10-KPeriod: FY2013

US BANCORP \DE\ Annual Report, Year Ended Dec 31, 2013

Filed February 21, 2014For Securities:USBUSB-PHUSB-PPUSB-PRUSB-PQUSB-PSUSB-PA

Summary

U.S. Bancorp, a diversified financial services holding company, filed its 2013 annual report, highlighting its operations and the complex regulatory environment it navigates. The company offers a comprehensive suite of services including lending, deposit-taking, cash management, capital markets, and trust and investment management. Its primary banking subsidiary, U.S. Bank National Association, serves a broad customer base across a network of 3,081 banking offices, primarily in the Midwest and West regions of the U.S., supported by 4,906 ATMs. The company also has a significant presence in credit card services and merchant processing through its subsidiary Elavon. The filing emphasizes the significant impact of the Dodd-Frank Act and evolving regulatory landscape on the company's operations. U.S. Bancorp is subject to stringent capital and liquidity requirements, stress testing, and resolution planning mandates. The adoption of Basel III standards, which began on January 1, 2014, introduces new capital definitions and higher requirements, particularly focusing on common equity Tier 1 capital. The company's regulatory compliance, including its "outstanding" Community Reinvestment Act (CRA) rating, is crucial for maintaining its financial holding company status and broader business activities.

Financial Highlights

38 data points
Beta

Revenue

$19.60B

Net Income

$5.84B

29.8% Net Margin

EPS (Diluted)

$3.00

Total Assets

$364.02B

Free Cash Flow

$11.45B

Financial Statements
Beta
Revenue$19.60B
Interest Expense$1.68B
Net Income$5.84B
EPS (Basic)$3.02
EPS (Diluted)$3.00
Shares Outstanding (Basic)1.84B
Shares Outstanding (Diluted)1.85B

Key Highlights

  • 1U.S. Bancorp operates a large, diversified financial services platform with a primary banking subsidiary, U.S. Bank National Association, and a significant merchant processing arm (Elavon).
  • 2The company is subject to an extensive and evolving regulatory framework, heavily influenced by the Dodd-Frank Act, which impacts capital requirements, risk management, and business operations.
  • 3Implementation of Basel III capital standards, effective January 1, 2014, necessitates a focus on common equity Tier 1 capital and higher capital ratios.
  • 4U.S. Bancorp is actively involved in regulatory stress testing (CCAR) and resolution planning ('Living Wills') mandated by regulators.
  • 5The company has a strong Community Reinvestment Act (CRA) rating ('outstanding'), which is vital for regulatory approvals and its financial holding company status.
  • 6Shareholder returns are supported by an approved stock repurchase program, with $488 million remaining authorization as of year-end 2013.

Frequently Asked Questions

The most significant regulatory changes stem from the Dodd-Frank Act, leading to enhanced prudential standards for large bank holding companies like U.S. Bancorp. This includes more stringent capital and liquidity requirements under Basel III, mandatory stress testing (CCAR), and the submission of resolution plans ('Living Wills'). The company also faces increased deposit insurance assessments and evolving rules for derivatives and proprietary trading (Volcker Rule).

As of December 31, 2013, U.S. Bancorp reported strong capital ratios under existing Basel I rules, with a total capital ratio of 13.2% and a Tier 1 capital ratio of 11.2%. Its leverage ratio was 9.6%. The company is preparing for the implementation of Basel III, which will introduce new capital definitions and likely increase capital requirements over time.

U.S. Bancorp employs a comprehensive approach to regulatory compliance and risk management, with dedicated roles like Chief Risk Officer and Chief Operational Risk Officer. The company actively participates in regulatory stress tests and resolution planning. Its strong CRA rating ('outstanding') is a testament to its community focus and supports its ability to operate as a financial holding company. The firm also adheres to various federal and state consumer protection laws and financial privacy regulations.

U.S. Bancorp's Board of Directors approved a $2.25 billion stock repurchase authorization for the period April 1, 2013, to March 31, 2014. During the fourth quarter of 2013, the company repurchased approximately 13 million shares for $37.94 per share on average, with $488 million remaining under this authorization at the end of the year. These repurchases are subject to regulatory approval and capital management considerations.