October 19, 2011 07:00 AM Eastern Daylight Time
U.S. Bancorp Reports Record Net Income for the Third Quarter of 2011
MINNEAPOLIS--(BUSINESS WIRE)--U.S. Bancorp (NYSE: USB) today reported net income of $1,273 million for the third quarter of 2011, or $.64 per diluted common share. Earnings for the third quarter of 2011 were driven by year-over-year growth in total net revenue and a reduction in the provision for credit losses. Highlights for the third quarter of 2011 included:- Strong new lending activity of $59.5 billion (12.9 percent increase on a linked quarter basis) during the third quarter including:
- $18.4 billion of new commercial and commercial real estate commitments
- $22.0 billion of commercial and commercial real estate commitment renewals
- $1.9 billion of lines related to new credit card accounts
- $17.2 billion of mortgage and other retail originations
- Growth in average total loans of 5.0 percent (4.5 percent excluding acquisitions) over the third quarter of 2010
- Growth in average total commercial loans of 11.9 percent over the third quarter of 2010 (11.7 percent excluding acquisitions)
- Growth in average total loans of 1.7 percent on a linked quarter basis, including average total commercial loan growth of 4.6 percent
- Growth in quarterly average commercial and commercial real estate commitments of 16.8 percent year-over-year and 5.8 percent over the prior quarter
- Significant growth in average deposits of 17.9 percent (13.2 percent excluding acquisitions) over the third quarter of 2010, including:
- Growth in average noninterest-bearing deposits of 47.5 percent (45.7 percent excluding acquisitions)
- Growth in average total savings deposits of 13.5 percent (7.3 percent excluding acquisitions)
- Growth in average total deposits of 2.8 percent on a linked quarter basis, including a 20.3 percent increase in noninterest-bearing deposits
- Total net revenue growth of 4.5 percent over the third quarter of 2010 (2.2 percent growth over the prior quarter)
- Net interest income growth of 5.9 percent over the third quarter of 2010 (3.1 percent growth over the prior quarter):
- Average earning assets growth of 13.6 percent year-over-year, including a planned increase in the investment securities portfolio
- Average earning assets growth of 3.1 percent on a linked quarter basis, including growth in the investment securities portfolio
- Exceptionally strong growth in lower cost core deposit funding
- Net interest margin of 3.65 percent for the third quarter of 2011, compared with 3.91 percent for the third quarter of 2010, and 3.67 percent for the second quarter of 2011 (The year-over-year decline was due to increases in lower yielding investment securities and cash balances at the Federal Reserve.)
- Year-over-year growth in fee-based revenue, driven by:
- Higher payments-related revenue (6.0 percent) including higher credit and debit card revenue (5.5 percent), corporate payment products revenue (6.3 percent) and merchant processing services revenue (6.3 percent)
- Higher deposit service charges (14.4 percent)
- Higher commercial products revenue (7.6 percent)
- Managed expense levels leading to positive operating leverage on a year-over-year and linked quarter basis
- Total noninterest expense increase of 3.8 percent year-over-year
- Efficiency ratio decreased to 51.5 percent compared with 51.9 percent in the third quarter of 2010 and 51.6 percent in the prior quarter
- Net charge-offs and nonperforming assets declined on a linked quarter basis. Provision for credit losses was $150 million less than net charge-offs.
- Net charge-offs declined 10.4 percent from the second quarter of 2011
- Nonperforming assets (excluding covered assets) decreased 6.9 percent from the second quarter of 2011 (6.7 percent including covered assets)
- On a linked quarter basis, early and late stage loan delinquencies remained relatively stable despite seasonal pressures, and declined as a percentage of ending loan balances in a majority of loan categories
- Allowance to nonperforming assets (excluding covered assets) was 166 percent at September 30, 2011, compared with 159 percent at June 30, 2011, and 153 percent at September 30, 2010
- Allowance to period-end loans (excluding covered loans) was 2.66 percent at September 30, 2011, compared with 2.83 percent at June 30, 2011, and 3.10 percent at September 30, 2010
- Strong capital generation continues to strengthen capital position; ratios at September 30, 2011 were:
- Tier 1 common equity ratio of 8.5 percent
- Tier 1 capital ratio of 10.8 percent
- Total risk based capital ratio of 13.5 percent
- Tier 1 common ratio of 8.2 percent under anticipated Basel III guidelines
- Repurchased 13 million shares of common stock during the current quarter
