U.S. Bancorp Discloses Summary Results of Dodd-Frank Act Stress Test

Today U.S. Bancorp disclosed a summary of its Dodd-Frank Act Stress Test (“DFAST”) results. The disclosure includes U.S. Bancorp’s projected stressed minimum and end-of-period capital ratios for the period from the fourth quarter of 2014 through the fourth quarter of 2016. The projections assume annual common stock dividends equal to the quarterly average dollar amount of common stock dividends that the company paid in the previous year and no redemption or repurchase of any capital instrument, in addition to estimates of losses, revenues, net income before taxes and loan losses by type of loan over the same time period. The projections were made under the Supervisory Severely Adverse Scenario defined by the Federal Reserve. This hypothetical stressed economic scenario is designed to assess the overall strength and resilience of the banking industry and does not necessarily represent future economic conditions expected by the Company.

A summary of the Company’s DFAST results are included in the table below. The Company’s DFAST results may differ from those calculated and published by the Federal Reserve due to differences in models, methodologies and tax rate, among other things. A document summarizing the risks and methodologies used to calculate the results, as well as an analysis of the significant reasons for the changes in capital ratios under the hypothetical stressed economic scenario is available on our website at www.usbank.com.

CCAR 2015
U.S. Bancorp Disclosure
Dodd-Frank Act Stress Testing Results 2015
Projected stressed capital ratios, risk-weighted assets, losses, revenues, net income before taxes, and loan losses
Supervisory-defined severely adverse scenario
U.S. Bancorp
Actual 2014:Q3 and projected stressed capital ratiosActual 2014:Q3 and projected 2016:Q4 risk-weighted
through 2016:Q4assets

Actual

2014:Q3

Stressed capital ratios (1)
Ending Minimum Actual

2014:Q3

Projected 2016:Q4

General
approach

Basel lll
standardized
approach

Tier 1 common ratio (%) 9.5% 7.9% 7.9%
Common equity tier 1 capital ratio (%) (2) 9.7% 7.6% 7.6% Risk-weighted assets 311.9 301.0

314.1 

Tier 1 risk-based capital ratio (%) 11.3% 9.0% 9.0% (billions of dollars) (1)
Total risk-based capital ratio (%) 13.6% 11.2% 11.2%
Tier 1 leverage ratio (%) 9.4% 7.6% 7.6%

(1) For each quarter in 2014, risk-weighted assets are calculated using the

general risk-based capital approach set forth in 12 CFR 225, appendix A.

(1) The capital ratios are calculated using capital action assumptions provided

For each quarter in 2015 and 2016, risk-weighted assets are calculated

within the Dodd-Frank Act stress testing rule. These projections represent

under the Board's standardized capital risk-based approach in 12 CFR 217,

hypothetical estimates that involve an economic outcome that is more adverse

subpart D, except for the risk-weighted assets used to calculate the tier 1

than expected. These estimates are not forecasts of expected losses,

common ratio, which uses the general risk-based capital approach for all quarters.

revenues, net income before taxes, or capital ratios. The minimum capital

ratio presented is for the period 2014:Q4 to 2016:Q4.

(2) Advanced approaches bank holding companies (BHCs) are subject to the

Projected losses, revenues, net income, and other

common equity tier 1 ratio for the third and fourth quarter of 2014. All bank

comprehensive income through 2016:Q4

holding companies are subject to the common equity tier 1 ratio for each quarter

of 2015 and 2016. An advanced approaches BHC includes any BHC that has

Percent of

consolidated total assets greater than or equal to $250 billion or consolidated

Billions of average

total on-balance sheet foreign exposure of at least $10 billion.

dollars assets (1)

See 12 CFR 217.100(b)(1). Other BHCs include any BHC that is subject

Pre-provision net revenue (2) 15.6 4.0%

to 12 CFR 225.8 and is not an advanced approaches BHC.

Other revenue (3) 0.0

less
Provisions 17.8

Realized losses/gains on securities (AFS/HTM) 0.2
Trading and counterparty losses (4) 0.0
Other losses/gains (5) 0.0
equals
Projected loan losses, by type of loan, 2014:Q4 - 2016:Q4 Net income before taxes (2.4 ) -0.6%
Memo items
Portfolio Other comprehensive income (6) (0.9 )
Billions of loss Other effects on capitalActual 2014:Q32016:Q4
dollars rates (%)(1) AOCI included in capital (billions of dollars) (7) (0.1 ) (0.9)
Loan losses 15.1 6.2%
First-lien mortgages, domestic 1.1 2.0%

(1) Average assets is the nine-quarter average of total assets.

Junior liens and HELOCs, domestic 0.6 3.5%

(2) Pre-provision net revenue includes losses from operational-risk events,

Commercial and industrial (2) 4.0 7.0%

mortgage repurchase expenses, and other real estate owned (OREO) costs.

Commercial real estate, domestic 3.0 7.5%

(3) Other revenue includes one-time income and (expense) items not included in

Credit cards 4.0 19.5%

pre-provision net revenue.

Other consumer (3) 1.3 4.2%

(4) Trading and counterparty losses include mark-to-market and credit valuation

Other loans (4) 1.0 4.2%

adjustments (CVA) losses and losses arising from the counterparty default

scenario component applied to derivatives, securities lending, and repurchase

agreement activities.

(1) Average loan balances used to calculate portfolio loss rates exclude loans held

(5) Other losses/gains includes projected change in fair value of loans held for sale

for sale and loans held for investment under the fair-value option, and are

and loans held for investment measured under the fair-value option, and

calculated over nine quarters.

goodwill impairment losses.

(2) Commercial and industrial loans include small- and medium-enterprise loans

(6) Other comprehensive income (OCI) is only calculated for advanced approaches

and corporate cards.

BHCs, and other BHCs that opt into the advanced approaches treatment  

(3) Other consumer loans include student loans and automobile loans.

of AOCI.

(4) Other loans include international real estate loans.

(7) Certain AOCI items are subject to transition into projected regulatory capital.

Those transitions are 20 percent included in projected regulatory capital for

Note:  Estimates may not sum precisely due to rounding.

2014, 40 percent included in projected regulatory capital for 2015, and

60 percent included in projected regulatory capital for 2016.

Minneapolis-based U.S. Bancorp (NYSE:USB), with $403 billion in assets as of Dec. 31, 2014, is the parent company of U.S. Bank National Association, the fifth largest commercial bank in the United States. The company operates 3,176 banking offices in 25 states and 5,022 ATMs and provides a comprehensive line of banking, investment, mortgage, trust and payment services products to consumers, businesses and institutions. Visit U.S. Bancorp on the web at www.usbank.com.

Forward-Looking Statements

The following information appears in accordance with the Private Securities Litigation Reform Act of 1995:

This press release contains forward-looking statements about U.S. Bancorp. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date hereof. The forward-looking statements contained in this press release include, among other things, projected future capital ratios, risk-weighted assets, revenue, net income before taxes, and loan losses of U.S. Bancorp based on a hypothetical scenario containing assumptions that may not come to pass in the future. There can be no assurance that U.S. Bancorp’s actual results would match the results disclosed herein if the assumed scenario was to occur.

Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. A reversal or slowing of the current economic recovery or another severe contraction could adversely affect U.S. Bancorp’s revenues and the values of its assets and liabilities. Global financial markets could experience a recurrence of significant turbulence, which could reduce the availability of funding to certain financial institutions and lead to a tightening of credit, a reduction of business activity, and increased market volatility. Stress in the commercial real estate markets, as well as a downturn in the residential real estate markets could cause credit losses and deterioration in asset values. In addition, U.S. Bancorp’s business and financial performance is likely to be negatively impacted by recently enacted and future legislation and regulation. U.S. Bancorp’s results could also be adversely affected by deterioration in general business and economic conditions; changes in interest rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of securities held in its investment securities portfolio; legal and regulatory developments; increased competition from both banks and non-banks; changes in customer behavior and preferences; breaches in data security; effects of mergers and acquisitions and related integration; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, residual value risk, market risk, operational risk, compliance risk, strategic risk, interest rate risk, liquidity risk and reputational risk.

For discussion of these and other risks that may cause actual results to differ from expectations, refer to U.S. Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2014, as amended, on file with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Corporate Risk Profile” contained in Exhibit 13, and all subsequent filings with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. However, factors other than these also could adversely affect U.S. Bancorp’s results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. Forward-looking statements speak only as of the date hereof, and U.S. Bancorp undertakes no obligation to update them in light of new information or future events.

Contacts:

U.S. Bancorp
Sean O’Connor, 612-303-0778
Investor Relations
or
Dana Ripley, 612-303-3167
Corporate Communications

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