Document and Company Informatio
Document and Company Information (USD $) | |||
In Billions, except Share data | 9 Months Ended
Sep. 30, 2009 | Oct. 31, 2009
| Jun. 30, 2008
|
Document and Company Information [Abstract] | |||
Entity Registrant Name | US BANCORP \DE\ | ||
Entity Central Index Key | 0000036104 | ||
Document Type | 10-Q | ||
Document Period End Date | 2009-09-30 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | 48.6 | ||
Entity Common Stock Shares Outstanding (actual number of shares) | 1,912,423,877 |
Consolidated Balance Sheet (Una
Consolidated Balance Sheet (Unaudited) (USD $) | ||
In Millions | Sep. 30, 2009
| Dec. 31, 2008
|
Assets | ||
Cash and due from banks | $5,016 | $6,859 |
Investment securities | ||
Held-to-maturity (fair value $49 and $54, respectively) | 48 | 53 |
Available-for-sale | 42,288 | 39,468 |
Loans held for sale (included $5,674 and $2,728 of mortgage loans carried at fair value, respectively) | 6,030 | 3,210 |
Loans | ||
Commercial | 50,712 | 56,618 |
Commercial real estate | 33,896 | 33,213 |
Residential mortgages | 24,947 | 23,580 |
Retail | 63,642 | 60,368 |
Total loans, excluding covered assets | 173,197 | 173,779 |
Covered assets | 9,859 | 11,450 |
Total loans | 183,056 | 185,229 |
Less allowance for loan losses | (4,825) | (3,514) |
Net loans | 178,231 | 181,715 |
Premises and equipment | 2,251 | 1,790 |
Goodwill | 8,597 | 8,571 |
Other intangible assets | 3,158 | 2,834 |
Other assets | 19,439 | 21,412 |
Total assets | 265,058 | 265,912 |
Deposits | ||
Noninterest-bearing | 34,250 | 37,494 |
Interest-bearing | 104,950 | 85,886 |
Time deposits greater than $100,000 | 30,555 | 35,970 |
Total deposits | 169,755 | 159,350 |
Short-term borrowings | 28,166 | 33,983 |
Long-term debt | 33,249 | 38,359 |
Other liabilities | 8,008 | 7,187 |
Total liabilities | 239,178 | 238,879 |
Shareholders' equity | ||
Preferred stock | 1,500 | 7,931 |
Common stock, par value $0.01 a share - authorized: 4,000,000,000 shares; issued: 9/30/09 - 2,125,725,742 shares and 12/31/08 - 1,972,643,007 shares | 21 | 20 |
Capital surplus | 8,308 | 5,830 |
Retained earnings | 23,629 | 22,541 |
Less cost of common stock in treasury: 9/30/09 - 213,637,356 shares; 12/31/08 - 217,610,679 shares | (6,534) | (6,659) |
Accumulated other comprehensive income (loss) | (1,753) | (3,363) |
Total U.S. Bancorp shareholders' equity | 25,171 | 26,300 |
Noncontrolling interests | 709 | 733 |
Total equity | 25,880 | 27,033 |
Total liabilities and equity | $265,058 | $265,912 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) (Unaudited) (USD $) | ||
In Millions, except Share data | Sep. 30, 2009
| Dec. 31, 2008
|
Investment securities | ||
Held-to-maturity, fair value | $49 | $54 |
Mortgage loans, carried at fair value | $5,674 | $2,728 |
Shareholders' equity | ||
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized (actual number of shares) | 4,000,000,000 | 4,000,000,000 |
Common stock, shares issued (actual number of shares) | 2,125,725,742 | 1,972,643,007 |
Treasury stock, shares (actual number of shares) | 213,637,356 | 217,610,679 |
Consolidated Statement of Incom
Consolidated Statement of Income (Unaudited) (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Interest Income | ||||
Loans | $2,373 | $2,487 | $7,068 | $7,476 |
Loans held for sale | 87 | 52 | 221 | 174 |
Investment securities | 374 | 478 | 1,210 | 1,507 |
Other interest income | 23 | 40 | 65 | 120 |
Total interest income | 2,857 | 3,057 | 8,564 | 9,277 |
Interest Expense | ||||
Deposits | 299 | 425 | 937 | 1,489 |
Short-term borrowings | 138 | 276 | 412 | 861 |
Long-term debt | 313 | 423 | 1,007 | 1,316 |
Total interest expense | 750 | 1,124 | 2,356 | 3,666 |
Net interest income | 2,107 | 1,933 | 6,208 | 5,611 |
Provision for credit losses | 1,456 | 748 | 4,169 | 1,829 |
Net interest income after provision for credit losses | 651 | 1,185 | 2,039 | 3,782 |
Noninterest Income | ||||
Credit and debit card revenue | 267 | 269 | 782 | 783 |
Corporate payment products revenue | 181 | 179 | 503 | 517 |
Merchant processing services | 300 | 300 | 836 | 880 |
ATM processing services | 103 | 94 | 309 | 271 |
Trust and investment management fees | 293 | 329 | 891 | 1,014 |
Deposit service charges | 256 | 286 | 732 | 821 |
Treasury management fees | 141 | 128 | 420 | 389 |
Commercial products revenue | 157 | 132 | 430 | 361 |
Mortgage banking revenue | 276 | 61 | 817 | 247 |
Investment products fees and commissions | 27 | 37 | 82 | 110 |
Securities gains (losses), net | ||||
Realized gains (losses), net | 1 | 0 | 126 | 16 |
Total other-than-temporarily impairment | (148) | (411) | (860) | (741) |
Portion of other-than-temporary impairment recognized in other comprehensive income | 71 | 0 | 441 | 0 |
Total securities gains (losses), net | (76) | (411) | (293) | (725) |
Other | 168 | 8 | 427 | 680 |
Total noninterest income | 2,093 | 1,412 | 5,936 | 5,348 |
Noninterest Expense | ||||
Compensation | 769 | 763 | 2,319 | 2,269 |
Employee benefits | 134 | 125 | 429 | 391 |
Net occupancy and equipment | 203 | 199 | 622 | 579 |
Professional services | 63 | 61 | 174 | 167 |
Marketing and business development | 137 | 75 | 273 | 220 |
Technology and communications | 175 | 153 | 487 | 442 |
Postage, printing and supplies | 72 | 73 | 218 | 217 |
Other intangibles | 94 | 88 | 280 | 262 |
Other | 406 | 276 | 1,251 | 863 |
Total noninterest expense | 2,053 | 1,813 | 6,053 | 5,410 |
Income before income taxes | 691 | 784 | 1,922 | 3,720 |
Applicable income taxes | 86 | 198 | 287 | 1,060 |
Net income | 605 | 586 | 1,635 | 2,660 |
Net income attributable to noncontrolling interests | (2) | (10) | (32) | (44) |
Net income attributable to U.S. Bancorp | 603 | 576 | 1,603 | 2,616 |
Net income applicable to U.S. Bancorp common shareholders | $583 | $557 | $1,223 | $2,560 |
Earnings per common share | 0.31 | 0.32 | 0.67 | 1.47 |
Diluted earnings per common share | 0.3 | 0.32 | 0.66 | 1.46 |
Dividends declared per common share | 0.05 | 0.425 | 0.15 | 1.275 |
Average common shares outstanding | 1,908 | 1,743 | 1,832 | 1,738 |
Average diluted common shares outstanding | 1,917 | 1,756 | 1,840 | 1,753 |
Consolidated Statement of Share
Consolidated Statement of Shareholders Equity (Unaudited) (USD $) | |||||||||
In Millions | Total U.S. Bancorp Shareholders' Equity
| Common Stock
| Preferred Stock
| Capital Surplus
| Treasury Stock
| Retained Earnings
| Other Comprehensive Income (Loss)
| Noncontrolling Interests
| Total
|
Shares, Beginning Balance at Dec. 31, 2007 | 1,728 | ||||||||
Beginning Balance at Dec. 31, 2007 | $21,046 | $20 | $1,000 | $5,749 | ($7,480) | $22,693 | ($936) | $780 | $21,826 |
Net income | 2,616 | 2,616 | 44 | 2,660 | |||||
Changes in unrealized gains and losses on securities available-for-sale | (2,156) | (2,156) | (2,156) | ||||||
Unrealized gain on derivatives | 1 | 1 | 1 | ||||||
Foreign currency translation | (37) | (37) | (37) | ||||||
Realized loss on derivatives | (15) | (15) | (15) | ||||||
Reclassification for realized losses | 763 | 763 | 763 | ||||||
Change in retirement obligation | 6 | 6 | 6 | ||||||
Income taxes | 546 | 546 | 546 | ||||||
Total comprehensive income | 1,724 | 44 | 1,768 | ||||||
Preferred stock dividends | (53) | (53) | (53) | ||||||
Common stock dividends | (2,224) | (2,224) | (2,224) | ||||||
Issuance of preferred stock | 491 | 500 | (9) | 491 | |||||
Issuance of common and treasury stock | 800 | (80) | 880 | 800 | |||||
Issuance of common and treasury stock, shares | 28 | ||||||||
Purchase of treasury stock | (90) | (90) | (90) | ||||||
Purchase of treasury stock, shares | (2) | ||||||||
Net other changes in noncontrolling interests | (76) | (76) | |||||||
Stock option and restricted stock grants | (14) | (14) | (14) | ||||||
Shares reserved to meet deferred compensation obligations | (5) | (5) | (5) | ||||||
Ending Balance at Sep. 30, 2008 | 21,675 | 20 | 1,500 | 5,646 | (6,695) | 23,032 | (1,828) | 748 | 22,423 |
Shares, Ending Balance at Sep. 30, 2008 | 1,754 | ||||||||
Shares, Beginning Balance at Dec. 31, 2008 | 1,755 | ||||||||
Beginning Balance at Dec. 31, 2008 | 26,300 | 20 | 7,931 | 5,830 | (6,659) | 22,541 | (3,363) | 733 | 27,033 |
Change in accounting principle | 141 | (141) | |||||||
Net income | 1,603 | 1,603 | 32 | 1,635 | |||||
Changes in unrealized gains and losses on securities available-for-sale | 2,569 | 2,569 | 2,569 | ||||||
Other-than-temporary impairment not recognized in earnings on securities available-for-sale | 441 | 441 | 441 | ||||||
Unrealized gain on derivatives | 375 | 375 | 375 | ||||||
Foreign currency translation | 25 | 25 | 25 | ||||||
Reclassification for realized losses | 297 | 297 | 297 | ||||||
Income taxes | (1,074) | (1,074) | (1,074) | ||||||
Total comprehensive income | 3,354 | 32 | 3,386 | ||||||
Redemption of preferred stock | (6,599) | (6,599) | (6,599) | ||||||
Repurchase of common stock warrant | (139) | (139) | (139) | ||||||
Preferred stock dividends | (209) | 168 | (377) | (209) | |||||
Common stock dividends | (279) | (279) | (279) | ||||||
Issuance of common and treasury stock | 2,691 | 1 | 2,561 | 129 | 2,691 | ||||
Issuance of common and treasury stock, shares | 157 | ||||||||
Purchase of treasury stock | (4) | (4) | (4) | ||||||
Net other changes in noncontrolling interests | (12) | (12) | |||||||
Distributions to noncontrolling interests | (44) | (44) | |||||||
Stock option and restricted stock grants | 56 | 56 | 56 | ||||||
Ending Balance at Sep. 30, 2009 | $25,171 | $21 | $1,500 | $8,308 | ($6,534) | $23,629 | ($1,753) | $709 | $25,880 |
Shares, Ending Balance at Sep. 30, 2009 | 1,912 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows (Unaudited) (USD $) | ||
In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Operating Activities | ||
Net cash provided by operating activities | $4,220 | $4,046 |
Investing Activities | ||
Proceeds from sales of available-for-sale investment securities | 4,622 | 2,084 |
Proceeds from maturities of investment securities | 5,743 | 3,800 |
Purchases of investment securities | (10,220) | (3,413) |
Net (increase) decrease in loans outstanding | 113 | (11,871) |
Proceeds from sales of loans | 2,226 | 115 |
Purchases of loans | (3,598) | (2,862) |
Acquisitions, net of cash acquired | 220 | 637 |
Other, net | 839 | (291) |
Net cash used in investing activities | (55) | (11,801) |
Financing Activities | ||
Net increase in deposits | 10,179 | 5,280 |
Net increase (decrease) in short-term borrowings | (5,817) | 4,980 |
Proceeds from issuance of long-term debt | 5,032 | 8,533 |
Principal payments or redemption of long-term debt | (10,167) | (11,700) |
Proceeds from issuance of preferred stock | 0 | 491 |
Proceeds from issuance of common stock | 2,688 | 658 |
Redemption of preferred stock | (6,599) | 0 |
Repurchase of common stock warrant | (139) | 0 |
Cash dividends paid on preferred stock | (256) | (49) |
Cash dividends paid on common stock | (929) | (2,204) |
Net cash provided by (used in) financing activities | (6,008) | 5,989 |
Change in cash and due from banks | (1,843) | (1,766) |
Cash and due from banks at beginning of period | 6,859 | 8,884 |
Cash and due from banks at end of period | $5,016 | $7,118 |
Basis of Presentation
Basis of Presentation | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note1Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States. In the opinion of management of U.S.Bancorp (the Company), all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of results for the interim periods have been made. These financial statements and notes should be read in conjunction with the consolidated financial statements and notes included in the Companys Annual Report on Form10-K for the year ended December31, 2008. Certain amounts in prior periods have been reclassified to conform to the current presentation. Accounting policies for the lines of business are generally the same as those used in preparation of the consolidated financial statements with respect to activities specifically attributable to each business line. However, the preparation of business line results requires management to establish methodologies to allocate funding costs, expenses and other financial elements to each line of business. Table 10 Line of Business Financial Performance included in Managements Discussion and Analysis provides details of segment results. This information is incorporated by reference into these Notes to Consolidated Financial Statements. |
Accounting Changes
Accounting Changes | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Accounting Changes [Abstract] | |
Accounting Changes | Note2Accounting Changes Fair Value MeasurementsOn April9, 2009, the Financial Accounting Standards Board (FASB) issued new accounting guidance, which the Company adopted effective January1, 2009, for determining fair value for an asset or liability if there has been a significant decrease in the volume and level of activity in relation to normal market activity. In that circumstance, transactions or quoted prices may not be determinative of fair value. Significant adjustments may be necessary to quoted prices or alternative valuation techniques may be required in order to determine the fair value of the asset or liability under current market conditions. The adoption of this guidance resulted in the use of valuation techniques other than quoted prices for the valuation of the Companys non-agency mortgage-backed securities, but the effect was not significant. For additional information on the fair value of certain financial assets and liabilities, refer to Note12. Other-Than-Temporary ImpairmentsOn April9, 2009, the FASB issued new accounting guidance, which the Company adopted effective January1, 2009, for the measurement and recognition of other-than-temporary impairment for debt securities. If an entity does not intend to sell, and it is more likely than not that the entity will not be required to sell, a debt security before recovery of its cost basis, other-than-temporary impairment should be separated into (a)the amount representing credit loss and (b)the amount related to all other factors. The amount of other-than-temporary impairment related to credit loss is recognized in earnings and other-than-temporary impairment related to other factors is recognized in other comprehensive income (loss). To determine the amount related to credit loss, the Company applied a methodology similar to that used for accounting by creditors for impairment of loans. The Companys adoption of this guidance resulted in the recognition of a cumulative-effect adjustment to January1, 2009 retained earnings, with a corresponding adjustment to accumulated other comprehensive income (loss), of $141million. For additional information on investment securities, refer to Note3. Business CombinationsEffective January1, 2009, the Company adopted accounting guidance issued by the FASB which establishes principles and requirements for the acquirer in a business combination, including the recognition and measurement of the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquired entity as of the acquisition date; the recognition and measurement of the goodwill acquired in the business combination or gain from a bargain purchase as of the acquisition date; and additional disclosures related to the nature and financial effects of the business combination. Under this guidance, nearly all acquired assets and liabilities assumed are required to be recorded at fair value at the acquisition date, including loans. The recognition at the acquisition date of an allowance for loan losses on acquired loans was eliminated, as credit-related factors are now incorporated directly into the fair value of the loans. Other |
Investment Securities
Investment Securities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Investment Securities [Abstract] | |
Investment Securities | Note3Investment Securities The amortized cost, other-than-temporary impairment recorded in other comprehensive income, gross unrealized holding gains and losses, and fair value of held-to-maturity and available-for-sale securities were as follows: September30, 2009 December31, 2008 Unrealized Losses Amortized Unrealized Other-than- Fair Amortized Unrealized Unrealized Fair (Dollars in Millions) Cost Gains Temporary Other Value Cost Gains Losses Value Held-to-maturity (a) Agency residential mortgage-backed securities $ 4 $ $ $ $ 4 $ 5 $ $ $ 5 Obligations of state and political subdivisions 34 2 (1 ) 35 38 2 (1 ) 39 Other debt securities 10 10 10 10 Total held-to-maturity $ 48 $ 2 $ $ (1 ) $ 49 $ 53 $ 2 $ (1 ) $ 54 Available-for-sale (b) U.S. Treasury and agencies $ 3,326 $ 15 $ $ (15 ) $ 3,326 $ 664 $ 18 $ $ 682 Mortgage-backed securities Residential Agency 26,464 617 (72 ) 27,009 26,512 426 (410 ) 26,528 Non-agency Prime (c) 2,289 6 (108) (158 ) 2,029 3,160 (729 ) 2,431 Non-prime 1,428 10 (298) (127 ) 1,013 1,574 3 (423 ) 1,154 Commercial 14 (1) 13 17 17 Asset-backed securities Collateralized debt obligations/Collateralized loan obligations 205 10 (8) 207 101 1 (11 ) 91 Other 520 10 (13 |
Loans
Loans | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Loans [Abstract] | |
Loans | Note 4Loans The composition of the loan portfolio was as follows: September30,2009 December31,2008 Percent Percent (Dollars in Millions) Amount of Total Amount of Total Commercial Commercial $ 44,166 24.1 % $ 49,759 26.9 % Lease financing 6,546 3.6 6,859 3.7 Total commercial 50,712 27.7 56,618 30.6 Commercial real estate Commercial mortgages 24,649 13.5 23,434 12.6 Construction and development 9,247 5.0 9,779 5.3 Total commercial real estate 33,896 18.5 33,213 17.9 Residential mortgages Residential mortgages 19,634 10.7 18,232 9.8 Home equity loans, first liens 5,313 2.9 5,348 2.9 Total residential mortgages 24,947 13.6 23,580 12.7 Retail Credit card 16,402 9.0 13,520 7.3 Retail leasing 4,696 2.6 5,126 2.8 Home equity and second mortgages 19,427 10.6 19,177 10.3 Other retail Revolving credit 3,428 1.9 3,205 1.7 Installment 5,532 3.0 5,525 3.0 Automobile 9,426 5.1 9,212 5.0 Student 4,731 2.6 4,603 2.5 Total other retail 23,117 12.6 22,545 12.2 Total retail 63,642 34.8 60,368 32.6 Total loans, excluding covered assets 173,197 94.6 173,779 93.8 Covered Assets 9,859 5.4 11,450 6.2 Total loans $ 183,056 100.0 % $ 185,229 100.0 % Loans are presented net of unearned interest and deferred fees and costs, which amounted to $1.4billion at September30, 2009, and $1.5billion at December31, 2008. Covered assets represent assets acquired from the FDIC subject to loss shari |
Accounting for Transfers and Se
Accounting for Transfers and Servicing of Financial Assets and Variable Interest Entities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Accounting for Transfers and Servicing of Financial Assets and Variable Interest Entities [Abstract] | |
Accounting for Transfers and Servicing of Financial Assets and Variable Interest Entities | Note5Accounting for Transfers and Servicing of Financial Assets and Variable Interest Entities When the Company sells financial assets, it may retain servicing rights and/or other beneficial interests in the transferred financial assets. The gain or loss on sale depends, in part, on the previous carrying amount of the transferred financial assets and the consideration other than beneficial interests in the transferred assets received in exchange. Upon transfer, any servicing assets are initially recognized at fair value. The remaining carrying amount of the transferred financial asset is allocated between the assets sold and any interest(s) that continues to be held by the Company based on the relative fair values as of the date of transfer. The Company is involved in various entities that are considered to be variable interest entities (VIEs) as defined by applicable authoritative accounting guidance. Generally, a VIE is a corporation, partnership, trust or any other legal structure that does not have equity investors with substantive voting rights or has equity investors that do not have sufficient equity at risk for the entity to independently finance its activities. The Companys investments in VIEs primarily represent private investment funds or partnerships that make equity investments, provide debt financing or support community-based investments in affordable housing, development entities that provide capital for communities located in low-income districts and historic rehabilitation projects that may enable the Company to ensure regulatory compliance with the Community Reinvestment Act. In addition, the Company sponsors entities to which it transfers a pool of tax credit investments. These entities are consolidated by the Company as it continues to absorb the majority of the entities expected losses. The Company sponsors an off-balance sheet conduit to which it transferred high-grade investment securities, initially funded by the conduits issuance of commercial paper. These investment securities include primarily (i)non-agency asset-backed securities, which are guaranteed by third-party insurers, and (ii)collateralized mortgage obligations. The conduit held assets of $.7billion at September30, 2009, compared with $.8billion at December31, 2008. During 2008, the conduit ceased issuing commercial paper and began to draw upon a Company-provided liquidity facility to replace outstanding commercial paper as it matured. The Company determined its liquidity facility variable interest does not absorb the majority of the variability of the conduits cash flows or fair value because of third-party insurance protection. As a result, the Company is not the primary beneficiary of the conduit and, therefore, does not consolidate the conduit. At September30, 2009, the amount advanced to the conduit under the liquidity facility was $.7billion, compared with $.9billion at December31, 2008, and was recorded on the Companys balance sheet in commercial loans. Proceeds from the conduits investment securities will be used to repay draws on the liquidity facility. The Company believes there is sufficient collateral to repay all liquidity |
Mortgage Servicing Rights
Mortgage Servicing Rights | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Mortgage Servicing Rights [Abstract] | |
Mortgage Servicing Rights | Note6Mortgage Servicing Rights The Company serviced $145.0billion of residential mortgage loans for others at September30, 2009, and $120.3billion at December31, 2008. The net impact included in mortgage banking revenue of assumption changes on the fair value of mortgage servicing rights (MSRs) and fair value changes of derivatives used to offset MSR value changes was a $67million net gain and $25million net loss for the three months ended September30, 2009 and 2008, respectively, and a $114million net gain and $52million net loss for the nine months ended September30, 2009 and 2008, respectively. Loan servicing fees, not including valuation changes included in mortgage banking revenue, were $131million and $102million for the three months ended September30, 2009 and 2008, respectively, and $374million and $295million for the nine months ended September30, 2009 and 2008, respectively. Changes in fair value of capitalized MSRs are summarized as follows: Three Months Ended Nine Months Ended September30, September30, (Dollars in Millions) 2009 2008 2009 2008 Balance at beginning of period $ 1,482 $ 1,731 $ 1,194 $ 1,462 Rights purchased 16 6 91 23 Rights capitalized 254 127 686 406 Changes in fair value of MSRs Due to change in valuation assumptions (a) (118 ) (56 ) (122 ) 43 Other changes in fair value (b) (80 ) (58 ) (295 ) (184 ) Balance at end of period $ 1,554 $ 1,750 $ 1,554 $ 1,750 (a) Principally reflects changes in discount rates and prepayment speed assumptions, primarily arising from interest rate changes. (b) Primarily represents changes due to collection/realization of expected cash flows over time (decay). The estimated sensitivity to changes in interest rates of the fair value of the MSRs portfolio and the related derivative instruments at September30, 2009, was as follows: Down Scenario Up Scenario (Dollars in Millions) 50bps 25bps 25bps 50bps Net fair value $ (20 ) $ (17 ) $ (1 ) $ (4 ) |
Preferred Stock
Preferred Stock | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Preferred Stock [Abstract] | |
Preferred Stock | Note7Preferred Stock At September30, 2009 and December31, 2008, the Company had authority to issue 50million shares of preferred stock. The number of shares issued and outstanding and the carrying amount of each outstanding series of the Companys preferred stock was as follows: September30,2009 December31,2008 Shares Issued Carrying Shares Issued Carrying (Dollars in Millions) and Outstanding Amount and Outstanding Amount SeriesB 40,000 $ 1,000 40,000 $ 1,000 SeriesD 20,000 500 20,000 500 SeriesE 6,599,000 6,431 Total preferred stock (a) 60,000 $ 1,500 6,659,000 $ 7,931 (a) The par value of all shares issued and outstanding at September30, 2009 and December31, 2008, was $1.00 a share. On November14, 2008, the Company issued 6.6million shares of SeriesE Fixed Rate Cumulative Perpetual Preferred Stock (the SeriesE Preferred Stock) and a warrant to purchase 33million shares of the Companys common stock, at a price of $30.29 per common share, to the U.S.Department of the Treasury under the Capital Purchase Program of the Emergency Economic Stabilization Act of 2008 for proceeds of $6.6billion. The Company allocated $172million of the proceeds to the warrant, with the resulting discount on the SeriesE Preferred Stock being accreted over five years and reported as a reduction to income applicable to common equity over that period. On June17, 2009, the Company redeemed the SeriesE Preferred Stock. The Company included in its computation of earnings per diluted common share for the first nine months of 2009 the impact of a deemed dividend of $154million, representing the unaccreted preferred stock discount remaining on the redemption date. On July15, 2009, the Company repurchased the warrant from the U.S.Department of the Treasury for $139million. On March27, 2006, the Company issued depositary shares representing an ownership interest in 40,000shares of SeriesB Non-Cumulative Perpetual Preferred Stock with a liquidation preference of $25,000 per share (the SeriesB Preferred Stock), and on March17, 2008, the Company issued depositary shares representing an ownership interest in 20,000shares of SeriesD Non-Cumulative Perpetual Preferred Stock with a liquidation preference of $25,000 per share (the SeriesD Preferred Stock). The SeriesB Preferred Stock and SeriesD Preferred Stock have no stated maturity and will not be subject to any sinking fund or other obligation of the Company. Dividends, if declared, will accrue and be payable quarterly, in arrears, at a rate per annum equal to the greater of three-month LIBOR plus .60percent, or 3.50percent on the SeriesB Preferred Stock, and 7.875percent per annum on the SeriesD Preferred Stock. Both series are redeemable at the Companys optio |
Earnings Per Share
Earnings Per Share | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note8Earnings Per Share The components of earnings per share were: Three Months Ended Nine Months Ended September30, September30, (Dollars and Shares in Millions, Except Per Share Data) 2009 2008 2009 2008 Net income attributable to U.S.Bancorp $ 603 $ 576 $ 1,603 $ 2,616 Preferred dividends (19 ) (19 ) (209 ) (53 ) Accretion of preferred stock discount (14 ) Deemed dividend on preferred stock redemption (154 ) Earnings allocated to participating stock awards (1 ) (3 ) (3 ) Net income applicable to U.S.Bancorp common shareholders $ 583 $ 557 $ 1,223 $ 2,560 Average common shares outstanding 1,908 1,743 1,832 1,738 Net effect of the exercise and assumed purchase of stock awards and conversion of outstanding convertible notes 9 13 8 15 Average diluted common shares outstanding 1,917 1,756 1,840 1,753 Earnings per common share $ .31 $ .32 $ .67 $ 1.47 Diluted earnings per common share $ .30 $ .32 $ .66 $ 1.46 Options outstanding at September30, 2009 to purchase 70million and 75million common shares were not included in the computation of diluted earnings per share for the three and nine months ended September30, 2009, respectively, because they were antidilutive. Options outstanding at September30, 2008 to purchase 35million and 27million common shares were not included in the computation of diluted earnings per share for the three and nine months ended September30, 2008, respectively, because they were antidilutive. |
Employee Benefits
Employee Benefits | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Employee Benefits [Abstract] | |
Employee Benefits | Note9Employee Benefits The components of net periodic benefit cost for the Companys retirement plans were: Three Months Ended September30, Nine Months Ended September30, Postretirement Postretirement Pension Plans Welfare Plan Pension Plans Welfare Plan (Dollars in Millions) 2009 2008 2009 2008 2009 2008 2009 2008 Service cost $ 20 $ 19 $ 1 $ 1 $ 60 $ 57 $ 4 $ 4 Interest cost 38 35 2 3 114 105 8 9 Expected return on plan assets (54 ) (56 ) (1 ) (1 ) (161 ) (168 ) (4 ) (4 ) Prior service (credit) cost and transition (asset) obligation amortization (2 ) (1 ) (5 ) (4 ) Actuarial (gain) loss amortization 13 8 (1 ) (1 ) 37 24 (5 ) (3 ) Net periodic benefit cost $ 15 $ 5 $ 1 $ 2 $ 45 $ 14 $ 3 $ 6 |
Income Taxes
Income Taxes | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Income Taxes [Abstract] | |
Income Taxes | Note10Income Taxes The components of income tax expense were: Three Months Ended Nine Months Ended September30, September30, (Dollars in Millions) 2009 2008 2009 2008 Federal Current $ 327 $ 525 $ 1,011 $ 1,344 Deferred (282 ) (378 ) (802 ) (462 ) Federal income tax 45 147 209 882 State Current 67 81 152 214 Deferred (26 ) (30 ) (74 ) (36 ) State income tax 41 51 78 178 Total income tax provision $ 86 $ 198 $ 287 $ 1,060 A reconciliation of expected income tax expense at the federal statutory rate of 35percent to the Companys applicable income tax expense follows: Three Months Ended Nine Months Ended September30, September30, (Dollars in Millions) 2009 2008 2009 2008 Tax at statutory rate (35percent) $ 242 $ 274 $ 673 $ 1,302 State income tax, at statutory rates, net of federal tax benefit 27 33 51 115 Tax effect of Tax credits (134 ) (72 ) (285 ) (212 ) Tax-exempt income (52 ) (44 ) (150 ) (129 ) Noncontrolling interests (1 ) (3 ) (11 ) (15 ) Other items 4 10 9 (1 ) Applicable income taxes $ 86 $ 198 $ 287 $ 1,060 The Companys income tax returns are subject to review and examination by federal, state, local and foreign government authorities. On an ongoing basis, numerous federal, state, local and foreign examinations are in progress and cover multiple tax years. As of September30, 2009, the federal taxing authority has completed its examination of the Company through the fiscal year ended December31, 2006. The years open to examination by foreign, state and local government authorities vary by jurisdiction. The Companys net deferred tax asset was $652million at September30, 2009, and $1.1billion at December31, 2008. |
Derivative Instruments
Derivative Instruments | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Derivative Instruments [Abstract] | |
Derivative Instruments | Note11Derivative Instruments The Company recognizes all derivatives in the consolidated balance sheet at fair value as other assets or liabilities. On the date the Company enters into a derivative contract, the derivative is designated as either a hedge of the fair value of a recognized asset or liability, including hedges of foreign currency exposure (fair value hedge); a hedge of a forecasted transaction or the variability of cash flows to be paid related to a recognized asset or liability (cash flow hedge); or a customer accommodation or an economic hedge for asset/liability risk management purposes (free-standing derivative). Of the Companys $46.2billion of total notional amount of asset and liability management positions at September30, 2009, $17.0billion was designated as a fair value or cash flow hedge. When a derivative is designated as either a fair value or cash flow hedge, the Company performs an assessment, at inception and quarterly thereafter to determine the effectiveness of the derivative in offsetting changes in the value of the hedged item(s). Fair Value HedgesThese derivatives are primarily interest rate swaps that hedge the change in fair value related to interest rate changes of underlying fixed-rate debt and junior subordinated debentures. Changes in the fair value of derivatives designated as fair value hedges, and changes in the fair value of the hedged items, are recorded in earnings. All fair value hedges were highly effective for the nine months ended September30, 2009, and the change in fair value attributed to hedge ineffectiveness was not material. The Company also uses forward commitments to sell specified amounts of certain foreign currencies and foreign denominated debt to hedge the volatility of its investment in foreign operations as driven by fluctuations in foreign currency exchange rates. The net amount of gains or losses included in the cumulative translation adjustment for the third quarter and first nine months of 2009 was not material. Cash Flow HedgesThese derivatives are interest rate swaps that are hedges of the forecasted cash flows from the underlying variable-rate debt. Changes in the fair value of derivatives designated as cash flow hedges are recorded in other comprehensive income (loss) until income from the cash flows of the hedged items is realized. If a derivative designated as a cash flow hedge is terminated or ceases to be highly effective, the gain or loss in other comprehensive income (loss) is amortized to earnings over the period the forecasted hedged transactions impact earnings. If a hedged forecasted transaction is no longer probable, hedge accounting is ceased and any gain or loss included in other comprehensive income (loss) is reported in earnings immediately. At September30, 2009, the Company had $415million of realized and unrealized losses on derivatives classified as cash flow hedges recorded in other comprehensive income (loss). The estimated amount to be reclassified from other comprehensive income (loss) into earnings during the remainder of 2009 and the next 12months is a loss of $37million and $147million, respectively. This includes gain |
Fair Values of Assets and Liabi
Fair Values of Assets and Liabilities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Fair Values of Assets and Liabilities [Abstract] | |
Fair Values of Assets and Liabilities | Note 12Fair Values of Assets and Liabilities The Company uses fair value measurements for the initial recording of certain assets and liabilities, periodic remeasurement of certain assets and liabilities, and disclosures. Derivatives, investment securities, certain mortgage loans held for sale (MLHFS) and MSRs are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as loans held for sale, loans held for investment and certain other assets. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-fair value accounting or impairment write-downs of individual assets. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value measurement reflects all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. The Company groups its assets and liabilities measured at fair value into a three-level hierarchy for valuation techniques used to measure financial assets and financial liabilities at fair value. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: Level 1Quoted prices in active markets for identical assets or liabilities. Level1 includes U.S.Treasury and exchange-traded instruments. Level2 Observable inputs other than Level1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level2 includes debt securities that are traded less frequently than exchange-traded instruments and which are valued using third party pricing services; derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data; and MLHFS whose values are determined using quoted prices for similar assets or pricing models with inputs that are observable in the market or can be corroborated by observable market data. Level3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category includes residential MSRs, certain debt securities, including the Companys SIV-related investments and non-age |
Guarantees and Contingent Liabi
Guarantees and Contingent Liabilities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Guarantees and Contingent Liabilities [Abstract] | |
Guarantees and Contingent Liabilities | Note13Guarantees and Contingent Liabilities Visa Restructuring and Card Association LitigationThe Companys payment services business issues and acquires credit and debit card transactions through the Visa U.S.A. Inc. card association or its affiliates (collectively Visa). In 2007, Visa completed a restructuring and issued shares of Visa Inc. common stock to its financial institution members in contemplation of its initial public offering (IPO) completed in the first quarter of 2008 (the Visa Reorganization). As a part of the Visa Reorganization, the Company received its proportionate number of shares of Visa Inc. common stock. In addition, the Company and certain of its subsidiaries have been named as defendants along with Visa U.S.A. Inc. (Visa U.S.A.) and MasterCard International (collectively, the Card Associations), as well as several other banks, in antitrust lawsuits challenging the practices of the Card Associations (the Visa Litigation). Visa U.S.A. member banks have a contingent obligation to indemnify Visa Inc. under the Visa U.S.A. bylaws (which were modified at the time of the restructuring in October 2007)for potential losses arising from the Visa Litigation. The contingent obligation of member banks under the Visa U.S.A. bylaws has no specific maximum amount. The Company has also entered into judgment and loss sharing agreements with Visa U.S.A. and certain other banks in order to apportion financial responsibilities arising from any potential adverse judgment or negotiated settlements related to the Visa Litigation. In 2007 and 2008, Visa announced settlement agreements with American Express and Discover Financial Services, respectively. In addition to these settlements, Visa U.S.A. member banks remain obligated to indemnify Visa Inc. for potential losses arising from the remaining Visa litigation. Using proceeds from its initial IPO and through subsequent reductions to the conversion ratio applicable to the ClassB shares held by member financial institutions, Visa Inc. has funded an escrow account for the benefit of member financial institutions to fund the expenses of the Visa Litigation, as well as the members proportionate share of any judgments or settlements that may arise out of the Visa Litigation. The receivable related to the escrow account is classified in other liabilities as a direct offset to the related Visa Litigation liabilities and will decline as amounts are paid out of the escrow account. On July16, 2009, Visa deposited additional funds into the escrow account and further reduced the conversion ratio applicable to the ClassB shares. As a result, the Company recognized a $39million gain related to the effective repurchase of a portion of its ClassB shares. At September30, 2009, the carrying amount of the Companys liability related to the remaining Visa Litigation, was $113million. The remaining ClassB shares held by the Company will be eligible for conversion to ClassA shares three years after the IPO or upon settlement of the Visa Litigation, whichever is later. The following table is a summary of other guarantees and contingent liabilities of the Company at September30, 2009: |
Subsequent Events
Subsequent Events | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14Subsequent Events The Company has evaluated the impact of events that occurred subsequent to September30, 2009 through November6, 2009, the date the consolidated financial statements were filed with the United States Securities and Exchange Commission. Based on this evaluation, the Company determined none of these events require adjustment to the consolidated financial statements. On October30, 2009, the Company acquired the nine banking subsidiaries of FBOP Corporation of Oak Park, Illinois, from the FDIC. The Company received approximately $18.4billion of assets and assumed $18.3billion of liabilities, including $15.4billion of deposits. Substantially all loans are subject to a loss sharing agreement with the FDIC. |
Condensed Daily Average Balance
Condensed Daily Average Balance Sheet and Related Yields and Rates | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Daily Average Balance Sheet and Related Yields and Rates [Abstract] | |
Daily Average Balance Sheet And Related Yields And Rates | U.S.Bancorp Consolidated Daily Average Balance Sheet and Related Yields and Rates Consolidated Daily Average Balance Sheet and Related Yields and Rates(a) For the Three Months Ended September30, 2009 2008 Yields Yields % Change (Dollars in Millions) Average and Average and Average (Unaudited) Balances Interest Rates Balances Interest Rates Balances Assets Investment securities $ 42,558 $ 414 3.89 % $ 42,548 $ 521 4.90 % % Loans held for sale 7,359 87 4.74 3,495 52 6.03 * Loans(b) Commercial 51,222 513 3.98 54,573 661 4.83 (6.1 ) Commercial real estate 33,829 367 4.30 31,748 440 5.50 6.6 Residential mortgages 24,405 343 5.62 23,309 354 6.08 4.7 Retail 62,224 1,047 6.67 56,930 1,041 7.27 9.3 Total loans, excluding covered assets 171,680 2,270 5.25 166,560 2,496 5.97 3.1 Covered assets 10,288 115 4.40 * Total loans 181,968 2,385 5.21 166,560 2,496 5.97 9.3 Other earning assets 2,226 23 4.06 2,370 41 6.83 (6.1 ) Total earning assets 234,111 2,909 4.94 214,973 3,110 5.77 8.9 Allowance for loan losses (4,673 ) (2,686 ) (74.0 ) Unrealized gain (loss) on available-for-sale securities (1,318 ) (2,368 ) 44.3 Other assets 36,291 33,704 7.7 Total assets $ 264,411 $ |