<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
COMMISSION FILE NO. 0-3505
U. S. BANCORP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OREGON 93-0571730
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
111 S.W. FIFTH AVENUE 97204
PORTLAND, OREGON (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(503) 275-6111
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Number of shares of Common Stock, par value $5, outstanding at April 30, 1996:
150,276,264 shares.
================================================================================
<PAGE> 2
U. S. BANCORP
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheet....................................................... 3
Consolidated Statement of Income................................................. 5
Consolidated Statement of Cash Flows............................................. 7
Consolidated Statement of Changes in Shareholders' Equity 9
Notes to Financial Statements.................................................... 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .............................. 12
</TABLE>
PART II - OTHER INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 4. Submission of Matters to a Vote of Security Holders.............................. 23
Item 6. Exhibits and Reports on Form 8-K................................................. 23
Signatures................................................................................................. 24
Exhibit Index.............................................................................................. 25
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
U. S. BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, December 31, March 31,
(In Thousands) 1996 1995 1995
- -------------- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 2,012,320 $ 2,416,209 $ 1,785,945
Interest-bearing deposits with banks 1,247 1,294 1,218
Federal funds sold and security resale agreements 700,921 506,408 170,893
Other short-term investments 13,801 8,817 6,420
Trading account securities 148,804 279,656 159,724
Loans held for sale 153,198 159,986 398,806
Securities available for sale, at fair value (amortized cost:
$2,993,751, $3,259,095 and $2,412,769, respectively) 2,979,697 3,276,723 2,389,401
Securities held to maturity, at amortized cost (fair value:
$848,438, $885,695 and $1,893,675, respectively) 834,805 865,126 1,917,984
Loans and lease financing, net of unearned income
Commercial 12,093,429 11,746,095 11,128,445
Foreign 30,838 56,293 87,869
Real estate construction 882,405 833,013 832,333
Real estate mortgage 3,507,270 3,477,118 3,386,326
Consumer 5,490,349 5,485,383 5,327,441
Lease financing 1,263,426 1,187,373 992,711
------------ ------------ ------------
Total loans and lease financing 23,267,717 22,785,275 21,755,125
Allowance for credit losses (442,147) (434,508) (389,359)
------------ ------------ ------------
Net loans and lease financing 22,825,570 22,350,767 21,365,766
Premises, furniture and equipment 629,514 633,836 663,268
Other real estate and equipment owned 46,616 37,212 29,366
Customers' liability on acceptances 329,113 306,648 314,913
Other assets 881,639 951,601 891,969
------------ ------------ ------------
$ 31,557,245 $ 31,794,283 $ 30,095,673
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
U. S. BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(CONTINUED)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1996 1995 1995
(In Thousands) ---- ---- ----
- -------------- (Unaudited) (Unaudited)
<S> <C> <C> <C>
LIABILITIES
Deposits
Noninterest-bearing deposits $ 5,397,487 $ 6,009,728 $ 5,076,850
NOW accounts and interest checking 2,662,517 2,709,155 2,698,398
Savings 1,556,676 1,583,656 1,996,474
Money market deposit accounts 5,764,494 5,544,479 4,919,372
Consumer time 5,737,173 5,685,290 5,562,859
Time - $100,000 or more 2,108,350 1,732,321 1,438,803
------------ ------------ ------------
23,226,697 23,264,629 21,692,756
Federal funds purchased and security
repurchase agreements 2,643,535 2,731,116 2,665,598
Commercial paper 176,392 176,125 177,599
Other short-term borrowings 530,257 692,105 960,890
Long-term debt 1,354,437 1,377,021 1,159,652
Acceptances outstanding 329,113 306,648 314,913
Other liabilities 657,817 629,586 547,578
------------ ------------ ------------
Total liabilities 28,918,248 29,177,230 27,518,986
SHAREHOLDERS' EQUITY
Preferred stock 150,000 150,000 150,000
Common stock 750,861 752,962 761,371
Capital surplus 323,756 347,836 445,946
Retained earnings 1,424,469 1,356,907 1,235,101
Net unrealized gain (loss) on securities
available for sale, net of tax (10,089) 9,348 (15,731)
------------ ------------ ------------
Total shareholders' equity 2,638,997 2,617,053 2,576,687
------------ ------------ ------------
$ 31,557,245 $ 31,794,283 $ 30,095,673
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
U. S. BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
First Quarter Ended
(In Thousands) March 31,
- -------------- -------------------------
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
INTEREST INCOME
Loans and lease financing, including fees $ 527,939 $ 508,173
Securities held to maturity 10,999 28,857
Securities available for sale 48,380 34,699
Loans held for sale 3,248 3,638
Trading account securities 3,103 2,125
Interest-bearing deposits
and other short-term investments 6,320 4,352
--------- ---------
Total interest income 599,989 581,844
--------- ---------
INTEREST EXPENSE
Deposits 189,812 163,222
Short-term borrowings 38,303 53,644
Long-term debt 23,635 19,700
--------- ---------
Total interest expense 251,750 236,566
--------- ---------
NET INTEREST INCOME 348,239 345,278
Provision for credit losses 30,132 23,573
--------- ---------
Net interest income after
provision for credit losses 318,107 321,705
NONINTEREST REVENUES
Service charges on deposit accounts 46,963 48,091
Bank card revenue, net 18,384 17,550
Trust and investment management 17,187 15,907
Exchange fees 9,707 10,342
Insurance revenue 5,135 5,074
Mortgage banking income, net 8,347 2,598
Other operating revenue 25,148 21,205
Equity investment income 10,454 2,276
Gain (loss) on sale of securities
available for sale 3,385 (80)
Gain (loss) on sale of operations (144) 473
--------- ---------
Total noninterest revenues $ 144,566 $ 123,436
--------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
U. S. BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(CONTINUED)
<TABLE>
<CAPTION>
First Quarter Ended
(In Thousands, Except Per Share Data) March 31,
- ------------------------------------- -------------------
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
NONINTEREST EXPENSES
Employee compensation and benefits $150,971 $152,845
Net occupancy expense 20,689 21,232
Equipment rentals, depreciation
and maintenance 30,656 31,434
Stationery, supplies and postage 14,820 15,729
Regulatory agency fees 2,516 13,749
Advertising and marketing 8,067 8,795
Telecommunications 7,789 8,122
Other operating expense 43,338 53,669
Merger and integration costs 8,380 --
-------- --------
Total noninterest expenses 287,226 305,575
-------- --------
Income before income taxes 175,447 139,566
Provision for income taxes 62,533 44,750
-------- --------
NET INCOME $112,914 $ 94,816
======== ========
Net income applicable to
common shareholders $109,867 $ 91,769
Per common share:
Net income $.73 $.60
Cash dividends declared .28 .25
Average number of common
shares outstanding 150,815 152,230
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE> 7
U. S. BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
First Quarter Ended
(In Thousands) March 31,
---------------------------
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 112,914 $ 94,816
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation, amortization and accretion 36,027 31,633
Provision for credit losses 30,132 23,573
Noncash portion of merger and integration costs 5,891 --
Equity investment income (10,117) (2,180)
(Gain) loss on sales of securities available for sale (3,385) 118
Gain on sales of securities held to maturity -- (38)
Gain on sales of trading securities (2,664) (3,967)
Net gain on sales of loans and property (1,630) (2,763)
Net gain on sales of mortgage loan servicing rights (2,800) --
Change in loans held for sale (1,004) (230,879)
Change in trading account securities 134,048 (17,156)
Change in deferred loan fees, net of amortization 4,856 1,748
Change in accrued interest receivable 16,527 4,405
Change in accrued interest payable 3,530 11,318
Change in other assets and liabilities, net 74,478 47,061
--------- ---------
Net cash provided by (used in) operating activities 396,803 (42,311)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of interest-earning
deposits of nonbank subsidiaries 878 2,601
Purchase of interest-earning deposits by nonbank subsidiaries (3,461) (1,967)
Net decrease in investments in interest-
earning deposits by banking subsidiaries (2,354) (74)
Proceeds from maturities of securities held to maturity 29,928 73,556
Proceeds from sales of securities held to maturity -- 3,223
Purchase of securities held to maturity -- (8,817)
Proceeds from maturities of securities available for sale 285,554 198,693
Purchase of securities available for sale (311,412) (239,361)
Proceeds from sale of securities available for sale 287,573 193,363
Proceeds from sales of equity investments 14,017 990
Purchase of equity investments (2,317) (7,498)
Principal collected on loans by nonbank subsidiaries 8,705 188,520
Loans made to customers by nonbank subsidiaries (8,777) (199,026)
Net increase in loans by banking subsidiaries (519,327) (124,076)
Proceeds from sales of loans -- 3,226
Proceeds from sales of premises and equipment 2,081 1,716
Purchase of premises and equipment (23,014) (15,512)
Proceeds from sale of foreclosed assets 9,299 12,865
Proceeds from sale of mortgage loan servicing rights 686 --
Purchase of mortgage loan servicing rights -- (1,327)
Acquisitions/dispositions, net of cash and cash equivalents -- 11,389
--------- ---------
Net cash provided by (used in) investing activities (231,941) 92,484
--------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
7
<PAGE> 8
U. S. BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
First Quarter Ended
(In Thousands) March 31,
- -------------- -------------------------------
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits (37,932) (165,768)
Net change in short-term borrowings (249,162) (685,764)
Proceeds from issuance of long-term debt 5,002 222,036
Repayment of long-term debt (27,711) (91,442)
Proceeds from issuance of stock 10,731 3,082
Common stock repurchased (36,914) (2,352)
Dividends paid (38,252) (35,667)
----------- -----------
Net cash used in financing activities (374,238) (755,875)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (209,376) (705,702)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,922,617 2,662,540
----------- -----------
CASH AND CASH EQUIVALENTS AT PERIOD END $ 2,713,241 $ 1,956,838
=========== ===========
Supplemental disclosures:
Cash paid during the period for:
Interest $ 248,219 $ 225,360
Income taxes 17,539 2,239
Non-cash investing activities:
Transfer from loans to loans held for sale -- 243,647
Transfer from loans held for sale to loans 12,392 7,519
Transfer from loans to other real estate owned 21,529 13,272
Fair value adjustment to securities available for sale 31,682 40,008
Income tax effect related to fair value adjustment 11,550 13,774
</TABLE>
See Notes to Consolidated Financial Statements.
8
<PAGE> 9
U. S. BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
First Quarter Ended
(In Thousands) March 31,
- -------------- ------------------------------
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
Shareholders' equity at beginning of period $ 2,617,053 $ 2,493,054
Net income 112,914 94,816
Stock options exercised, dividends reinvested and
other transactions 10,731 3,712
Repurchase of common stock (36,914) (2,352)
Common stock issued to redeem subordinated debt -- 154
Preferred dividends declared (3,047) (3,047)
Common dividends declared (42,303) (32,640)
Change in net unrealized gain (loss) on securities,
net of tax (19,437) 22,990
----------- -----------
Shareholders' equity at end of period $ 2,638,997 $ 2,576,687
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
9
<PAGE> 10
U. S. BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Principles of Consolidation
The consolidated financial statements of U. S. Bancorp include the
accounts of U. S. Bancorp and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated. These statements are unaudited
and should be read in conjunction with the 1995 Form 10-K of U. S. Bancorp and
Subsidiaries. A summary of U. S. Bancorp's significant accounting policies is
set forth in Note 1 to the Consolidated Financial Statements in U. S. Bancorp's
1995 Form 10-K. In the opinion of management, all adjustments (comprised of
normal recurring accruals) necessary for a fair presentation of the interim
financial statements have been included.
The major banking subsidiaries of U. S. Bancorp include United States
National Bank of Oregon (U. S. Bank of Oregon), U. S. Bank of Washington, N.A.,
West One Bank, Washington, West One Bank, Idaho, U. S. Bank of California,
U. S. Bank of Nevada and U. S. Bank of Utah.
2. Commitments and Contingent Liabilities
In the normal course of business there are various commitments and
contingent liabilities to extend credit and guarantees, which are not reflected
in the financial statements. Management does not anticipate any material loss as
a result of these transactions. Such commitments and contingent liabilities
include commitments to extend credit of $17.0 billion, $15.9 billion and $14.5
billion and standby letters of credit of $1.2 billion, $1.1 billion and $940
million at March 31, 1996, December 31, 1995 and March 31, 1995, respectively.
3. Recently Issued Accounting Pronouncements
Effective January 1, 1996, U. S. Bancorp adopted three recently issued
Statements of Financial Accounting Standards (SFAS). The standards and their
impact on U. S. Bancorp are described below.
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of" addresses the accounting for the
impairment of long-lived assets, such as premises, furniture and equipment,
certain identifiable intangibles and goodwill related to those assets.
Long-lived assets and certain identifiable intangibles are to be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. An impairment loss is
recognized when the sum of the future cash flows (undiscounted and without
interest charges expected from the use of the asset and its eventual
disposition) is less than the carrying amount of the asset. The Statement also
requires that long-lived assets and identifiable intangibles, except for assets
of a discontinued operation held for disposal, be accounted for at the lower of
cost or fair value less cost to sell. This Statement did not have a material
effect on U. S. Bancorp's financial condition, results of operations, cash flows
or related disclosures.
SFAS No. 122, "Accounting for Mortgage Servicing Rights," an amendment
of SFAS No. 65 requires that U.S. Bancorp recognize as separate assets the
rights to service mortgage loans for others, however those servicing rights are
acquired. Previously, only purchased servicing rights were capitalizable as an
asset, whereas internally originated servicing rights were expensed. The
Statement also requires that capitalized excess servicing receivables be
assessed for impairment based on fair value. This Statement did not have a
material impact on U. S. Bancorp's financial condition, results of operations,
cash flows or related disclosures.
SFAS No. 123, "Accounting for Stock-Based Compensation" prescribes
accounting and reporting standards for all stock-based compensation plans,
including employee stock options, restricted stock and stock appreciation
rights. The Statement defines a "fair value based method" of accounting for
employee stock options and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However, it also
allows an entity to continue to measure compensation for those plans using the
"intrinsic value based method" under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (Opinion No. 25).
Most U. S. Bancorp stock options have no intrinsic value at grant date,
and under Opinion No. 25 no compensation cost is recognized for them.
Compensation cost is recognized for other types of stock-based compensation
plans under Opinion No. 25, including plans with variable, usually
performance-based, features. SFAS No. 123 requires that an employer's financial
statements include certain disclosures about stock-based compensation
arrangements regardless of the method used to account for them. An employer that
continues to apply the accounting provisions of Opinion No. 25 will disclose pro
forma amounts that reflect the difference between compensation cost, if any,
included in net income and the related cost measured by the fair value based
method, including tax effects, that would have been recognized in the income
statement if the fair value based
10
<PAGE> 11
method had been used. U. S. Bancorp will continue to apply Opinion No. 25 in
accounting for stock-based compensation plans.
4. Acquisitions
In February 1996, U. S. Bancorp announced the signing of a definitive
agreement for U. S. Bancorp to acquire California Bancshares, Inc. (CBI), the
holding company for a multi-bank, 38-branch commercial banking operation serving
the east San Francisco Bay Area and the central valley of northern California.
Under the terms of the agreement, which is subject to approval by regulators and
the CBI shareholders, CBI will be merged into U. S. Bancorp, and each share of
CBI common stock will be converted into .95 shares of U. S. Bancorp common
stock. The total value of the transaction is approximately $327 million, based
on the market price of U. S. Bancorp common stock over a reasonable period of
time before and after the companies reached agreement on the common stock
exchange ratio. The transaction will be accounted for as a purchase and is
anticipated to be completed in the second or third quarter of 1996.
At March 31, 1996, CBI had total assets of $1.5 billion, deposits of
$1.4 billion and stockholders' equity of $133 million.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
The focus of the following discussion is on U. S. Bancorp's financial
condition, changes in financial condition and results of operations. It is a
supplement to the consolidated financial statements and footnotes that are
presented elsewhere, and should be read in conjunction therewith.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
First Quarter Ended
March 31, Percent
---------
1996 1995 Change
---- ---- ------
(In Millions, except per share)
<S> <C> <C> <C>
EARNINGS
Net interest income $ 348.2 $ 345.3 1%
Provision for credit losses 30.1 23.6 28
Net income 112.9 94.8 19
PER COMMON SHARE
Net income $ .73 $ .60 22%
Cash dividends declared .28 .25 12
Book value 16.57 15.94 4
Average common shares outstanding, (000's) 150,815 152,230 (1)
Period-end shares outstanding, (000's) 150,171 152,274 (1)
FINANCIAL RATIOS
Return on average common equity 17.67% 15.66%
Return on average assets 1.46 1.29
Overhead ratio 57.02 63.49
Net interest margin (1) 5.19 5.41
Leverage capital ratio 7.97 8.09
Risk-based capital ratios
Tier 1 capital 8.25 8.90
Total capital 11.52 11.52
PERIOD-END BALANCES
Loans $ 23,268 $ 21,755 7%
Interest-earning assets 28,100 26,800 5
Assets 31,557 30,096 5
Deposits 23,227 21,693 7
Long-term debt 1,354 1,160 17
Common shareholders' equity 2,489 2,427 3
Preferred stock 150 150 --
Full-time equivalent
employees 14,089 14,617 (4)
AVERAGE BALANCES
Loans $ 22,950 $ 21,736 6%
Interest-earning assets 27,792 26,692 4
Assets 31,124 29,885 4
Deposits 23,150 21,577 7
Common shareholders' equity 2,501 2,376 5
- ----------
(1) Tax-equivalent basis.
</TABLE>
12
<PAGE> 13
RESULTS OF OPERATIONS
OVERVIEW
To facilitate the discussion of its results of operations, in the
table on the next page, U. S. Bancorp presents an additional analysis of
performance to supplement the accompanying consolidated statement of income and
balance sheet. This additional analysis of performance should not be viewed as a
substitute for the generally accepted accounting principle-based financial
statements previously presented. There are three primary differences between the
consolidated statement of income and the operating income analysis that follows.
First, the operating income analysis presents the line items in a slightly
different order. Second, certain transactions that are nonrecurring or that are
not related to what management believes is core business, are not included in
noninterest revenues and noninterest expenses in determining operating income.
Finally, operating income is also before the provision for credit losses, other
real estate owned transactions (OREO) and income taxes. The provision for credit
losses is excluded from operating income as its amount is based on the analysis
of the required level of the allowance for credit losses and can be subject to
fluctuation due to the prevailing level of charge-offs. Management has presented
the additional analysis in the belief that it is meaningful to understand the
results and trends in operating income separately from nonrecurring
transactions, noncore activities, certain provisions and other real estate owned
transactions. Due to the format of this presentation, not all line items agree
directly to the consolidated financial statements.
For the first quarter of 1996, net income was $112.9 million, compared
with net income of $94.8 million in the first quarter of 1995. Operating income,
as defined and presented in the following table, increased 21 percent over the
same period a year ago, due to increases in net interest income and noninterest
revenues and a reduction in noninterest expenses. The following key highlights
compare the first quarter of 1996 with the same period of 1995 unless otherwise
noted:
- - Net income totaled a record $112.9 million, or $.73 per share, an
increase of 19 percent from $ 94.8 million, or $.60 per share.
- - Operating income (income on a tax-equivalent basis before the provision
for credit losses, other real estate owned transactions, items
determined to be noncore or nonrecurring, and income taxes) of $212.1
million was up 21 percent from $175.0 million.
- - Net interest margin was 5.19 percent compared with 5.41 percent. The
change was largely due to declining yields on interest-earning assets
and an increase in the average rates paid on interest-bearing deposits.
- - Noninterest expenses (before OREO transactions and items determined to
be noncore or nonrecurring) of $277.9 million dropped 8 percent from
$303.6 million.
- - Return on average assets improved to 1.46 percent from 1.29 percent,
while the return on average common equity rose to 17.67 percent from
15.66 percent.
- - The overhead ratio improved to 57 percent from 63 percent.
13
<PAGE> 14
The table below presents U. S. Bancorp's operating income analysis for
the first quarters of 1996 and 1995. A discussion of the major changes in each
key component follows.
<TABLE>
<CAPTION>
OPERATING INCOME ANALYSIS First Quarter Ended
March 31,
------------------------- Percent
1996 1995 Change
---- ---- ------
(In Thousands)
<S> <C> <C> <C>
Net interest income (1) $ 359,170 $ 357,845 --%
Noninterest revenues 130,871 120,767 8
Noninterest expenses 277,930 303,645 (8)
--------- ---------
Operating income (1) 212,111 174,967 21
Provision for credit losses (30,132) (23,573) 28
OREO transactions (916) 826 N/M
--------- ---------
181,063 152,220 19
Noncore/nonrecurring items
Equity investment income 10,454 2,276
Gain (loss) on sale of
operations and loans (144) 473
Gain(loss) on sale of securities
available for sale 3,385 (80)
Merger and integration costs (8,380) --
Nonrecurring noninterest
expense items -- (2,756)
--------- ---------
Income before income taxes (1) 186,378 152,133
Less tax-equivalent
adjustment included above 10,931 12,567
Provision for income taxes 62,533 44,750
--------- ---------
Net income $ 112,914 $ 94,816 19%
========= ========= ===
</TABLE>
(1) Tax-equivalent basis.
N/M Not meaningful.
For detailed information on the items presented as noncore or nonrecurring,
refer to the respective discussions of "Noninterest Revenues" and "Noninterest
Expenses" that follow.
14
<PAGE> 15
NET INTEREST INCOME - TAX-EQUIVALENT BASIS
Net interest income, the principal source of U. S. Bancorp's operating
income, includes interest income and fees generated by interest-earning assets,
primarily loans and securities portfolios, less interest expense on
interest-bearing liabilities, primarily deposits, purchased funds and short- and
long-term debt. Net interest income is affected by the volume and relative mix
of both earning assets and interest-bearing and noninterest-bearing liabilities,
and related interest yields and rates paid on these assets and liabilities.
<TABLE>
<CAPTION>
Net
Interest Interest Interest
ANALYSIS OF NET INTEREST INCOME (TAX-EQUIVALENT BASIS) Income Expense Income
------ ------ ------
(In Millions)
<S> <C> <C> <C>
First quarter 1995 as reported $594.4 $236.6 $357.8
Increase (decrease) due to:
Changes in balances 23.7 7.4 16.3
Changes in rates (12.0) 5.3 (17.3)
Change due to one more day in 1996 4.8 2.4 2.4
------ ------ ------
First quarter 1996 as reported $610.9 $251.7 $359.2
====== ====== ======
</TABLE>
Net interest income on a tax-equivalent basis was $359.2 million, an
increase of $1.3 million, over the first quarter of 1995. The net interest
margin in the first quarter of 1996 was 5.19 percent compared with 5.41 percent
in the same quarter a year ago, and was 5.29 percent in the fourth quarter of
1995.
The spread between the yield on earning assets and rates paid on
interest-bearing liabilities decreased in the first quarter of 1996 compared
with first quarter 1995 due to a decline in the yields on interest-earning
assets and an increase in rates paid on interest-bearing liabilities. The
decrease in net interest income due to rate changes was mostly offset by the
favorable impact of higher volumes of commercial and real estate loans and lease
financing receivables. Net interest income was also favorably affected by one
more day in the first quarter of 1996 compared with the first quarter of 1995.
Total loans averaged $23.0 billion in the first quarter 1996, an
increase of $1.2 billion, or 6 percent, compared with the first quarter a year
ago. Average total securities portfolios were $4.0 billion during the first
quarter of 1996, an 8 percent decrease from $4.3 billion in first quarter 1995.
The decrease is primarily due to the proceeds on maturity of securities used
to fund loan growth.
Average noninterest-bearing deposits increased $301.7 million, or 6
percent, in 1996 compared with 1995. Average interest-bearing deposits in
1996 increased $1.3 billion, or 8 percent, over 1995 primarily due to
increases in money market accounts, other time deposits and time deposits of
$100,000 or more.
<TABLE>
<CAPTION>
First Quarter Ended
NET INTEREST MARGIN ANALYSIS March 31,
-----------------
(Tax-equivalent Basis) 1996 1995
---- ----
<S> <C> <C>
Average rate earned on interest-earning assets 8.83% 9.00%
Average rate paid on interest-bearing liabilities 4.52 4.41
---- ----
Rate spread 4.31% 4.59%
==== ====
Net interest margin 5.19% 5.41%
==== ====
</TABLE>
15
<PAGE> 16
NONINTEREST REVENUES
Noninterest revenues increased $10.1 million, or 8 percent, in the
first quarter of 1996 compared with the first quarter of 1995, excluding
revenues associated with noncore/nonrecurring activities identified below. The
principal components of noninterest revenue are shown in the table below.
<TABLE>
<CAPTION>
First Quarter Ended
March 31, Percent
-----------------------------
1996 1995 Change
---- ---- ------
(In Thousands)
<S> <C> <C> <C>
NONINTEREST REVENUES:
Service charges on deposit accounts $ 46,963 $ 48,091 (2)%
Bank card revenue 18,384 17,550 5
Trust and investment management 17,187 15,907 8
Exchange fees 9,707 10,342 (6)
Insurance revenue 5,135 5,074 1
ATM revenue 5,344 5,001 7
Brokerage and other commissions 4,237 2,729 55
Trading account 2,664 4,764 (44)
Mortgage banking income, net 8,347 2,598 N/M
Other revenue 12,903 8,711 48
--------- ---------
130,871 120,767 8
--------- ---------
Noncore/nonrecurring revenue items:
Equity investment income 10,454 2,276
Gain (loss) on sale of securities
available for sale 3,385 (80)
Gain (loss) on sale of
operations and loans (144) 473
--------- ---------
Total noninterest revenues $ 144,566 $ 123,436 17%
========= ========= ====
</TABLE>
N/M Not meaningful.
The decrease in service charges is related mainly to a reduction in
consumer product services charges. Trust and investment management fees grew 8
percent to $17.2 million, due mainly to the growth in investment advisory
services. Funds under management in Qualivest Funds, U. S. Bancorp's proprietary
mutual funds, grew 17 percent in the first quarter of 1996 from year-end 1995.
Brokerage and other commissions grew $1.5 million, or 55 percent, to
$4.2 million for the first quarter of 1996 as a result of increased sales
volumes for brokerage products. Mortgage banking income increased $5.7 million
to $8.3 million in the first quarter of 1996, due mainly to a higher level of
mortgage loan originations and related mortgage banking activities. Included in
other revenue in the table above in the first quarter of 1996 is $3.2 million of
servicing income attributable to the portfolio of affinity credit card
receivables sold with an interim servicing agreement in the second quarter of
1995.
Equity investment income is mainly derived from U. S. Bancorp's
investment as a limited partner in several limited partnerships and, to a lesser
degree, in venture capital investments. U. S. Bancorp has no control over
investment sales activities by the general partners; however, U. S. Bancorp
recognized gains of $8.2 million in the first quarter of 1996 related to sales
of limited partnership investments. Gains of $2.3 million were recognized on
disposition of venture capital investments.
The available for sale (AFS) securities gains in the first quarter of
1996 reflected the sale of mortgage-backed securities, with subsequent
reinvestment of the proceeds in AFS securities, to reduce prepayment risk in
this portion of the portfolio.
16
<PAGE> 17
NONINTEREST EXPENSES
Noninterest expenses, before noncore/nonrecurring items, decreased 8
percent in the first quarter of 1996 compared with the first quarter of 1995.
The principal components of noninterest expense are shown in the following
table.
<TABLE>
<CAPTION>
First Quarter Ended
March 31, Percent
------------------------
1996 1995 Change
---- ---- ------
(In Thousands)
<S> <C> <C> <C>
NONINTEREST EXPENSES:
Employee compensation
and benefits $ 150,971 $ 152,845 (1)%
Net occupancy expense 20,689 21,232 (3)
Equipment rentals,
depreciation and
maintenance 30,656 31,434 (2)
Stationery, supplies and
postage 14,820 15,729 (6)
Regulatory agency fees 2,516 13,749 (82)
Advertising and marketing 8,067 8,795 (8)
Telecommunications 7,789 8,122 (4)
Other operating expenses:
Amortization of intangibles 3,577 5,607 (36)
Contract personnel 4,611 2,348 96
Other taxes and licenses 4,086 3,870 6
Legal and accounting 2,522 3,342 (25)
Travel 2,411 2,773 (13)
All other 25,215 33,799 (25)
--------- ---------
277,930 303,645 (8)
Noncore/nonrecurring expense items:
OREO transactions 916 (826)
Asset write-downs -- 2,756
Merger-related costs 8,380 --
--------- ---------
Total noninterest expenses $ 287,226 $ 305,575 (6)%
========= ========= ====
</TABLE>
Employee compensation and benefits decreased 1 percent, or $1.9 million
for the first quarter of 1996 compared with the same period in the prior year.
The decrease in employee compensation and benefits reflected a reduction in the
number of full-time equivalent (FTE) employees as a result of the merger with
West One Bancorp (West One) and related consolidation of operations. FTE
employees decreased from 14,617 at March 31, 1995, to 14,089 at March 31, 1996.
Contract personnel expenses increased in the first quarter of 1996 compared with
the first quarter of 1995. U.S. Bancorp uses contract personnel to provide
flexibility in addressing consolidation and merger integration-related
activities.
17
<PAGE> 18
Noninterest expenses decreased in most categories of expense in
addition to compensation and benefits in the first quarter of 1996 as a result
of operational efficiencies achieved through the merger-related consolidation
and integration activities. Regulatory agency fees in the first quarter of 1996
decreased 82 percent from the level in the first quarter of 1995 due to the
reduction in FDIC deposit insurance premiums. The rate assessed for
well-capitalized banks decreased from $.23 to $.04 of FDIC insured deposits at
June 1, 1995, and the rate was zero for the first quarter of 1996. Amortization
of intangibles declined $2.0 million primarily due to a decrease in intangibles
related to affinity credit card portfolios sold in mid-1995.
The overhead ratio (defined as noninterest expenses as a percentage of
tax-equivalent net interest income and noninterest revenues) decreased to 57.0
percent in the first quarter of 1996 from 63.5 percent in the first quarter of
1995 and 65.4 percent as of December 31, 1995. Excluding other real estate owned
transactions and noncore/ nonrecurring items, the overhead ratio was 56.7
percent in the first quarter of 1996, 63.4 percent in the first quarter of 1995
and 60.8 percent as of December 31, 1995.
In connection with the West One merger in the fourth quarter of 1995,
U. S. Bancorp recorded a pre-tax merger and integration cost provision of $98.9
million. An additional $8.4 million of merger-related expenses were incurred
during the first quarter of 1996. The merger and integration activity is
summarized in the table below.
<TABLE>
<CAPTION>
Severance, Facilities
Retention and and
Other Employee Account Professional
Related Costs Conversions Fees Other Total
------------- ----------- ---- ----- -----
(In Millions)
<S> <C> <C> <C> <C> <C>
Provision for merger and integration
costs, 1995 $29.4 $39.6 $13.9 $16.0 $98.9
Utilization for the period
Cash -- .2 10.6 .5 11.3
Noncash -- -- -- -- --
----- ----- ----- ----- -----
Total -- .2 10.6 .5 11.3
----- ----- ----- ----- -----
Balance, December 31, 1995 29.4 39.4 3.3 15.5 87.6
Provision for merger and integration
costs, 1996 7.1 .5 .2 .6 8.4
Utilization for the period
Cash 10.6 1.9 3.1 1.4 17.0
Noncash -- 6.0 -- 8.3 14.3
----- ----- ----- ----- -----
Total 10.6 7.9 3.1 9.7 31.3
----- ----- ----- ----- -----
Balance, March 31, 1996 $25.9 $32.0 $ 0.4 $ 6.4 $64.7
===== ===== ===== ===== =====
</TABLE>
INCOME TAXES
The effective tax rates for the three months ended March 31, 1996 and
1995 were 35.6 percent and 32.1 percent, respectively. The increase in the
effective tax rate in 1996 was mainly due to the higher level of earnings
leading to a corresponding decrease in the proportion of tax-exempt income
compared with 1995.
FINANCIAL CONDITION
SECURITIES PORTFOLIOS
Securities available for sale totaled $3.0 billion at March 31, 1996
compared with $3.3 billion at December 31, 1995 and $2.4 billion at March 31,
1995. Securities held to maturity totaled $835 million at March 31, 1996,
compared with $865 million at December 31, 1995 and $1.9 billion at March 31,
1995. Securities in both portfolios may decline moderately in the future as the
cash received from maturities may be used to fund loan growth.
18
<PAGE> 19
In November of 1995, the Financial Accounting Standards Board (FASB)
issued additional implementation guidance regarding the FASB's previously issued
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The additional guidance allowed
business entities a one-time opportunity to reclassify investment securities
effective for year-end 1995 financial statements. U. S. Bancorp reclassified
$800 million of held to maturity securities to the available for sale category
to provide additional flexibility in managing the securities portfolios.
LOAN PORTFOLIO
Loans outstanding were $23.3 billion, $22.8 billion and $21.8 billion
at March 31, 1996, December 31, 1995 and March 31, 1995, respectively. Average
loans increased 6 percent from $21.7 billion in the first quarter of 1995 to
$23.0 billion in the first quarter of 1996. First quarter 1996 average loans
increased at an annualized rate of 7 percent from $22.6 billion in the fourth
quarter of 1995. Loan growth was particularly strong in commercial and real
estate mortgage loans and lease financing receivables.
LIQUIDITY
Liquidity is the ability to raise adequate and reasonably priced funds,
primarily through deposits, as well as purchased funds and the issuance of debt
and equity capital, and is managed through the selection of the asset mix and
the maturity mix of liabilities.
Core deposits, defined as deposits other than time deposits of $100,000
or more, are U. S. Bancorp's primary source of funding and provide a sizable
source of relatively stable, low-cost funds. Average core deposits increased to
$20.8 billion in the first quarter of 1996, an increase of $104 million from the
fourth quarter of 1995.
Other sources of liquidity include purchased funds, comprised of time
deposits over $100,000, federal funds purchased and security repurchase
agreements, commercial paper and short-term borrowings. Average purchased funds
totaled $5.4 billion in the first three months of 1996, compared with $5.5
billion in the first three months of 1995. A portion of the remaining funding of
average total assets came from long-term debt, which averaged $1.4 billion in
the first three months of 1996, compared to $1.1 billion in the first three
months of 1995.
U. S. Bancorp's liquidity is enhanced by its accessibility to a
diversity of national market sources of funds. At March 31, 1996, U. S. Bancorp
had available a total of $1.4 billion in uncommitted borrowing capacities for
medium-term notes, subordinated debt, preferred stock and a general liquidity
line of credit. The following table summarizes U. S. Bancorp's ratings by major
statistical rating agencies at March 31, 1996; such ratings are subject to
revision or withdrawal at anytime.
<TABLE>
<CAPTION>
Standard Duff Thomson
& Poor's Moody's & Phelps BankWatch
-------- ------- -------- ---------
<S> <C> <C> <C> <C>
Commercial paper .......................... A-1 P-1 DUFF1+ TBW-1
Senior debt ............................... A A2 AA- A+
Subordinated debt ......................... A- A3 A+ A
Preferred stock ........................... BBB+ a2 A A-
</TABLE>
U. S. Bancorp intends to account for the acquisition of California
Bancshares, Inc. using the purchase method of accounting, which will permit U.S.
Bancorp to repurchase shares of its common stock from time to time in the open
market. Subject to market conditions and other factors, it is anticipated that
U. S. Bancorp will repurchase shares of its common stock approximately equal to
the 9.6 million shares to be issued to stockholders of California Bancshares,
Inc., and will obtain the funds for the purchase of such shares from a variety
of sources, including issuances of debt, asset maturities and sales, and other
sources of liquidity.
19
<PAGE> 20
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
The provision for credit losses for the first quarter of 1996 was $30.1
million compared with $23.6 million for the first quarter of 1995. The higher
provision reflected the growth in the loan portfolio, the increase in the ratio
of the allowance for credit losses to 1.90 percent of loans from 1.79 percent at
March 31, 1995, and a slightly higher level of net charge-offs in the first
quarter of 1996.
Management performs a quarterly analysis to establish the appropriate
level of the allowance, taking into consideration such factors as loan loss
experience, an evaluation of potential losses in the portfolio, credit
concentrations and trends in portfolio volume, maturity, delinquencies and
nonaccruals, risks associated with standby letters of credit which guarantee the
debt of others and other off-balance sheet commitments, and prevailing and
anticipated economic conditions. U. S. Bancorp closely monitors credit risk in
its loan portfolio and believes that its credit approval and review processes
are effective and operating in accordance with sound banking policy, and that
the allowance for credit losses at March 31, 1996 was adequate to absorb
potential credit losses inherent in loans, leases, loan commitments and standby
letters of credit outstanding at that date.
U.S. Bancorp continues to evaluate its loan portfolio for impairment as
defined by SFAS No. 114, "Accounting for Creditors for Impairment of a Loan," as
amended. The total recorded investment in impaired loans was $73.2 million at
March 31, 1996, compared with $104.0 million at December 31, 1995. The amount of
impaired loans and any associated valuation allowance was not material as to
loans outstanding or the balance of the allowance for credit losses as of either
date.
The table below presents the change in the allowance for credit losses
for the periods indicated.
<TABLE>
<CAPTION>
First Quarter First Quarter
Ended Year Ended Ended
March 31, December 31, March 31,
ALLOWANCE FOR CREDIT LOSSES 1996 1995 1995
------------ ------------ ------------
(In Thousands)
<S> <C> <C> <C>
Loans (net of unearned income) $ 23,267,717 $ 22,785,275 $ 21,755,125
Daily average loans
(net of unearned income) $ 22,950,458 $ 22,164,517 $ 21,735,759
Balance of allowance for credit
losses at beginning of period $ 434,508 $ 387,559 $ 387,559
Dispositions -- (3,137) (3,392)
Charge-offs
Commercial 8,073 25,912 3,696
Lease financing 47 716 41
Real estate construction 12 538 243
Real estate mortgage 745 6,829 5,914
Consumer 10,721 44,804 10,471
Bank card 11,188 38,094 10,469
------------ ------------ ------------
30,786 116,893 30,834
------------ ------------ ------------
Recoveries
Commercial 2,776 17,710 4,728
Lease financing 173 593 62
Real estate construction 63 1,955 1,558
Real estate mortgage 293 2,969 956
Consumer 3,461 13,469 3,434
Bank card 1,527 6,190 1,715
------------ ------------ ------------
8,293 42,886 12,453
------------ ------------ ------------
Net charge-offs 22,493 74,007 18,381
Provision for credit losses 30,132 124,093 23,573
------------ ------------ ------------
Balance of allowance for credit
losses at end of period $ 442,147 $ 434,508 $ 389,359
============ ============ ============
Net charge-offs to average loans
and leases .39% .33% .34%
Allowance for credit losses to
period-end loans 1.90% 1.91% 1.79%
Allowance as a % of
nonperforming loans 432% 336% 217%
</TABLE>
20
<PAGE> 21
ASSET QUALITY
During the first quarter of 1996, nonperforming assets as a percentage
of loans and foreclosed assets decreased to .64 percent from .73 percent at
December 31, 1995, and .96 percent at March 31, 1995. Nonperforming assets
totaled $149 million at March 31, 1996, a decrease of $17.6 million from
December 31, 1995 and $59.4 million from a year ago. Nonaccrual loans were
reduced by principal payments, charge-offs and other transactions totaling $36
million, offsetting new loans placed on nonaccrual during the first three months
of 1996 totaling $19 million, for a net decrease of $17 million. While the
overall credit quality of the loan portfolio has improved, the total nonaccrual
balance may fluctuate from quarter to quarter. U. S. Bancorp anticipates normal
fluctuations in the balance of nonaccrual loans as it increases its lending
activity and resolves loans currently in the nonaccrual portfolio. The increase
in OREO at March 31, 1996 compared with year-end 1995 was due primarily to
repossession of commercial real estate properties located in California
previously reported as nonaccrual loans.
In addition to the loans classified as nonperforming, U. S. Bancorp has
other loans which it has internally classified, largely due to weakening
financial strength of the borrowers or concern about specific industries. These
loans, although currently performing in accordance with contractual terms, are
monitored closely by management and have been considered in establishing the
level of the allowance for credit losses. U. S. Bancorp's lending procedures and
loan portfolio, including internally classified loans, are examined by
regulatory agencies as part of their supervisory activities.
The following table summarizes U. S. Bancorp's nonperforming assets and
past due loans. Past due loans are defined as loans contractually past due as to
interest or principal 90 days or more.
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1996 1995 1995
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Nonaccrual loans $101,658 $118,436 $177,517
Restructured loans 734 10,996 1,511
Other real estate and equipment owned 46,616 37,212 29,366
-------- -------- --------
Total nonperforming assets $149,008 $166,644 $208,394
======== ======== ========
Accruing loans past due 90 days or more $ 31,895 $ 29,968 $ 19,320
======== ======== ========
Total nonaccrual and restructured loans as
a percentage of total loans .44% .57% .82%
Total nonperforming assets as a percentage
of loans and foreclosed assets .64% .73% .96%
</TABLE>
CAPITAL AND DIVIDENDS
The federal bank regulatory agencies have jointly issued rules which
implement a system of prompt corrective action for financial institutions
required by FDICIA. The rules define the relevant capital levels for the five
categories, ranging from "well-capitalized" to "critically undercapitalized". An
insured depository institution is generally deemed to be "well-capitalized" if
it has a total risk-based capital ratio of at least 10 percent, a Tier 1
risk-based capital ratio of at least six percent, and a leverage ratio of at
least five percent.
Risk-based capital guidelines issued by the Federal Reserve Board
establish a risk-adjusted ratio relating capital to different categories of
assets and off-balance sheet exposures for bank holding companies. The
guidelines require a minimum total risk-based capital ratio of eight percent,
with half of the total in the form of Tier 1 capital. U. S. Bancorp's Tier 1
capital is comprised primarily of common equity and perpetual preferred stock,
less goodwill and certain other intangibles, and excludes the equity impact of
adjusting available for sale
21
<PAGE> 22
securities to market value. Total capital also includes subordinated debt and a
portion of the allowance for credit losses, as defined.
The risk-based capital rules have been supplemented by a leverage
ratio, defined as Tier 1 capital to adjusted quarterly average total assets.
Banking organizations other than those which are most highly rated are expected
to maintain ratios at least 100 to 200 basis points above the minimum three
percent level, depending on their financial condition.
Each subsidiary bank is subjected to capital requirements similar to
the requirements for bank holding companies. At March 31, 1996, all of U. S.
Bancorp's banking subsidiaries met the risk-based capital ratio and leverage
ratio requirements for "well-capitalized" banks. The banking subsidiaries'
ratios are expected to be maintained at such levels by the retention of earnings
and, if necessary, the issuance of additional capital-qualifying securities.
The risk-based capital and leverage ratios for U. S. Bancorp and its
significant bank subsidiaries at March 31, 1996 are presented in the table
below:
<TABLE>
<CAPTION>
Risk-based
Capital Ratios
-----------------------
Total Total Leverage
Assets Tier 1 Capital Ratio
------------- ------ --------- --------
(In Millions)
<S> <C> <C> <C> <C>
U.S. Bancorp (Consolidated) $31,557 8.25% 11.52% 7.97%
Bank Subsidiaries
U.S. Bank of Oregon 11,977 8.97 10.81 9.64
U.S. Bank of Washington 7,170 8.32 10.55 9.17
West One Bank, Washington 2,162 8.88 10.89 7.34
West One Bank, Idaho 4,506 10.34 11.59 7.42
U.S. Bank of California 1,909 10.49 12.83 7.66
U.S. Bank of Nevada 1,044 9.29 11.91 6.79
U.S. Bank of Utah 847 10.67 11.92 7.81
</TABLE>
At March 31, 1996, common shareholders' equity was $2.5 billion. For
the first quarter of 1996, average common equity to average total assets
increased to 8.04 percent from 7.95 percent for the first quarter of 1995. The
quarterly dividend rates were $.28 and $.25 for the first quarter of 1996 and
1995, respectively.
22
<PAGE> 23
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
U. S. Bancorp held its 1996 annual meeting of shareholders on April 16, 1996.
The following directors were elected at the annual meeting to serve until the
next annual meeting:
<TABLE>
<CAPTION>
Abstentions and Broker
For Withheld Non-Votes
--- -------- ---------
<S> <C> <C> <C>
Harry Bettis 131,224,177 899,099 0
Gerry B. Cameron 131,195,486 927,790 0
Carolyn Silva Chambers 131,245,593 877,683 0
Franklin G. Drake 131,187,844 935,432 0
Robert L. Dryden 131,314,822 808,454 0
John B. Fery 131,257,680 865,596 0
Joshua Green, III 131,102,743 1,020,533 0
Daniel R. Nelson 131,195,263 928,013 0
Allen T. Noble 131,163,144 960,132 0
Paul A. Redmond 131,310,003 813,273 0
N. Stewart Rogers 131,314,380 808,896 0
Benjamin R. Whiteley 131,316,915 806,361 0
</TABLE>
The Third Amendment and Restatement of the U. S. Bancorp 1993 Stock Incentive
Plan (the "Incentive Plan") was submitted to the shareholders for approval. The
Incentive Plan as amended authorizes grants of performance cash awards and
restricted stock units, as well other stock-based awards. Additionally, the
maximum number of shares subject to options or stock appreciation rights which
may be granted to a participant during any five-year calendar period was
increased. The Incentive Plan as amended was approved at the annual meeting by
the following votes: 95,372,194 for; 32,768,855 against; 2,278,656 abstentions
and broker non-votes.
Performance goals under the U.S. Bancorp Executive Annual Incentive Plan and the
U.S. Bancorp Performance Cash Award Plan were submitted to the shareholders for
approval at the annual meeting, and were approved by the following votes:
118,584,152 for; 7,508,352 against; 2,288,584 abstentions and broker non-votes.
The selection of Deloitte & Touche LLP as independent auditors for the year 1996
was approved at the annual meeting by the following votes: 130,057,103 for;
790,065 against; 1,276,108 abstentions and broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits filed herewith are listed in the Exhibit Index on
page 25 of this report.
(b) A report on Form 8-K was filed on March 11, 1996, to report an
amendment to the merger agreement with California Bancshares,
Inc. to account for the proposed merger by purchase accounting
rather than as a pooling-of-interests.
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
U. S. BANCORP
(Registrant)
Date: May 14, 1996 By: /s/ STEVEN P. ERWIN
----------------------------------------
Steven P. Erwin
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
24
<PAGE> 25
EXHIBIT INDEX
Exhibit
12.1 U. S. Bancorp and Subsidiaries - Computation of Ratios of
Consolidated Earnings to Fixed Charges.
12.2 U. S. Bancorp and Subsidiaries - Capital Ratios.
27 Financial Data Schedule.
25
<PAGE> 1
EXHIBIT 12.1
U.S. BANCORP AND SUBSIDIARIES
COMPUTATION OF RATIOS OF CONSOLIDATED
EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
First Quarter
Ended March 31,
1996
--------------
Considering Interest on Deposits as an Operating Expense (In Thousands)
- --------------------------------------------------------
<S> <C>
Net income $ 112,914
Income taxes 62,533
---------
Earnings before income taxes and accounting changes 175,447
---------
Add fixed charges
Interest on borrowed funds 61,938
Interest income from federal funds sold (A) (1,988)
Interest component of leases (B) 4,028
---------
Total fixed charges 63,978
---------
Earnings before income taxes, accounting changes and fixed charges $ 239,425
=========
Ratio of earnings to total fixed charges 3.74 x
=========
Considering Interest on Deposits as Fixed Charges
- -------------------------------------------------
Fixed charges as shown above $ 63,978
Interest on deposits 189,812
---------
Total fixed charges 253,790
Add earnings before income taxes and accounting changes 175,447
---------
Earnings before income taxes, accounting changes and fixed charges $ 429,237
=========
Ratio of earnings to total fixed charges 1.69 x
=========
</TABLE>
- -----------------
(A) Approximates interest expense related to federal funds purchased
transactions for purposes other than the funding of banking
subsidiaries' operations.
(B) Interest component of leases includes imputed interest on capitalized
leases and approximately one-third of rental expense, which approximates
the interest component of operating leases.
26
<PAGE> 1
EXHIBIT 12.2
U.S. BANCORP AND SUBSIDIARIES
CAPITAL RATIOS
<TABLE>
<CAPTION>
March 31,
------------------------------
1996 1995
----------- -----------
(In Thousands)
<S> <C> <C>
Total assets as reported $31,557,245 $30,095,673
Shareholders' equity as reported 2,638,997 2,576,687
Tier 1 capital 2,466,157 2,386,836
Total capital 3,440,470 3,089,443
Weighted risk assets 29,877,505 26,821,884
Adjusted quarterly average assets 30,950,275 29,486,719
Ratios
Tier 1 capital to weighted risk assets 8.25% 8.90%
Total capital to weighted risk assets 11.52% 11.52%
Tier 1 capital to adjusted average assets (leverage ratio) 7.97% 8.09%
</TABLE>
27
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,012,320
[INT-BEARING-DEPOSITS] 1,247
[FED-FUNDS-SOLD] 700,921
[TRADING-ASSETS] 148,804
[INVESTMENTS-HELD-FOR-SALE] 2,979,697
[INVESTMENTS-CARRYING] 834,805
[INVESTMENTS-MARKET] 848,438
[LOANS] 23,267,717
[ALLOWANCE] 442,147
<TOTAL-ASSETS> 31,557,245
[DEPOSITS] 23,226,697
[SHORT-TERM] 3,350,184
[LIABILITIES-OTHER] 986,930
[LONG-TERM] 1,354,437
0
150,000
<COMMON> 750,861
<OTHER-SE> 1,738,136
[TOTAL-LIABILITIES-AND-EQUITY] 31,557,245
[INTEREST-LOAN] 527,939
[INTEREST-INVEST] 59,379
[INTEREST-OTHER] 12,671
[INTEREST-TOTAL] 599,989
[INTEREST-DEPOSIT] 189,812
<INTEREST-EXPENSE> 251,750
[INTEREST-INCOME-NET] 348,239
[LOAN-LOSSES] 30,132
[SECURITIES-GAINS] 3,385
[EXPENSE-OTHER] 287,226
<INCOME-PRETAX> 175,447
[INCOME-PRE-EXTRAORDINARY] 175,447
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,914
<EPS-PRIMARY> .73
<EPS-DILUTED> .73
[YIELD-ACTUAL] 5.19
[LOANS-NON] 101,658
[LOANS-PAST] 31,895
[LOANS-TROUBLED] 734
[LOANS-PROBLEM] 0
[ALLOWANCE-OPEN] 434,508
[CHARGE-OFFS] 30,786
[RECOVERIES] 8,293
[ALLOWANCE-CLOSE] 442,147
[ALLOWANCE-DOMESTIC] 0
[ALLOWANCE-FOREIGN] 0
[ALLOWANCE-UNALLOCATED] 0
</TABLE>
