|
|
|
4.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total banking region
|
|
|
46,630
|
|
|
|
71.5
|
|
|
|
49,950
|
|
|
|
78.1
|
|
Outside the Companys banking region
|
|
|
18,564
|
|
|
|
28.5
|
|
|
|
14,005
|
|
|
|
21.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
65,194
|
|
|
|
100.0
|
%
|
|
$
|
63,955
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
included in covered loans at December 31, 2010 was in
California, compared with $4.7 billion at December 31,
2009.
The Company classifies loans as construction until the
completion of the construction phase. Following construction, if
a loan is retained, the loan is reclassified to the commercial
mortgage category. In 2010, approximately $995 million of
construction loans were reclassified to the commercial mortgage
loan category for bridge financing after completion of the
construction phase. At December 31, 2010, $270 million
of tax-exempt industrial development loans were secured by real
estate. The Companys commercial real estate mortgages and
construction loans had unfunded commitments of $6.5 billion
and $6.1 billion at December 31, 2010 and 2009,
respectively.
The Company also finances the operations of real estate
developers and other entities with operations related to real
estate. These loans are not secured directly by real estate and
are subject to terms and conditions similar to commercial loans.
These loans were included in the commercial loan category and
totaled $1.7 billion at December 31, 2010.
Residential
Mortgages Residential
mortgages held in the loan portfolio at December 31, 2010,
increased $4.7 billion (17.9 percent) over
December 31, 2009. Average residential mortgages increased
$3.2 billion (13.2 percent) in 2010, compared with
2009. The growth reflected increased origination and refinancing
activity in the second half of 2010 as a result of the low
interest rate environment. Most
U.S. BANCORP 29
Table
10 SELECTED
LOAN MATURITY DISTRIBUTION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over One
|
|
|
|
|
|
|
|
|
|
One Year
|
|
|
Through
|
|
|
Over Five
|
|
|
|
|
December 31,
2010 (Dollars in Millions)
|
|
or Less
|
|
|
Five Years
|
|
|
Years
|
|
|
Total
|
|
|
|
|
Commercial
|
|
$
|
20,697
|
|
|
$
|
25,625
|
|
|
$
|
2,076
|
|
|
$
|
48,398
|
|
Commercial real estate
|
|
|
10,684
|
|
|
|
17,252
|
|
|
|
6,759
|
|
|
|
34,695
|
|
Residential mortgages
|
|
|
1,728
|
|
|
|
3,608
|
|
|
|
25,396
|
|
|
|
30,732
|
|
Retail
|
|
|
25,679
|
|
|
|
24,303
|
|
|
|
15,212
|
|
|
|
65,194
|
|
Covered loans
|
|
|
4,814
|
|
|
|
4,445
|
|
|
|
8,783
|
|
|
|
18,042
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
63,602
|
|
|
$
|
75,233
|
|
|
$
|
58,226
|
|
|
$
|
197,061
|
|
Total of loans due after one year with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predetermined interest rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
61,855
|
|
Floating interest rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,604
|
|
|
|
loans retained in the portfolio are to customers with prime or
near-prime credit characteristics at the date of origination.
Retail
Total retail loans
outstanding, which include credit card, retail leasing, home
equity and second mortgages and other retail loans, increased
$1.2 billion (1.9 percent) at December 31, 2010,
compared with December 31, 2009. The increase was primarily
driven by higher installment (primarily automobile) and
federally-guaranteed student loans, partially offset by lower
credit card and home equity balances. Average retail loans
increased $2.1 billion (3.3 percent) in 2010, compared
with 2009, as a result of current year growth and credit card
portfolio purchases in 2009 and 2010.
Of the total retail loans and residential mortgages outstanding,
excluding covered assets, at December 31, 2010,
approximately 73.6 percent were to customers located in the
Companys primary banking region. Table 9 provides a
geographic summary of residential mortgages and retail loans
outstanding as of December 31, 2010 and 2009. The
collateral for $5.2 billion of residential mortgages and
retail loans included in covered loans at December 31, 2010
was in California, compared with $6.6 billion at
December 31, 2009.
Loans Held for
Sale Loans held for
sale, consisting primarily of residential mortgages to be sold
in the secondary market, were $8.4 billion at
December 31, 2010, compared with $4.8 billion at
December 31, 2009. The increase in loans held for sale was
principally due to a higher level of mortgage loan origination
and refinancing activity in the second half of 2010.
Investment
Securities The Company
uses its investment securities portfolio for several purposes.
The portfolio serves as a vehicle to manage enterprise interest
rate risk, provides liquidity, including the ability to meet
proposed regulatory requirements, generates interest and
dividend income from the investment of excess funds depending on
loan demand and is used as collateral for public deposits and
wholesale funding sources. While the Company intends to hold its
investment securities indefinitely, it may sell
available-for-sale securities in response to structural changes
in the balance sheet and related interest rate risk and to meet
liquidity requirements, among other factors.
At December 31, 2010, investment securities totaled
$53.0 billion, compared with $44.8 billion at
December 31, 2009. The $8.2 billion
(18.3 percent) increase reflected $7.3 billion of net
investment purchases, the consolidation of $.6 billion of
held-to-maturity
securities held in a VIE due to the adoption of new
authoritative accounting guidance effective January 1,
2010, and a $.3 billion favorable change in net unrealized
gains (losses) on
available-for-sale
securities.
Average investment securities were $47.8 billion in 2010,
compared with $42.8 billion in 2009. The weighted-average
yield of the
available-for-sale
portfolio was 3.41 percent at December 31, 2010,
compared with 4.00 percent at December 31, 2009. The
average maturity of the
available-for-sale
portfolio was 7.4 years at December 31, 2010, compared
with 7.1 years at December 31, 2009. Investment
securities by type are shown in Table 11.
The Company conducts a regular assessment of its investment
portfolio to determine whether any securities are
other-than-temporarily
impaired. At December 31, 2010, the Companys net
unrealized loss on
available-for-sale
securities was $346 million, compared with
$635 million at December 31, 2009. The favorable
change in net unrealized gains (losses) was primarily due to
increases in the fair value of agency and certain non-agency
mortgage-backed securities, partially offset by decreases in the
fair value of obligations of state and political subdivisions
securities as a result of market interest rate increases near
the end of 2010. Unrealized losses on
available-for-sale
securities in an unrealized loss position totaled
$1.2 billion at December 31, 2010, compared with
$1.3 billion at December 31, 2009. When assessing
unrealized losses for
other-than-temporary
impairment, the Company considers the nature of the investment,
the financial condition of the issuer, the extent and duration
of unrealized loss,
30 U.S. BANCORP
Table
11 INVESTMENT
SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-Sale
|
|
|
Held-to-Maturity
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|