10-QPeriod: Q3 FY2010

US BANCORP \DE\ Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 8, 2010For Securities:USBUSB-PHUSB-PPUSB-PRUSB-PQUSB-PSUSB-PA

Summary

U.S. Bancorp's (USB) third quarter 2010 10-Q filing highlights significant uncertainty stemming from the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act. Management expects this legislation, upon full implementation, to adversely impact financial results through various provisions including the creation of a Consumer Financial Protection Bureau, changes to deposit insurance assessments, potential regulatory caps on interchange fees, and the exclusion of certain capital instruments from Tier 1 capital calculations. While the precise financial impact remains unquantifiable at this stage, the company anticipates detrimental effects on both revenues and expenses. Investors should note that the Dodd-Frank Act's phased-in exclusion of certain capital instruments, currently boosting the Tier 1 capital ratio by 1.4%, is set to begin in 2013. The majority of the act's provisions require further rulemaking, adding another layer of uncertainty to the future operating environment. Beyond this legislative risk, investors are directed to the company's 2009 10-K for a comprehensive discussion of other potential risks affecting business, financial results, and stock price.

Financial Highlights

36 data points
Beta

Net Income

$908.00M

EPS (Diluted)

$0.45

Total Assets

$290.65B

Cash & Equivalents

$4.47B

Free Cash Flow

-$1.15B

Financial Statements
Beta
Interest Expense$653.00M
Net Income$908.00M
EPS (Basic)$0.46
EPS (Diluted)$0.45
Shares Outstanding (Basic)1.91B
Shares Outstanding (Diluted)1.92B

Key Highlights

  • 1The Dodd-Frank Act poses a significant future risk, with expected adverse impacts on financial results, revenues, and expenses.
  • 2Key provisions of Dodd-Frank include the establishment of a Consumer Financial Protection Bureau and changes to deposit insurance assessments.
  • 3Interchange fees for debit card transactions may be subject to regulatory rate-setting.
  • 4Certain capital instruments, currently increasing Tier 1 capital by 1.4%, will be excluded from Tier 1 regulatory capital calculations starting in 2013, with a three-year phase-in.
  • 5The full financial impact of Dodd-Frank and related future rulemaking is currently unquantifiable.
  • 6Investors are referred to the 2009 10-K for a broader discussion of other existing risk factors.

Frequently Asked Questions

The primary concern is the significant uncertainty and expected adverse impact on U.S. Bancorp's financial results from the newly enacted Dodd-Frank Wall Street Reform and Consumer Protection Act. The full implications are not yet quantifiable due to pending rulemaking.

The Dodd-Frank Act will lead to the exclusion of certain capital instruments from Tier 1 regulatory capital calculations. These instruments currently contribute 1.4% to U.S. Bancorp's Tier 1 capital ratio, and their exclusion will begin in 2013, phased in over three years.

This filing primarily focuses on the Dodd-Frank Act. However, investors are directed to the company's 2009 Annual Report on Form 10-K for a comprehensive discussion of other risks that could adversely affect the company's business, financial results, or stock price.

The full impact of the Dodd-Frank Act and the numerous regulations that need to be developed is currently unknown and unquantifiable. The company expects detrimental effects on revenues and expenses once these provisions are fully implemented.