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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 17, 2001
1-6880
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(Commission File Number)
U.S. BANCORP
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(Exact name of Registrant as specified in its charter)
DELAWARE 41-0255900
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(State of Incorporation) (IRS Identification Number)
U.S. Bank Place
601 Second Avenue South, Minneapolis, Minnesota 55402-4302
(612) 973 1111
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(Registrant's telephone number)
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ITEM 5 OTHER EVENTS
DOCUMENT INCORPORATED HEREIN:
Press Release by U.S. Bancorp dated April 17, 2001
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on it's behalf by the
undersigned hereunto duly authorized.
U.S. BANCORP
By: /s/ Terrance R. Dolan
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Name: Terrance R. Dolan
Title: Senior Vice President
Date: April 17, 2001
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[US BANCORP LOGO]
[NEWS RELEASE]
Contact:
Wendy L. Raway H.D. McCullough Judith T. Murphy
Media Relations Investor Relations Investor Relations
(612) 973-2429 (612) 973-2261 (612) 973-2264
U.S. BANCORP REPORTS EARNINGS FOR 1ST QUARTER 2001
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EARNINGS SUMMARY TABLE 1
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($ in millions, except per-share data) PERCENT PERCENT
1Q 4Q 1Q CHANGE CHANGE
2001 2000 2000 1Q01/4Q00 1Q01/1Q00
--------------------------------------------------------
Before merger and restructuring-related charges*:
Operating earnings $797.3 $824.2 $729.8 (3.3) 9.2
Earnings per common share (diluted) 0.42 0.43 0.38 (2.3) 10.5
Cash earnings per common share (diluted)** 0.48 0.49 0.43 (2.0) 11.6
Net income 410.1 768.7 686.8 (46.7) (40.3)
Earnings per common share (diluted) 0.21 0.40 0.36 (47.5) (41.7)
Cash earnings per common share (diluted)** 0.27 0.46 0.40 (41.3) (32.5)
Dividends paid per common share 0.1875 0.1625 0.1625 15.4 15.4
Book value per common share (period-end) 8.00 7.97 7.31 0.4 9.4
Return on average common equity***(%) 20.9 22.2 20.8
Return on average assets*** (%) 1.98 2.02 1.90
Net interest margin (%) 4.41 4.33 4.44
Efficiency ratio*** (%) 50.5 47.8 50.4
* merger and restructuring-related charges (net of taxes) totaled $387.2
million in 1Q01, $55.5 million in 4Q00 and $43.0 million in 1Q00
** calculated by adding amortization of goodwill and other intangible assets to operating
earnings and net income
*** before merger and restructuring-related charges
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MINNEAPOLIS, April 17, 2001 -- U.S. Bancorp (NYSE: USB) today reported operating
earnings of $797.3 million for the first quarter of 2001, compared with $729.8
million for the first quarter of 2000. Operating earnings of $.42 per diluted
share in the first quarter of 2001 were $.04, or 10.5 percent, higher than the
same period of 2000. Operating earnings on a cash basis increased to $.48 per
diluted share in the first quarter of 2001 from $.43 in the first quarter of
2000. Return on average common equity and return on average assets, excluding
merger and restructuring-related charges, were 20.9 percent and 1.98 percent,
respectively, in the first quarter of 2001, compared with returns of 20.8
percent and 1.90 percent in the first quarter of 2000.
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
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U.S. Bancorp (the "Company") is the organization created by the merger of
Firstar Corporation ("FSR") of Milwaukee, Wisconsin and the former U.S. Bancorp
("USB") of Minneapolis, Minnesota. The merger was completed on February 27,
2001, as a pooling-of-interests, and prior periods have been restated. The
Company's operating earnings of $.42 per diluted share represent a 20.0 percent
increase over Firstar's first quarter of 2000 operating earnings, as originally
reported, of $.35 per diluted share. The Company's operating earnings of $.42
per diluted share were $.01 higher than Firstar's fourth quarter of 2000
earnings of $.41, as originally reported.
Including after-tax merger and restructuring-related charges of $387.2
million in the first quarter of 2001 and $43.0 million in the first quarter of
2000, the Company recorded net income for the first quarter of 2001 of $410.1
million, or $.21 per diluted share, compared with $686.8 million, or $.36 per
diluted share, for the same period of 2000.
U.S. Bancorp President and Chief Executive Officer Jerry A. Grundhofer
said, "I am pleased with the first quarter results of the new U.S. Bancorp. I am
proud of what our employees have accomplished in a very short period of time -
employees who now have the opportunity to share in the success and growth of our
new Company through the broad-based stock option grant that we announced in
March. We have kept the proper focus on our customers, as evidenced by solid
first quarter earnings despite a more difficult economic environment, and we
have made significant progress on the integration of our two companies, the
former Firstar and the former U.S. Bancorp. All significant decisions related to
technology and operations have been finalized and scheduled for implementation
in 2001 or the first half of 2002. Opportunities to improve performance through
the introduction of new business models, products and services into both
franchises have been identified and are beginning to be rolled-out. In March,
former Firstar's retail banking model was introduced into the west markets, and
the strong corporate payment services product set of the former U.S. Bancorp was
introduced into the east markets. I am very excited about the future of this
company. By bringing these two great companies together under one powerful
brand, along with our nationally recognized Five Star Service Guarantee, we have
created an organization that will bring better solutions and greater convenience
to our customers, provide growth opportunities for our employees, value to our
shareholders and a strong commitment to the communities we serve. We have the
employees, the markets, the products, the financial strength and the brand to
build the best bank in America."
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
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SIGNIFICANT ITEMS - SECURITIES GAINS AND UNUSUAL LOSSES TABLE 2
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($ in millions)
1Q 2001
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UNUSUAL OR NONRECURRING GAINS
Investment securities sales $200.0
Sale of principal-only residuals 7.7
Other securities gains 8.3
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Total unusual or nonrecurring gains $216.0
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UNUSUAL OR NONRECURRING LOSSES
Credit portfolio charges $160.0
Partnerships and equity investment losses 36.8
Mortgage servicing rights impairment 11.0
Other 11.6
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Total unusual or nonrecurring losses $219.4
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Operating earnings for the first quarter of 2001 included a number of
significant unusual or nonrecurring income and expense items. Total revenue on a
taxable-equivalent basis for the first quarter of 2001 grew by $282.0 million,
or 10.5 percent, over the first quarter of 2000, primarily due to $216.0 million
of securities gains. Excluding securities gains, capital markets revenues
(primarily U.S. Bancorp Piper Jaffray and U.S. Bancorp Libra) and trust and
asset management-related revenues, total revenue on a taxable-equivalent basis
for the first quarter of 2001 grew by approximately $180 million, or 8.5%, over
the same period of 2000. Total noninterest expense, before merger and
restructuring-related charges, increased over the first quarter of 2000 by $36.7
million, or 2.7 percent, primarily due to $59.4 million of unusual or
nonrecurring expense items. Without these expense items, noninterest expense
would have decreased in the first quarter of 2001 by $22.7 million, or 1.7
percent, from the first quarter of 2000, primarily reflecting cost savings from
recent acquisitions. Provision for credit losses for the first quarter of 2001,
excluding merger-related charges, increased by $182.6 million over the first
quarter of 2000, primarily due to a $160.0 million charge to the provision for
credit losses incurred in connection with an accelerated loan workout strategy.
The additional provision for credit losses was taken after an extensive review
of the Company's commercial portfolio in light of recent declining economic
conditions and company-specific trends. In connection with this strategy, the
Company has written down the carrying values of these loans to estimated
secondary market prices or liquidation values and intends to aggressively pursue
the disposition or restructuring
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 4
of these loans in a relatively short period of time. The net impact of the
unusual or nonrecurring items was immaterial to the Company's operating earnings
in the first quarter of 2001.
Net charge-offs, excluding merger-related items totaling $90.0 million to
conform risk management policies and effect certain portfolio restructurings, in
the first quarter of 2001 were $387.1 million, compared with fourth quarter of
2000 net charge-offs of $229.5 million and first quarter of 2000 net charge-offs
of $183.1 million. Included in the first quarter of 2001 charge-offs were $160.0
million of net charge-offs related to the Company's accelerated loan workout
strategy. In addition, $21.3 million of net charge-offs in the first quarter of
2001 were associated with a portfolio of high loan-to-value home equity loans
and the indirect automobile portfolio of the former U.S. Bancorp. These
portfolios were sold at the end of the first quarter as part of the portfolio
restructuring. Excluding the $271.3 million in net charge-offs associated with
the merger, the credit portfolio review and accelerated workout strategy and the
sold portfolios, baseline net charge-offs in the first quarter of 2001 were
$205.8 million (see table 9). Net charge-offs, including merger-related and
other risk management actions taken during the first quarter of 2001, were
$477.1 million. Nonperforming assets increased from $867.0 million at December
31, 2000, to $1,090.8 million at March 31, 2001. Of the $223.8 million increase
in nonperforming assets, $210.0 million was associated with merger-related
actions and management's accelerated loan workout strategy. The ratio of
allowance for credit losses to nonperforming loans was 176 percent at March 31,
2001, compared with 233 percent at December 31, 2000. (see tables 10 & 12)
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
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LINE OF BUSINESS FINANCIAL PERFORMANCE* TABLE 3
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($ in millions)
PRE-TAX OPERATING INCOME** PERCENT CHANGE 1Q 2001
---------------------------------- -------------------------- EARNINGS
BUSINESS LINE 1Q 2001 4Q 2000 1Q 2000 1Q01/4Q00 1Q01/1Q00 COMPOSITION
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Wholesale Banking $514.1 $497.9 $455.5 3.3 12.9 32 %
Consumer Banking 603.6 609.7 551.8 (1.0) 9.4 38
Private Client, Trust and
Asset Management 151.1 163.4 154.3 (7.5) (2.1) 10
Payment Services 282.5 290.3 243.7 (2.7) 15.9 18
Capital Markets 35.7 49.3 71.4 (27.6) (50.0) 2
Treasury and Corporate Support (6.3) (131.0) (141.3) nm nm --
----------------------------------
Consolidated Company $1,580.7 $1,479.6 $1,335.4 6.8 18.4 100 %
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* preliminary data
** pre-tax income before merger and restructuring-related charges and provision for loan losses
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Line of Business
Within the Company, financial performance is measured by major lines of
business which include: Wholesale Banking, Consumer Banking, Private Client,
Trust and Asset Management, Payment Services, Capital Markets, and Treasury and
Other Corporate Support. The business line results are derived from the
Company's profitability reporting systems. Designations, assignments and
allocations may change from time to time as product lines change or segments are
realigned to better respond to our diverse customer base. All results for 2001
and 2000 have been restated to present consistent methodologies for all business
lines.
Wholesale Banking offers lending, depository, treasury management and
other financial services to middle market, large corporate and public sector
clients. Wholesale Banking contributed $514.1 million of the Company's pre-tax
operating income in the first quarter of 2001, a 12.9 percent increase over the
same period of 2000 and a 3.3 percent increase over the fourth quarter of 2000.
Total revenue grew by 14.2 percent from the first quarter of 2000 to the first
quarter of 2001, the result of core loan and deposit growth, as well as the
impact of acquisitions in the equipment finance division, and an increase in
noninterest income (17.5 percent), particularly cash management-related fees.
Offsetting the favorable variance in revenue was an increase in noninterest
expense (20.6 percent), primarily due to the leasing acquisitions and planned
growth in targeted markets.
Consumer Banking delivers products and services to the broad consumer
market and small businesses through banking offices, telemarketing, on-line
service, direct mail and automated teller
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 6
machines ("ATM"). It encompasses community banking, metropolitan banking, small
business banking, consumer banking and investment sales. Consumer Banking
contributed $603.6 million of the Company's pre-tax operating income in the
first quarter of 2001, a 9.4 percent increase over the same period of 2000 and a
1.0 percent decline from the fourth quarter of 2000. Total revenue growth of 6.6
percent in the first quarter of 2001 over the same quarter of 2000 can be
primarily attributed to an increase in retail deposit and cash management fees,
the result of core account growth, product pricing enhancements and the
acquisition of 41 branches in Tennessee. Mortgage banking revenue also
contributed to the favorable variance. Partially offsetting the increase in
revenue was an increase in noninterest expense (3.2 percent), primarily related
to the Tennessee branch acquisition.
Private Client, Trust and Asset Management provides mutual fund processing
services, trust, private banking and financial advisory services through four
businesses, including: the Private Client Group, Corporate Trust, Institutional
Trust and Custody, and Mutual Fund Services, LLC. The business segment also
offers investment management services to several client segments including
mutual funds, institutional customers, and private asset management. Private
Client, Trust and Asset Management contributed $151.1 million of the Company's
pre-tax operating income in the first quarter of 2001, a 2.1 percent decline
from the same period of 2000 and an 7.5 percent decline from the fourth quarter
of 2000. Strong growth in net interest income (17.8 percent) in the first
quarter of 2001 from the first quarter of 2000, the result of core loan and
deposit growth, was offset by a decrease in noninterest income (3.2 percent) and
an increase in noninterest expense (3.9 percent).
Payment Services includes consumer and business credit cards, corporate
and purchasing card services, consumer lines of credit, ATM processing and
merchant processing. Payment Services contributed $282.5 million of the
Company's pre-tax operating income in the first quarter of 2001, a 15.9 percent
increase over the same period of 2000 and a 2.7 percent decrease from the fourth
quarter of 2000. Strong revenue growth of 11.7 percent, primarily due to growth
in credit card and payment processing fees, was partially offset by an increase
in noninterest expense (1.5 percent).
Capital Markets engages in equity and fixed income trading activities,
offers investment banking and underwriting services for corporate and public
sector customers and provides financial advisory services and securities, mutual
funds, annuities and insurance products to consumers and regionally-based
businesses through a network of brokerage offices. Capital Markets contributed
$35.7 million of the Company's pre-tax operating income in the first quarter of
2001, a 50.0 percent decline from the first quarter of 2000 and a 27.6 percent
decline from the fourth quarter of 2000. The unfavorable
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 7
variances in pre-tax operating income from the first and fourth quarters of 2000
were due to significant decreases in fees related to trading, investment
products fees and commissions and investment banking revenues.
Treasury and Corporate Support includes the Company's investment and
residential mortgage portfolios, funding, capital management and asset
securitization activities, interest rate risk management, the net effect of
transfer pricing related to loan and deposit balances, and the change in
residual allocations associated with the provision for credit losses. It also
includes business activities managed on a corporate basis, including income and
expense of enterprise-wide operations and administrative support functions.
Treasury and Corporate Support recorded a pre-tax operating loss of $6.3 million
in the first quarter of 2001, compared to a loss of $141.3 million in the first
quarter of 2000 and a loss of $131.0 million in the fourth quarter of 2000.
Included in this business segment in the first quarter of 2001 were
approximately $208 million of securities gains partially offset by $36.8 million
of unusual expense items.
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 8
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INCOME STATEMENT HIGHLIGHTS TABLE 4
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(Taxable-equivalent basis, $ in millions, PERCENT PERCENT
except per-share data) 1Q 4Q 1Q CHANGE CHANGE
2001 2000 2000 1Q01/4Q00 1Q01/1Q00
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Net interest income $1,574.1 $1,562.5 $1,511.6 0.7 4.1
Noninterest income 1,400.9 1,264.9 1,181.4 10.8 18.6
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Total revenue 2,975.0 2,827.4 2,693.0 5.2 10.5
Noninterest expense* 1,394.3 1,347.8 1,357.6 3.5 2.7
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Operating income before merger and
restructuring-related charges 1,580.7 1,479.6 1,335.4 6.8 18.4
Provision for credit losses* 365.8 229.5 183.2 59.4 99.7
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Income before taxes, merger and
restructuring-related charges 1,214.9 1,250.1 1,152.2 (2.8) 5.4
Taxable-equivalent adjustment 18.5 21.0 22.0 (11.9) (15.9)
Income taxes* 399.1 404.9 400.4 (1.4) (0.3)
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Income before merger and restructuring-related
charges 797.3 824.2 729.8 (3.3) 9.2
Merger and restructuring-related charges (after-tax) (387.2) (55.5) (43.0) nm nm
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Net income $ 410.1 $ 768.7 $ 686.8 (46.7) (40.3)
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Per diluted common share:
Earnings, before merger and
restructuring-related charges $ 0.42 $ 0.43 $ 0.38 (2.3) 10.5
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Earnings on a cash basis, before
merger and restructuring-related charges** $ 0.48 $ 0.49 $ 0.43 (2.0) 11.6
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Net income $ 0.21 $ 0.40 $ 0.36 (47.5) (41.7)
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Earnings on a cash basis** $ 0.27 $ 0.46 $ 0.40 (41.3) (32.5)
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* before effect of merger and restructuring-related charges
** calculated by adding amortization of goodwill and other intangible assets to
operating earnings and net income
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Net Interest Income
First quarter net interest income on a taxable-equivalent basis was
$1,574.1 million, compared with $1,511.6 million recorded in the first quarter
of 2000. Average earning assets for the period increased over the first quarter
of 2000 by $7.3 billion, or 5.3 percent, primarily driven by core commercial and
retail loan growth of $9.3 billion and the impact of acquisitions, offset by a
$3.7 billion decline in lower margin residential mortgages. The net interest
margin was essentially flat in the first quarter of 2001 at 4.41 percent,
compared with 4.44 percent in the first quarter of 2000. The
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 9
8 basis point improvement in the net interest margin in the first quarter of
2001 from the fourth quarter of 2000 reflects the benefit of the declining rate
environment and product re-pricing dynamics.
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AVERAGE LOANS TABLE 5
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($ in millions) PERCENT PERCENT
1Q 4Q 1Q CHANGE CHANGE
2001 2000 2000 1Q01/4Q00 1Q01/1Q00
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Commercial $ 46,805 $ 46,886 $ 43,055 (0.2) 8.7
Lease financing 5,768 5,603 3,826 2.9 50.8
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Total commercial 52,573 52,489 46,881 0.2 12.1
Commercial mortgages 19,305 19,368 18,753 (0.3) 2.9
Construction and development 7,151 7,126 6,633 0.4 7.8
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Total commercial real estate 26,456 26,494 25,386 (0.1) 4.2
Residential mortgages 7,618 8,840 11,342 (13.8) (32.8)
Credit card 5,655 5,216 4,744 8.4 19.2
Retail leasing 4,291 3,957 2,328 8.4 84.3
Other retail 25,176 25,185 23,872 -- 5.5
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Total retail 35,122 34,358 30,944 2.2 13.5
Total loans $121,769 $122,181 $114,553 (0.3) 6.3
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Total loans, excl. residential mortgages $114,151 $113,341 $103,211 0.7 10.6
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Note: Average loan balances in the Company's loan conduit, Stellar Funding Group, Inc., totaled $3,276
million, $2,988 million and $2,480 in 1Q01, 4Q00 and 1Q00, respectively
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Excluding residential mortgage loans, average loans for the first quarter
were higher by $10.9 billion, or 10.6 percent, than the first quarter of 2000,
reflecting both core loan growth and acquisitions. In addition, $2.2 billion of
short term, high quality, low yielding commercial loans were funded in the loan
conduit, Stellar Funding Group, Inc. in the first quarter of 2001. Total average
loans for the first quarter, excluding residential mortgage loans, but including
loans funded in the loan conduit, grew by $11.7 billion, or 11.1 percent, over
the first quarter of 2000.
Excluding residential mortgage loans, average loans for the first quarter
of 2001 remained essentially flat to the fourth quarter 2000. Total average
loans, excluding residential mortgage loans,
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 10
but including loans funded in the loan conduit, grew by $1.1 billion, or .9
percent, in the first quarter of 2001 over the fourth quarter of 2000. Total
loans, excluding residential mortgage loans, at March 31, 2001, were $2.4
billion lower than at December 31, 2000, reflecting the $1.3 billion sale of a
portfolio of high loan-to-value home equity loans and the indirect automobile
portfolio held by the former U.S. Bancorp, in addition to the transfer of $2.2
billion of commercial loans into the loan conduit.
Investment securities at March 31, 2001, were $1.2 billion less than at
March 31, 2000, and $1.1 billion less than at December 31, 2000, primarily
reflecting net sales of securities. During the first quarter of 2001, the
Company sold $8.7 billion of investment securities and purchased $6.5 billion of
investment securities.
Average noninterest-bearing deposits in the first quarter of 2001 were
slightly lower than the first quarter of 2000. Average interest-bearing
deposits, however, grew by $3.1 billion, or 4.0 percent, over the first quarter
of 2000, reflecting bank acquisitions, growth in core money market deposits and
increases in time deposits greater than $100,000.
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 11
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NONINTEREST INCOME TABLE 6
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($ in millions) PERCENT PERCENT
1Q 4Q 1Q CHANGE CHANGE
2001 2000 2000 1Q01/4Q00 1Q01/1Q00
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Credit card and payment processing revenue $ 249.7 $ 264.7 $ 218.9 (5.7) 14.1
Trust and investment management fees 225.0 233.8 230.9 (3.8) (2.6)
Deposit service charges 146.5 145.4 123.4 0.8 18.7
Investment products fees and commissions 125.7 108.9 140.8 15.4 (10.7)
Cash management fees 76.8 71.8 71.8 7.0 7.0
Commercial product revenue 76.1 85.2 61.6 (10.7) 23.5
Trading account profits and commissions 71.9 62.4 85.3 15.2 (15.7)
Investment banking revenue 60.2 92.8 94.0 (35.1) (36.0)
Mortgage banking revenue 48.2 54.4 42.7 (11.4) 12.9
Securities gains (losses), net 216.0 7.0 (0.3) nm nm
Other 104.8 138.5 112.3 (24.3) (6.7)
-------------------------------
Total noninterest income $1,400.9 $1,264.9 $1,181.4 10.8 18.6
-------------------------------
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Noninterest Income
First quarter noninterest income was $1,400.9 million, an increase of
$219.5 million, or 18.6 percent, from the same quarter of 2000, and a $136.0
million, or 10.8 percent, increase from the fourth quarter of 2000. Excluding
the impact of securities gains, noninterest income in the first quarter of 2001
would have been essentially flat to the first quarter of 2000, and $73.0
million, or 5.8 percent, lower than the fourth quarter of 2000. Credit card and
payment processing revenue was higher in the first quarter of 2001 over the same
period of 2000 by $30.8 million, or 14.1 percent, reflecting continued growth in
corporate, merchant and retail card product fees. Deposit service charges, cash
management fees, commercial product revenue, and mortgage banking revenue also
improved in the first quarter of 2001 over the first quarter of 2000 by $23.1
million (18.7 percent), $5.0 million (7.0 percent), $14.5 million (23.5
percent), and $5.5 million (12.9 percent), respectively. The increases in
deposit service charges, cash management fees and commercial product revenue
were primarily driven by growth in core business and product fee enhancements
during 2000. The increase in mortgage banking revenue in the first quarter of
2001 over the first quarter of 2000 was due to an increase in origination fees,
partially offset by a decrease in gains on the sale of servicing
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 12
rights. Offsetting the growth in these items year over year was a reduction in
capital markets (primarily U.S. Bancorp Piper Jaffray and U.S. Bancorp Libra)
and trust and asset management-related revenues, which declined by approximately
$100 million from the first quarter of 2000, reflecting adverse equity capital
market conditions and declining asset values. Excluding the impact of securities
gains and these market-driven revenues, first quarter of 2001 noninterest income
would have increased by approximately $114 million, or 18.2 percent.
Excluding securities gains, noninterest income declined in the first
quarter of 2001 from the fourth quarter of 2000. Credit card and payment
processing revenue decreased by $15.0 million, reflecting seasonal spending
patterns. Mortgage banking revenue declined by $6.2 million, the result of lower
gains on the sale of servicing rights, partially offset by growth in mortgage
loan originations and servicing income. Given the current interest rate
environment, the Company expects continued growth in revenue from mortgage loan
originations in the second quarter. Approximately $45 million of the reduction
in noninterest income in the first quarter of 2001 from the fourth quarter of
2000 was due to the decline in capital markets and trust and asset
management-related revenue.
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NONINTEREST EXPENSE TABLE 7
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($ in millions) PERCENT PERCENT
1Q 4Q 1Q CHANGE CHANGE
2001 2000 2000 1Q01/4Q00 1Q01/1Q00
--------------------------------------------------------
Salaries $ 590.5 $ 593.7 $ 629.6 (0.5) (6.2)
Employee benefits 108.1 98.2 111.9 10.1 (3.4)
Net occupancy 110.1 104.2 97.2 5.7 13.3
Furniture and equipment 76.9 76.2 76.7 0.9 0.3
Postage 46.9 44.2 44.6 6.1 5.2
Goodwill 70.5 64.2 58.4 9.8 20.7
Other intangible assets 43.9 37.8 37.4 16.1 17.4
Other 347.4 329.3 301.8 5.5 15.1
-------------------------------
Subtotal 1,394.3 1,347.8 1,357.6 3.5 2.7
Merger and restructuring-related charges 404.2 84.1 65.0
-------------------------------
Total noninterest expense $1,798.5 $1,431.9 $1,422.6
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U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 13
Noninterest Expense
First quarter noninterest expense, before merger and restructuring-related
charges, totaled $1,394.3 million, an increase of $36.7 million, or 2.7 percent,
from the first quarter of 2000. The increase in noninterest expense was
primarily the result of unusual or nonrecurring expense items totaling $59.4
million, offset by net cost savings from acquisitions and a decline of
approximately $56 million in expenses associated with the slow-down in capital
market-related activities. Excluding the $59.4 million of unusual or
nonrecurring expense items, before merger and restructuring-related charges,
noninterest expense would have decreased in the first quarter of 2001 by $22.7
million, or 1.7 percent, from the first quarter of 2000.
First quarter of 2001 noninterest expense, before merger and
restructuring-related charges, was higher than the fourth quarter of 2000 by
$46.5 million, or 3.5 percent, primarily due to the $59.4 million of unusual or
nonrecurring expense items. Excluding unusual or nonrecurring expense items,
before merger and restructuring-related charges, noninterest expense in the
first quarter of 2001 would have declined by $12.9 million from the fourth
quarter of 2000, primarily due to the reduction in capital-market related
activities, partially offset by seasonally higher employee benefits and
increases in net occupancy of $5.9 million (5.7 percent), goodwill expense of
$6.3 million (9.8 percent) and other intangible expense of $6.1 million (16.1
percent). The increase in net occupancy, goodwill and other intangible expense
was primarily due to the purchase of 41 branches in Tennessee on December 8,
2000, by the former Firstar.
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17
U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 14
------------------------------------------------------------------------------------------------------------
SIGNIFICANT ITEMS - MERGER AND RESTRUCTURING TABLE 8
------------------------------------------------------------------------------------------------------------
($ in millions)
ESTIMATED TIMING
---------------------------- ACTUAL
SUMMARY OF CHARGES PLAN 2001 2002 1Q 2001
------------------------------------------------------------------------------------------------------------
Firstar/U.S. Bancorp
Severance and employee-related costs $ 187.4 $ 194.9 ($ 7.5) $ 123.6
Building and equipment 103.5 61.6 41.9 23.6
Investment banking and transaction costs 58.5 58.5 - 60.6
Charitable foundation 76.0 76.0 - 76.0
Restructurings 178.1 178.1 - 181.6
Branch sale (64.0) (64.0) - -
Other, net 103.8 65.3 38.5 38.5
---------------------------------------------------------
Subtotal 643.3 570.4 72.9 503.9
Conversion and integration 326.7 195.6 131.1 19.2
---------------------------------------------------------
Total Firstar/U.S. Bancorp* 970.0 766.0 204.0 523.1
U.S. Bancorp Piper Jaffray restructuring 26.0 26.0 - 22.6
Other acquisitions, net 75.0 55.0 20.0 25.1
---------------------------------------------------------
Total merger and restructuring $ 1,071.0 $ 847.0 $ 224.0 $ 570.8
---------------------------------------------------------
* originally estimated to be $800 million
------------------------------------------------------------------------------------------------------------
Earnings in the first quarter of 2001 included merger and
restructuring-related charges of $570.8 million. Total merger and
restructuring-related charges included $356.5 million of merger-related
noninterest expense and $166.6 million in provision for credit losses associated
with the Firstar/U.S. Bancorp merger, $22.6 million of restructuring expense for
U.S. Bancorp Piper Jaffray and $25.1 million of noninterest expense for other
recent acquisitions, including Mercantile, the Tennessee branch purchase and
Scripps Financial.
The $356.5 million of merger-related noninterest expense associated with
the Firstar/U.S. Bancorp merger included $123.6 million of severance and
employee-related costs, $23.6 million of building and equipment costs, $60.6
million of investment banking and transaction costs, $76.0 million of
contributions to charitable foundations, $15.0 million of non-credit related
restructurings, $38.5 million for asset impairments and other costs and $19.2
million of conversion and integration expense. In addition, the Company recorded
$166.6 million of merger-related provision for credit losses, which included
$90.0 million of charge-offs taken on credits with pre-charge off commitments
totaling $350 million. These charge-offs were taken to align risk management
practices for larger commercial credits, align charge-off policies and to
expedite the Company's transition out of a
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18
U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 15
segment of the health care industry. The write-down of several large commercial
loans, loans originally held separately by both Firstar and the former U.S.
Bancorp, was primarily taken to allow the Company to exit or reduce these
credits to conform with the credit exposure policy of the combined entity. An
additional $76.6 million of provision for credit losses was included in the
merger-related provision for credit losses to account for the sale of a
portfolio of high loan-to-value home equity loans and the indirect automobile
loan portfolio of the former U.S. Bancorp. The balance of these portfolios
totaled approximately $1.3 billion.
----------------------------------------------------------------------------------------------------
SIGNIFICANT ITEMS - CREDIT INITIATIVES TABLE 9
----------------------------------------------------------------------------------------------------
($ in millions) PROVISION
---------------------------
NET CHARGE-OFFS OPERATING "GAAP"
AND LOAN SALES BASIS* BASIS
------------------------------------------------
SUMMARY OF NET CHARGE-OFFS
Merger-related items $ 90.0 $ 90.0
Charge-offs related to consumer loans sold 21.3
Accelerated commercial workout strategy 160.0 $160.0 160.0
Baseline charge-offs 205.8 205.8 205.8
------------------------------------------------
477.1 365.8 455.8
Losses from consumer loans sold 113.6 76.6
------------------------------------------------
Total $590.7 $365.8 $532.4
------------------------------------------------
* excluding merger-related charges
----------------------------------------------------------------------------------------------------
In response to significant changes in the securities markets during the
past six months, including increased volatility, changes in equity valuations, a
slow down in the market for new and secondary issuances of equity, and the
increasingly competitive environment for the industry, U.S. Bancorp Piper
Jaffray is restructuring its operations. The restructuring is expected to
improve the operating efficiency of the individual businesses by removing excess
capacity from the product distribution system and by implementing new, more
effective operating models. Of the $26.0 million of total restructuring expense
to be incurred in 2001, $22.6 million was expensed in the first quarter of 2001.
Total merger-related expenses associated with the merger of the former
Firstar and the former U.S. Bancorp are expected to be $970 million, exceeding
the original estimate of $800 million by $170 million. The majority of the
increase is due to risk management policy conformance and the restructuring of
the credit portfolio, which were not anticipated at the time the merger was
announced. This credit portfolio restructuring, however, is expected to enhance
the overall credit risk profile of the Company. In addition, cost savings
associated with the merger of Firstar and the former U.S.
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19
U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 16
Bancorp are also expected to be higher than the original estimate of $266
million. The Company now anticipates that cost savings from the merger will be
approximately $325 million, with an accelerated phase-in of the cost savings in
2001. Along with the additional cost savings, the Company has identified revenue
enhancements that were not originally included in the transaction economics.
--------------------------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES TABLE 10
--------------------------------------------------------------------------------------------------------------------------------
($ in millions) 1Q2001
---------------------------- 4Q 3Q 2Q 1Q
"NORMALIZED*" ACTUAL 2000 2000 2000 2000
--------------------------------------------------------------------------------
Balance, beginning of period $1,786.9 $1,786.9 $1,776.6 $1,757.0 $1,726.1 $1,710.3
Net charge-offs
Commercial 53.9 270.3 69.0 68.9 68.5 49.4
Lease financing 6.4 19.6 7.2 4.8 5.6 3.1
--------------------------------------------------------------------------------
Total commercial 60.3 289.9 76.2 73.7 74.1 52.5
Commercial mortgages 3.1 28.5 6.8 0.7 (2.7) 0.2
Construction and development 0.8 0.8 3.9 5.8 (1.6) (0.4)
--------------------------------------------------------------------------------
Total commercial real estate 3.9 29.3 10.7 6.5 (4.3) (0.2)
Residential mortgages 3.2 3.2 3.0 2.3 2.3 4.8
Credit card 57.8 57.8 54.4 52.4 52.8 48.7
Retail leasing 6.2 6.2 4.6 3.7 2.6 1.9
Other retail 95.7 90.7 80.6 75.3 71.4 75.4
--------------------------------------------------------------------------------
Total retail 159.7 154.7 139.6 131.4 126.8 126.0
--------------------------------------------------------------------------------
Total net charge-offs 227.1 477.1 229.5 213.9 198.9 183.1
Provision for credit losses 282.4 532.4 229.5 214.0 201.3 183.2
Losses from consumer loan sales (113.6) (113.6) -- -- -- --
Acquisitions and other changes 0.5 0.5 10.3 19.5 28.5 15.7
--------------------------------------------------------------------------------
Balance, end of period $1,729.1 $1,729.1 $1,786.9 $1,776.6 $1,757.0 $1,726.1
--------------------------------------------------------------------------------
Net charge-offs to average loans (%) 0.76 1.59 0.75 0.71 0.68 0.64
Allowance for credit losses to
period-end loans (%) 1.45 1.45 1.46 1.46 1.48 1.50
* categories adjusted for merger-related ($90.0 million) and portfolio restructuring-related ($160.0 million)
net-charge-offs
--------------------------------------------------------------------------------------------------------------------------------
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20
U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 17
Credit Quality
The allowance for credit losses was $1,729.1 million at March 31, 2001,
lower than the allowance for credit losses of $1,786.9 million at December 31,
2000, principally due to reductions related to the sale of a portfolio of high
loan-to-value home equity loans and indirect automobile loans. The ratio of
allowance for credit losses to nonperforming loans was 176 percent at March 31,
2001, down from the ratio of 233 percent at December 31, 2000. The ratio of
allowance for credit losses to period-end loans was 1.45 percent at March 31,
2001, compared with the ratio of 1.46 percent at December 31, 2000.
Total net charge-offs, before merger-related items, in the first quarter
of 2001 were $387.1 million, compared with the fourth quarter of 2000 net
charge-offs of $229.5 million and the first quarter of 2000 net charge-offs of
$183.1 million. Total net charge-offs, before merger-related items, included
$160.0 million of charge-offs taken on credits with pre-charge off commitments
totaling $480 million related to the Company's accelerated loan workout
strategy. Total retail loan net charge-offs of $154.7 million were higher than
the same period of 2000 by $28.7 million, or 22.8 percent, and $15.1 million, or
10.8 percent, more than the fourth quarter of 2000. Included in the first
quarter of 2001 retail loan charge-offs were $21.3 million of charge-offs
associated with portfolios sold at the end of the quarter. Retail loan net
charge-offs as a percent of average loans outstanding were 1.79 percent in the
first quarter of 2001, compared with 1.62 percent and 1.64 percent in the fourth
quarter of 2000 and first quarter of 2000, respectively. Excluding the net
charge-offs related to the sold portfolios, retail loan net charge-offs as a
percent of average loans outstanding would have been 1.60 percent.
Commercial and commercial real estate loan net charge-offs were $319.2
million for the first quarter of 2001, or 1.64 percent of average loans
outstanding, compared with $86.9 million, or .44 percent, in the fourth quarter
of 2000 and $52.3 million, or .29 percent, of average loans outstanding, in the
first quarter of 2000. Commercial and commercial real estate loan net
charge-offs in the first quarter of 2001 included $255.0 million in
merger-related charge-offs and charge-offs associated with the Company's
accelerated loan workout strategy. Excluding net charge-offs associated with the
(MORE)
21
U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 18
merger and accelerated workout strategy, commercial and commercial real estate
loan net charge-offs were .33 percent of average loans outstanding. The Company
expects total net charge-offs in the second quarter of 2001 to increase modestly
from the "normalized" net charge-offs reported in the first quarter of 2001 (see
table 10).
------------------------------------------------------------------------------------------------------------
CREDIT RATIOS TABLE 11
------------------------------------------------------------------------------------------------------------
MAR 31 DEC 31 SEP 30 JUN 30 MAR 31
2001 2000 2000 2000 2000
-----------------------------------------------------------
Net charge-offs ratios*
Commercial 2.34 0.59 0.59 0.60 0.46
Lease financing 1.38 0.51 0.43 0.54 0.33
Total commercial 2.24 0.58 0.57 0.60 0.45
Commercial real estate 0.45 0.16 0.10 (0.07) --
Residential mortgages 0.17 0.14 0.10 0.10 0.17
Credit card 4.15 4.15 4.16 4.36 4.13
Retail leasing 0.59 0.46 0.43 0.37 0.33
Other retail 1.46 1.27 1.22 1.18 1.27
Total retail 1.79 1.62 1.58 1.59 1.64
Total net charge-offs 1.59 0.75 0.71 0.68 0.64
Delinquent loan ratios**
Commercial past due 90+ days 1.22 0.95 0.84 0.78 0.68
Consumer past due 90+ days 1.01 0.92 0.79 0.74 0.79
* annualized and calculated on average loan
balances
** ratios include nonperforming loans and are expressed as a percent of ending loan balances
------------------------------------------------------------------------------------------------------------
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22
U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 19
---------------------------------------------------------------------------------------------------
ASSET QUALITY TABLE 12
---------------------------------------------------------------------------------------------------
($ in millions)
MAR 31 DEC 31 SEP 30 JUN 30 MAR 31
2001 2000 2000 2000 2000
----------------------------------------------------
Nonperforming loans
Commercial $631.9 $470.4 $383.8 $325.3 $266.1
Lease financing 103.8 70.5 57.5 53.5 33.0
----------------------------------------------------
Total commercial 735.7 540.9 441.3 378.8 299.1
Commercial mortgages 98.5 105.5 107.6 103.4 114.9
Construction and development 57.8 38.2 34.8 24.1 32.9
----------------------------------------------------
Total commercial real estate 156.3 143.7 142.4 127.5 147.8
Residential mortgages 64.8 56.9 60.7 63.5 74.2
Retail 25.1 23.8 22.0 26.3 27.2
----------------------------------------------------
Total nonperforming loans 981.9 765.3 666.4 596.1 548.3
Other real estate 55.0 61.1 42.6 42.0 43.7
Other nonperforming assets 53.9 40.6 30.4 30.1 30.4
----------------------------------------------------
Total nonperforming assets* $1,090.8 $867.0 $739.4 $668.2 $622.4
----------------------------------------------------
Accruing loans 90 days past due $390.7 $385.2 $329.1 $319.7 $274.6
----------------------------------------------------
Allowance to nonperforming loans (%) 176 233 267 295 315
Allowance to nonperforming assets (%) 159 206 240 263 277
Nonperforming assets to loans
plus ORE (%) 0.91 0.71 0.61 0.56 0.54
* does not include accruing loans 90 days past due
---------------------------------------------------------------------------------------------------
Nonperforming assets at March 31, 2001, totaled $1,090.8 million,
compared with $867.0 million at December 31, 2000, and $622.4 million at March
31, 2000. $210.0 million of the increase in nonperforming assets from December
31, 2000, to March 31, 2001, was due to the merger-related and risk management
actions taken during the quarter, as credits were reduced to secondary market
value and placed on nonperforming status. The ratio of nonperforming assets to
loans and other real estate was .91 percent at March 31, 2001, compared with .71
percent at December 31, 2000, and .54 percent at March 31, 2000. Although the
Company has credit and non-credit relationships with companies in the energy
industry, the Company does not have direct credit exposure to troubled
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23
U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 20
California utilities. The Company expects nonperforming loans to decline
modestly from the March 31, 2001 totals through the remainder of 2001.
----------------------------------------------------------------------------------------------------------
CAPITAL POSITION TABLE 13
----------------------------------------------------------------------------------------------------------
($ in millions) MAR 31 DEC 31 SEP 30 JUN 30 MAR 31
2001 2000 2000 2000 2000
----------------------------------------------------------
Total shareholders' equity $15,243 $15,168 $14,334 $14,137 $14,014
Tier 1 capital 11,831 11,602 11,179 11,125 11,042
Total risk-based capital 17,135 17,038 16,740 16,718 16,430
Common equity to assets 9.5% 9.2% 8.9% 8.8% 9.0%
Tangible common equity to assets* 7.2 6.8 6.6 6.5 6.7
Tier 1 capital ratio 7.4 7.2 7.1 7.2 7.2
Total risk-based capital ratio 10.7 10.6 10.6 10.8 10.8
Leverage ratio 7.5 7.4 7.2 7.2 7.4
* calculated by deducting goodwill from shareholders' equity and assets
----------------------------------------------------------------------------------------------------------
Total shareholder's equity was $15.2 billion at March 31, 2001, an
increase of $1.2 billion from the $14.0 billion reported at March 31, 2000. The
increase was the result of strong corporate earnings, including merger-related
charges, offset by dividend payments and share buybacks in the second and third
quarters of 2000.
Tangible common equity to assets was 7.2 percent at March 31, 2001,
compared with 6.8 percent at December 31, 2000, and 6.7 percent at March 31,
2000. The Tier 1 capital ratio was 7.4 percent at March 31, 2001, compared with
7.2 percent at December 31, 2000, and at March 31, 2000. The total risk-based
capital ratio was 10.7 percent at March 31, 2001, compared with 10.6 percent at
December 31, 2000, and 10.8 percent at March 31, 2000, and the leverage ratio
was 7.5 percent at March 31, 2001, compared with 7.4 percent at December 31,
2000, and at March 31, 2000. All regulatory ratios continue to be in excess of
stated "well capitalized" requirements.
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24
U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 21
-----------------------------------------------------------------------------------------------------------
COMMON SHARES TABLE 14
-----------------------------------------------------------------------------------------------------------
(Millions) 1Q 4Q 3Q 2Q 1Q
2001 2000 2000 2000 2000
--------------------------------------------------------
Beginning shares outstanding 1,902.1 1,890.3 1,905.5 1,917.5 1,928.5
Shares issued for stock option and stock
purchase plans, acquisitions and other
corporate purposes 3.2 11.8 1.9 8.2 10.3
Shares repurchased -- -- (17.1) (20.2) (21.3)
--------------------------------------------------------
Ending shares outstanding 1,905.3 1,902.1 1,890.3 1,905.5 1,917.5
--------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
The stock repurchase programs of Firstar and the former U.S. Bancorp
were rescinded on October 4, 2000, and January 17, 2001, respectively, in
connection with the planned merger of the two companies.
Minneapolis-based U.S. Bancorp ("USB"), with $160 billion in assets, is
the 8th largest financial services holding company in the United States. The
company operates 2,242 banking offices and 5,208 ATMs, and provides a
comprehensive line of banking, brokerage, insurance, investment, mortgage, and
trust payment services products to consumers, businesses and institutions. U.S.
Bancorp is the parent company of Firstar Banks and U.S. Bank. Visit U.S. Bancorp
on the web at www.usbank.com and Firstar Bank at www.firstar.com.
A RECORDED REVIEW OF THE FINANCIAL RESULTS BY VICE CHAIRMAN AND CHIEF FINANCIAL
OFFICER DAVID M. MOFFETT WILL BE AVAILABLE BY TELEPHONE OR ON THE INTERNET. The
recorded message will be available from 10:30 A.M. on Tuesday, April 17, 2001
through 12:00 midnight on Monday, April 23, 2001. To access the recorded message
dial 800-642-1687 and enter ID number 434143. If calling from outside the United
States, please dial 706-645-9291 and enter the ID number.
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25
U.S. Bancorp Reports First Quarter 2001 Results
April 17, 2001
Page 22
Forward-Looking Statements
This press release contains forward-looking statements. Statements that
are not historical or current facts, including statements about beliefs and
expectations, are forward-looking statements. These forward-looking statements
cover, among other things, projected earnings growth, anticipated future
expenses and revenues, and the future prospects of the Company. Forward-looking
statements involve inherent risks and uncertainties, and important factors could
cause actual results to differ materially from those anticipated, including the
following, in addition to those contained in the Company's reports on file with
the SEC: (i) general economic or industry conditions could be less favorable
than expected, resulting in a deterioration in credit quality, a change in the
allowance for credit losses, or a reduced demand for credit or fee-based
products and services; (ii) changes in the domestic interest rate environment
could reduce net interest income and could increase credit losses; (iii) the
conditions of the securities markets could change, adversely affecting revenues
from capital markets businesses, the value or credit quality of the Company's
on-balance sheet and off-balance sheet assets, or the availability and terms of
funding necessary to meet the Company's liquidity needs; (iv) changes in the
extensive laws, regulations and policies governing financial services companies
could alter the Company's business environment or affect operations; (v) the
potential need to adapt to industry changes in information technology systems,
on which the Company is highly dependent, could present operational issues or
require significant capital spending; (vi) competitive pressures could intensify
and affect the Company's profitability, including as a result of continued
industry consolidation, the increased availability of financial services from
non-banks, technological developments such as the Internet, or bank regulatory
reform; and (vii) acquisitions may not produce revenue enhancements or cost
savings at levels or within time frames originally anticipated, or may result in
unforeseen integration difficulties. Forward-looking statements speak only as of
the date they are made, and the Company undertakes no obligation to update them
in light of new information or future events.
###
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26
U.S. Bancorp
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended
------------------------------------------------
(Dollars in Millions, Except Per Share Data) March 31, December 31, March 31,
(Unaudited) 2001 2000 2000
-----------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Loans $2,660.9 $2,787.9 $2,472.1
Loans held for sale 16.6 22.2 12.0
Investment securities
Taxable 253.3 251.3 251.0
Non-taxable 31.2 33.4 38.9
Money market investments 8.9 10.8 13.6
Trading securities 15.9 14.0 14.3
Other interest income 32.0 39.4 37.3
------------------------------------------------
Total interest income 3,018.8 3,159.0 2,839.2
INTEREST EXPENSE
Deposits 883.7 975.7 813.2
Short-term borrowings 219.1 220.7 171.1
Long-term debt 332.8 398.3 336.9
Company-obligated mandatorily redeemable preferred securities of subsidiary
trusts holding solely the junior subordinated debentures of the parent company 27.6 22.8 28.4
------------------------------------------------
Total interest expense 1,463.2 1,617.5 1,349.6
------------------------------------------------
Net interest income 1,555.6 1,541.5 1,489.6
Provision for credit losses 532.4 229.5 183.2
------------------------------------------------
Net interest income after provision for credit losses 1,023.2 1,312.0 1,306.4
NONINTEREST INCOME
Credit card and payment processing revenue 249.7 264.7 218.9
Trust and investment management fees 225.0 233.8 230.9
Deposit service charges 146.5 145.4 123.4
Investment products fees and commissions 125.7 108.9 140.8
Cash management fees 76.8 71.8 71.8
Commercial product revenue 76.1 85.2 61.6
Trading account profits and commissions 71.9 62.4 85.3
Investment banking revenue 60.2 92.8 94.0
Mortgage banking revenue 48.2 54.4 42.7
Securities gains (losses), net 216.0 7.0 (.3)
Other 104.8 138.5 112.3
------------------------------------------------
Total noninterest income 1,400.9 1,264.9 1,181.4
NONINTEREST EXPENSE
Salaries 590.5 593.7 629.6
Employee benefits 108.1 98.2 111.9
Net occupancy 110.1 104.2 97.2
Furniture and equipment 76.9 76.2 76.7
Postage 46.9 44.2 44.6
Goodwill 70.5 64.2 58.4
Other intangible assets 43.9 37.8 37.4
Merger and restructuring-related charges 404.2 84.1 65.0
Other 347.4 329.3 301.8
------------------------------------------------
Total noninterest expense 1,798.5 1,431.9 1,422.6
------------------------------------------------
Income before income taxes 625.6 1,145.0 1,065.2
Applicable income taxes 215.5 376.3 378.4
------------------------------------------------
Net income $410.1 $768.7 $686.8
------------------------------------------------
EARNINGS PER COMMON SHARE
Average shares outstanding (in millions) 1,901.1 1,895.7 1,921.7
Earnings per share $.22 $.41 $.36
------------------------------------------------
Diluted average shares outstanding (in millions) 1,915.7 1,907.7 1,933.4
Diluted earnings per share $.21 $.40 $.36
------------------------------------------------
27
U.S. Bancorp
CONSOLIDATED ENDING BALANCE SHEET
March 31, December 31, March 31,
(Dollars in Millions) 2001 2000 2000
------------------------------------------------------------------------------------------------------------------------------------
ASSETS (Unaudited) (Unaudited)
Cash and due from banks $7,252 $8,475 $6,644
Money market investments 523 657 1,013
Trading account securities 811 753 684
Investment securities
Held-to-maturity 260 252 191
Available-for-sale 16,251 17,390 17,518
Loans held for sale 1,210 764 1,948
Loans
Commercial 51,933 52,817 48,493
Commercial real estate 26,376 26,443 25,779
Residential mortgages 7,433 7,753 9,143
Retail 33,907 35,352 31,400
---------------------------------------------------------
Total loans 119,649 122,365 114,815
Less allowance for credit losses 1,729 1,787 1,726
---------------------------------------------------------
Net loans 117,920 120,578 113,089
Premises and equipment 1,787 1,836 1,867
Customers' liability on acceptances 145 183 117
Goodwill and other intangible assets 5,211 5,309 4,881
Other assets 8,904 8,724 8,029
---------------------------------------------------------
Total assets $160,274 $164,921 $155,981
---------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $24,797 $26,633 $24,676
Interest-bearing 67,686 68,177 67,506
Time deposits greater than $100,000 12,359 14,725 10,257
---------------------------------------------------------
Total deposits 104,842 109,535 102,439
Short-term borrowings 11,665 11,833 12,631
Long-term debt 21,725 21,876 21,440
Company-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely the junior
subordinated debentures of the parent company 1,400 1,400 1,400
Acceptances outstanding 145 183 117
Other liabilities 5,254 4,926 3,940
---------------------------------------------------------
Total liabilities 145,031 149,753 141,967
Shareholders' equity
Common stock 19 19 19
Capital surplus 3,500 4,276 4,294
Retained earnings 11,711 11,658 10,418
Treasury stock (38) (880) (483)
Other comprehensive income 51 95 (234)
---------------------------------------------------------
Total shareholders' equity 15,243 15,168 14,014
---------------------------------------------------------
Total liabilities and shareholders' equity $160,274 $164,921 $155,981
------------------------------------------------------------------------------------------------------------------------------------