Summary
US Bancorp's (USB) second-quarter 2010 10-Q filing highlights the significant impending impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This legislation, signed in July 2010, is expected to negatively affect the company's financial results through various provisions, including the establishment of a Consumer Financial Protection Bureau, changes to deposit insurance assessment bases, and potential rate-setting for interchange fees. Furthermore, certain instruments currently contributing to Tier 1 capital will be phased out, reducing the company's capital ratio by an estimated 1.4 percent over three years. The annual increase in deposit insurance assessments alone is projected to be around $200 million.
Financial Highlights
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Financial Statements
Beta
| Interest Expense | $638.00M |
| Net Income | $766.00M |
| EPS (Basic) | $0.45 |
| EPS (Diluted) | $0.45 |
| Shares Outstanding (Basic) | 1.91B |
| Shares Outstanding (Diluted) | 1.92B |
Key Highlights
- 1Dodd-Frank Act to adversely impact financial results upon full implementation.
- 2Establishment of a Consumer Financial Protection Bureau is a key provision of Dodd-Frank.
- 3Deposit insurance assessment base changes expected to increase annual costs by approximately $200 million.
- 4Certain instruments excluded from Tier 1 capital ratio calculation, phasing in from 2013.
- 5Excluded capital instruments currently boost Tier 1 capital ratio by 1.4 percent.
- 6Company anticipates detrimental impact on revenues and expenses from Dodd-Frank's future rulemaking.
- 7Referral to 2009 10-K for a comprehensive discussion of other risk factors.
Frequently Asked Questions
The primary concern is the significant and adverse impact expected from the newly enacted Dodd-Frank Wall Street Reform and Consumer Protection Act. This legislation introduces new regulatory structures and changes to existing financial frameworks that are anticipated to negatively affect US Bancorp's financial performance.
The Dodd-Frank Act will lead to the exclusion of certain instruments that currently contribute to the company's Tier 1 regulatory capital ratio. This exclusion will be phased in over three years starting in 2013 and is expected to reduce the Tier 1 capital ratio by approximately 1.4 percent.
Based on currently approved rates, the change in the assessment base for deposit insurance is estimated to increase US Bancorp's annual assessment payments by approximately $200 million.
No, the company states that it cannot currently quantify the future impact of the Dodd-Frank Act and the related future rulemaking by regulatory agencies. However, they expect these provisions to have a detrimental impact on revenues and expenses once fully implemented.