April 17, 2012 06:45 AM Eastern Daylight Time
U.S. Bancorp Reports 28 Percent Increase in Net Income for the First Quarter of 2012
- Year-over-Year Results Driven by a 9 Percent Increase in Total Net Revenue and Lower Credit Costs
- Returned 66 percent of First Quarter Earnings to Shareholders
MINNEAPOLIS--()--U.S. Bancorp (NYSE: USB) today reported net income of $1,338 million for the first quarter of 2012, or $.67 per diluted common share. Earnings for the first quarter of 2012 were driven by year-over-year growth in total net revenue and a lower provision for credit losses. Highlights for the first quarter of 2012 included:
- Strong new lending activity of $56.0 billion during the first quarter, including:
- $28.9 billion of new and renewed commercial and commercial real estate commitments
- $2.0 billion of lines related to new credit card accounts
- $25.1 billion of mortgage and other retail originations
- Growth in average total loans of 6.4 percent over the first quarter of 2011 (8.7 percent excluding covered loans)
- Growth in average total loans of 1.5 percent on a linked quarter basis (1.9 percent excluding covered loans)
- Growth in average total commercial loans of 17.3 percent over the first quarter of 2011 and 3.4 percent over the fourth quarter of 2011
- Growth in quarterly average commercial and commercial real estate commitments of 25.7 percent year-over-year and 5.1 percent over the prior quarter
- Significant growth in average deposits of 11.7 percent over the first quarter of 2011, including:
- Growth in average noninterest-bearing deposits of 43.9 percent
- Growth in average total savings deposits of 7.6 percent
- Growth in average total deposits of 2.2 percent on a linked quarter basis
- Total net revenue growth of 9.1 percent over the first quarter of 2011
- Net interest income growth of 7.3 percent over the first quarter of 2011 (.6 percent linked quarter)
- Average earning assets growth of 9.5 percent year-over-year
- Average earning assets growth of 1.7 percent on a linked quarter basis
- Continued strong growth in lower cost core deposit funding
- Net interest margin of 3.60 percent for the first quarter of 2012, compared with 3.69 percent for the first quarter of 2011, and 3.60 percent for the fourth quarter of 2011
- Year-over-year growth in fee-based revenue, driven by:
- Higher mortgage banking revenue
- Higher merchant processing services revenue (12.0 percent)
- Higher commercial products revenue (10.5 percent)
- Higher deposit service charges (7.0 percent)
- Positive operating leverage on a linked quarter basis
- Net charge-offs and nonperforming assets declined on a linked quarter and year-over-year basis. Provision for credit losses was $90 million less than net charge-offs.
- Net charge-offs declined 8.2 percent from the fourth quarter of 2011
- Early and late stage loan delinquencies as a percentage of ending loan balances declined in a majority of loan categories
- Nonperforming assets (excluding covered assets) decreased 5.9 percent from the fourth quarter of 2011 (8.5 percent including covered assets)
- Allowance to nonperforming assets (excluding covered assets) was 199 percent at March 31, 2012, compared with 191 percent at December 31, 2011, and 154 percent at March 31, 2011
- Allowance to period-end loans (excluding covered loans) was 2.44 percent at March 31, 2012, compared with 2.52 percent at December 31, 2011, and 2.97 percent at March 31, 2011
- Capital generation continues to fortify capital position; ratios at March 31, 2012 were:
- Tier 1 capital ratio of 10.9 percent
- Total risk based capital ratio of 13.3 percent
- Tier 1 common equity to risk-weighted assets ratio of 8.7 percent
- Tier 1 common equity ratio of 8.4 percent using anticipated Basel III guidelines as if fully implemented
- Increased dividend and share repurchase authorization announced March 13th
- Annual dividend raised from $.50 to $.78, a 56 percent increase
- Share repurchase authorization of 100 million shares through March 2013
- Repurchased 16 million shares of common stock during the first quarter
- Returned 66 percent of first quarter earnings to shareholders through dividends and buybacks
| EARNINGS SUMMARY | Table 1 | ||||||||||||||||||
| ($ in millions, except per-share data) | Percent | Percent | |||||||||||||||||
| Change | Change | ||||||||||||||||||
| 1Q | 4Q | 1Q | 1Q12 vs | 1Q12 vs | |||||||||||||||
| 2012 | 2011 | 2011 | 4Q11 | 1Q11 | |||||||||||||||
| Net income attributable to U.S. Bancorp | $ | 1,338 | $ | 1,350 | $ | 1,046 | (.9 | ) | 27.9 | ||||||||||
| Diluted earnings per common share | $ | .67 | $ | .69 | $ | .52 | (2.9 | ) | 28.8 | ||||||||||
| Return on average assets (%) | 1.60 | 1.62 | 1.38 | ||||||||||||||||
| Return on average common equity (%) | 16.2 | 16.8 | 14.5 | ||||||||||||||||
| Net interest margin (%) | 3.60 | 3.60 | 3.69 | ||||||||||||||||
| Efficiency ratio (%) | 51.9 | 52.7 | 51.1 | ||||||||||||||||
| Tangible efficiency ratio (%) (a) | 50.5 | 51.3 | 49.5 | ||||||||||||||||
| Dividends declared per common share | $ | .195 | $ | .125 | $ | .125 | 56.0 | 56.0 | |||||||||||
| Book value per common share (period-end) | $ | 16.94 | $ | 16.43 | $ | 14.83 | 3.1 | 14.2 | |||||||||||
(a) Computed as noninterest expense divided by the sum of net interest income on a taxable-equivalent
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basis and noninterest income excluding net securities gains (losses) and intangible amortization.
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Net income attributable to U.S. Bancorp was $1,338 million for the first quarter of 2012, 27.9 percent higher than the $1,046 million for the first quarter of 2011 and .9 percent lower than the $1,350 million for the fourth quarter of 2011. Diluted earnings per common share of $.67 in the first quarter of 2012 were $.15 higher than the first quarter of 2011 and $.02 lower than the previous quarter. Return on average assets and return on average common equity were 1.60 percent and 16.2 percent, respectively, for the first quarter of 2012, compared with 1.38 percent and 14.5 percent, respectively, for the first quarter of 2011. Impacting the comparison of current quarter results to prior periods were several notable items including in the fourth quarter of 2011, $263 million from the settlement of litigation related to the termination of a merchant processing referral agreement (“merchant settlement gain”), partially offset by a $130 million expense accrual related to mortgage servicing matters, which together increased fourth quarter of 2011 diluted earnings per common share by $.05. First quarter of 2011 results included a $46 million gain related to the acquisition of First Community Bank of New Mexico (“FCB”) in a transaction with the FDIC. The provision for credit losses for the first quarter of 2012 was $90 million lower than net charge-offs, compared with a provision for credit losses $125 million lower than net charge-offs for the fourth quarter of 2011 and $50 million lower than net charge-offs for the first quarter of 2011.
