US Bancorp USB
Q4 2012 Earnings Call Transcript

Transcript Call Date 01/16/2013

Operator: Welcome to U.S. Bancorp's Fourth Quarter 2012 Earnings Conference Call. Following your review of the results by Richard Davis, Chairman, President, and Chief Executive Officer; and Andy Cecere, U.S. Bancorp's Vice Chairman and Chief Financial Officer, there will be a formal question-and-answer session. This call will be recorded and available for replay beginning today at approximately noon Eastern Central Time through Wednesday January 23 at 12 O'clock Midnight Eastern Time.

I will now turn the conference call over to Judy Murphy, Director of Investor Relations for U.S. Bancorp.

Judith T. Murphy - SVP, IR: Thank you, Christy and good morning to everyone who has joined our call. Richard Davis, Andy Cecere, and Bill Parker are here with me today to review U.S. Bancorp’s fourth quarter and full year 2012 results and to answer your questions.

Richard and Andy will be referencing a slide presentation during their prepared remarks. A copy of the slide presentation as well as our earnings release and supplemental analyst schedules are available on our website at

I would like to remind you that any forward-looking statements made during today's call are subject to risk and uncertainty. Factors that could materially change our current forward-looking assumptions are described on Page 2 of today's presentation, in our press release, and in our Form 10-K and subsequent reports on file with the SEC.

I will now turn the call over to Richard.

Richard K. Davis - Chairman, President and CEO: Thank you Judy and good morning everyone. 2012 was a great year for our company and I am very proud to share our fourth quarter and full year results with you this morning. I'd like to begin with a few (full year) highlights on Page 3 of the presentation. U.S. Bancorp reported record net income of $5.6 billion or $2.84 per diluted common share for the year 2012. We achieved record total net revenue of $20.3 billion, which was higher than the previous year by 6.2% driven by growth in both net interest income and fee revenue.

We achieved industry-leading profitability with a return on average assets of 1.65% and the return on average common equity of 16.2% and an efficiency ratio of 51.5% and we realized positive operating leverage year-over-year. Average loans grew by 6.9% over 2011 and we experienced strong year-over-year average deposit growth of 10.6%.

Credit quality continued to improve with the decline in net charge-offs of 26.2% and an 18.9% decrease in non-performing assets excluding covered assets. Our capital position ended the year stronger with the Tier 1 common equity ratio of 9% and we were able to return $3.4 billion of our 2012 earnings to shareholders in the form of dividends and buybacks.

Now turning to Slide 4 on our fourth quarter highlights; U.S. Bancorp reported net income of $1.4 billion for the fourth quarter of 2012 or $0.72 per diluted common share. Included in the current quarter was an $80 million expense accrual for the recently announced mortgage foreclosures settlement, which reduced EPS by $0.03.

Recall that the fourth quarter of 2011 included two notable items that increased EPS by $0.05. Total net revenue of $5.1 billion was slightly higher than the same quarter of last year. Excluding the prior year merchant settlement gains however, total net revenue grew by 5.6%. Importantly, we achieved positive operating leverage year-over-year.

Read our Earnings Call Transcript disclaimer.
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