<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): JULY 15, 1998
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U.S. BANCORP
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(Exact name of registrant as specified in its charter)
DELAWARE 1-6880 41-0255900
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(State or other jurisdiction (Commission (I.R.S Employer
of Incorporation) File Number) Identification No.)
601 SECOND AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55402
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612-973-1111
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. OTHER EVENTS
On July 15, 1998, U.S. Bancorp (the "Company") released its second
quarter 1998 earnings summary to the public. The Company's press
release, dated July 15, 1998, announcing such earnings summary is
included as Exhibit 99 hereto and is incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c.) Exhibits (filed herewith)
99 Press release issued by U.S. Bancorp on July 15, 1998.
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 hereunto duly authorized.
U.S. BANCORP
By /s/ Susan E. Lester
-------------------
Susan E. Lester
Executive Vice President & Chief Financial Officer
DATE: July 15, 1998
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<PAGE>
[LOGO]
NEWS RELEASE
CONTACT:
Wendy L. Raway John R. Danielson Judith T. Murphy
Media Relations Investor Relations Investor Relations
(612) 973-2429 (612) 973-2261 (612) 973-2264
U.S. BANCORP REPORTS RECORD OPERATING EARNINGS FOR 2ND QUARTER 1998
<TABLE>
<CAPTION>
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2Q 2Q PERCENT YTD YTD PERCENT
EARNINGS SUMMARY 1998 1997 CHANGE 1998 1997 CHANGE
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($ in millions, except per-share data)
<S> <C> <C> <C> <C> <C> <C>
Before nonrecurring items*:
Operating earnings $358.2 $302.7 18.3 $708.2 $594.9 19.0
Operating earnings to common 358.2 299.6 19.6 708.2 588.8 20.3
Earnings per common share (diluted) 0.48 0.40 20.0 0.94 0.79 19.0
Net income 320.6 303.9 5.5 649.1 597.2 8.7
Earnings per common share (diluted) 0.43 0.41 4.9 0.86 0.80 7.5
Dividends paid per common share 0.1750 0.1550 12.9 0.3500 0.3100 12.9
Book value per common share (period-end) 8.28 7.79 6.3
Return on average common equity** (%) 23.2 21.4 23.4 21.1
Return on average assets** (%) 2.01 1.76 2.02 1.75
Net interest margin (%) 4.91 5.05 4.95 5.07
Efficiency ratio** (%) 49.7 49.7 48.0 50.2
Banking efficiency ratio***(%) 46.0 49.7 46.1 50.2
* Net nonrecurring items totaled $(37.6) million, after-tax, in 2Q98 and $1.2 million, after tax, in 2Q97.
Net nonrecurring items totaled $(59.1) million, after tax, year-to-date 1998, and $2.3 million, after tax, year-to-date
1997.
** before nonrecurring items
*** before nonrecurring items; without Piper Jaffray broker/dealer
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</TABLE>
MINNEAPOLIS, July 15, 1998 -- U.S. Bancorp (NYSE: USB) today reported record
operating earnings of $358.2 million, or $.48 per diluted share, for the second
quarter of 1998, compared with $302.7 million, or $.40 per diluted share, in the
second quarter of 1997. Return on average common equity and return on average
assets, excluding nonrecurring items, were 23.2 percent and 2.01 percent,
respectively, in the second quarter of 1998, compared with returns, excluding
nonrecurring items, of 21.4 percent and 1.76 percent in the second quarter of
1997.
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 2
Including nonrecurring items, the Company recorded net income for the
second quarter of 1998 of $320.6 million, or $.43 per diluted share, compared to
net income of $303.9 million, or $.41 per diluted share, in the second quarter
of 1997.
On May 1, 1998, the Company completed the acquisition of Piper Jaffray
Companies Inc., a full service investment banking and institutional and retail
brokerage company, in a cash purchase transaction for $738 million.
U.S. Bancorp's President and Chief Executive Officer, John F. Grundhofer,
said, "We are very pleased with our second quarter results. The quarter was
highlighted by the acquisition of Piper Jaffray and our continuing progress in
integrating the former U.S. Bancorp of Portland, including successful core
system conversions in five of our six western-most states. Once again, we
experienced strong revenue growth year-over-year, while continuing to reduce our
base operating expenses. Our performance ratios are among the best in the
banking industry and are the direct result of our focus on satisfying our
customers needs and creating value for our shareholders."
During the second quarter, further progress was made towards the full
integration of the former First Bank System, Inc. ("FBS") and the former U.S.
Bancorp ("USBC") of Portland, Oregon into the new U.S. Bancorp. Core system
conversions for the states of California, Utah and Nevada were completed in May,
and the conversions for the states of Washington and Idaho were completed in
June. The core system conversion for the state of Oregon is scheduled to be
completed in July.
Earnings in the second quarter of 1998 included after-tax nonrecurring
merger-related charges of $37.6 million. Approximately $53 million, after tax,
of additional merger-related expenses associated with the acquisition of U.S
Bancorp of Portland, Oregon are expected to be incurred over the next two
quarters. This represents an increase of approximately $25 million, or 5.6
percent, over the $450 million, after-tax, of merger-related charges originally
announced in March of 1997. Increased systems conversion costs are the
principal reason for the variance.
The strong operating earnings for the second quarter reflected growth in
core noninterest income and a decrease in core noninterest expense from the
second quarter of 1997. Comparisons to prior
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 3
periods are affected by the May 1, 1998, acquisition of Piper Jaffray Companies
Inc. Without the Piper Jaffray acquisition, noninterest income, before
nonrecurring items, increased by $56.3 million, or 13.9 percent, reflecting
strong growth in credit card fee revenue and trust and investment management
fees. Without the Piper Jaffray acquisition, noninterest expense, before
nonrecurring items, declined by $24.9 million, or 4.2 percent. Without the
impact of the Piper Jaffray broker/dealer, the efficiency ratio (ratio of
expenses to revenues) for the second quarter of 1998 was 46.0 percent, compared
to 49.7 percent in the second quarter of 1997.
Net charge-offs were .77 percent of average loans in the second quarter of
1998, equal to the first quarter of 1998 and slightly higher than the .73
percent in same period of last year. Consumer loans (excluding first mortgage
loans) 30 days or more past due were 2.02 percent of loans outstanding in the
second quarter of 1998, slightly above the 1.97 percent in the first quarter of
1998 and below the 2.26 percent in the same period of last year. The ratio of
allowance for credit losses to nonperforming loans continued to indicate strong
reserve coverage of 359 percent at June 30, 1998.
On April 22, 1998, shareholders authorized an increase in the capital stock
necessary to implement a previously announced three-for-one stock split. The
stock split was in the form of a 200 percent stock dividend payable May 18,
1998, to shareholders of record on May 4, 1998. The impact of the stock split
has been reflected in the second quarter financial statements and all prior
periods.
On June 9, 1998, U.S. Bancorp announced a share repurchase program. The
Company's Board of Directors authorized the repurchase of up to $2.5 billion of
the Company's common stock over the period ending March 31, 2000. The shares
will be repurchased in the open market or through negotiated transactions.
During the second quarter, the Company repurchased 6.6 million shares for a
total dollar value of $275.2 million.
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 4
<TABLE>
<CAPTION>
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INCOME STATEMENT HIGHLIGHTS
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(Taxable-equivalent basis, $ in millions,
except per-share data) 2Q 2Q PERCENT YTD YTD PERCENT
1998 1997 CHANGE 1998 1997 CHANGE
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income $777.9 $779.6 (0.2) $1,545.9 $1,541.5 0.3
Provision for credit losses 93.0 101.1 (8.0) 183.0 185.3 (1.2)
Noninterest income* 561.1 405.6 38.3 1,007.0 781.4 28.9
Noninterest expense* 665.1 589.5 12.8 1,224.2 1,165.0 5.1
---------------------- ------------------------
Income before taxes and
nonrecurring items 580.9 494.6 17.4 1,145.7 972.6 17.8
Taxable-equivalent adjustment 12.9 14.8 (12.8) 26.0 29.7 (12.5)
Income taxes* 209.8 177.1 18.5 411.5 348.0 18.2
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Income before nonrecurring items 358.2 302.7 18.3 708.2 594.9 19.0
Net nonrecurring items (after-tax) (37.6) 1.2 nm (59.1) 2.3 nm
---------------------- ------------------------
Net income $320.6 $303.9 5.5 $649.1 $597.2 8.7
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Net income to common $320.6 $300.8 6.6 $649.1 $591.1 9.8
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Per diluted common share:**
Earnings, before nonrecurring items $0.48 $0.40 20.0 $0.94 $0.79 19.0
---------------------- ------------------------
Earnings on a cash basis,
before nonrecurring items*** $0.52 $0.44 18.2 $1.03 $0.86 19.8
---------------------- ------------------------
Net income $0.43 $0.41 4.9 $0.86 $0.80 7.5
---------------------- ------------------------
Earnings on a cash basis*** $0.47 $0.44 6.8 $0.96 $0.87 10.3
---------------------- ------------------------
* before effect of nonrecurring items
** nonrecurring items reduced earnings by $0.05 in 2Q98 and $0.08 year-to-date 1998 and added $0.01 in 2Q97 and year-to-date
1997.
nonrecurring items reduced cash basis earnings by $0.05 in 2Q98 and $0.07 year-to-date 1998 and added $0.01 in
year-to-date 1997.
*** calculated by adding amortization of goodwill and other intangible assets to net income
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</TABLE>
NET INTEREST INCOME
Second quarter net interest income on a taxable-equivalent basis was $777.9
million, compared to $779.6 million recorded in the second quarter of 1997.
Earning assets increased by $1.6 billion, or 2.6 percent, driven by core
commercial and consumer loan growth, partially offset by reductions in
investment securities and residential mortgages. Average loans were up $1.9
billion, or 3.5 percent, from the second quarter of 1997. Excluding residential
mortgage loans, average loans for the second
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 5
quarter were higher by $2.9 billion, or 6.0 percent, than second quarter of
1997, reflecting growth in the commercial, home equity and second mortgages and
credit card loans. Other consumer loans were lower on average than the second
quarter of 1997, primarily due to reductions in installment loans in the
northwest region.
Average securities for the second quarter were lower by $846 million than
the second quarter of 1997, reflecting both maturities and sales of securities.
The net interest margin in the second quarter of 1998 of 4.91 percent was
below the 1997 margin of 5.05 percent and the first quarter margin of 4.98
percent, primarily due to growth in Payment Systems' noninterest-bearing assets,
including corporate and purchasing card loan balances, the additional funding
required for the Piper Jaffray acquisition and continued margin compression in
the commercial loan portfolio.
<TABLE>
<CAPTION>
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AVERAGE LOANS
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($ in millions) 2Q 2Q PERCENT
1998 1997 CHANGE
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<S> <C> <C> <C>
Commercial $24,264 $22,431 8.2
Commercial real estate 10,712 10,293 4.1
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Total commercial 34,976 32,724 6.9
Home equity and second mortgage 5,694 5,072 12.3
Credit card 3,941 3,546 11.1
Other 6,636 7,012 (5.4)
--------------------------------
Total consumer, excl. residential 16,271 15,630 4.1
Residential mortgage 4,153 5,161 (19.5)
--------------------------------
Total loans $55,400 $53,515 3.5
--------------------------------
--------------------------------
Total loans, excluding residential mortgages $51,247 $48,354 6.0
--------------------------------
--------------------------------
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</TABLE>
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 6
<TABLE>
<CAPTION>
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NONINTEREST INCOME
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($ in millions) 2Q 2Q PERCENT YTD YTD PERCENT
1998 1997 CHANGE 1998 1997 CHANGE
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Credit card fee revenue* $147.6 $98.8 49.4 $274.4 $189.5 44.8
Trust and investment management fees 108.0 87.2 23.9 202.9 171.8 18.1
Service charges on deposit accounts 99.4 97.4 2.1 197.3 192.8 2.3
Investment products fees and commissions 57.5 16.7 244.3 75.7 32.5 132.9
Trading account profits and commissions 28.0 6.8 311.8 35.1 17.3 102.9
Investment banking revenue 29.0 -- nm 29.0 -- nm
Other 91.6 98.7 (7.2) 192.6 177.5 8.5
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Subtotal** 561.1 405.6 38.3 1,007.0 781.4 28.9
Net securities gains -- 1.9 12.6 3.6
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Nonrecurring gains -- 1.9 12.6 3.6
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Total noninterest income $561.1 $407.5 $1,019.6 $785.0
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* Excluding the effects of the 4Q97 NWA contract renewal and the merchant processing alliance buyout, 2Q
credit card fee revenue would have increased by $35.1 million, or 35.5%.
**Excluding Piper Jaffray, fee income, before nonrecurring items, would have increased by $56.3 million, or 13.9%.
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</TABLE>
NONINTEREST INCOME
Second quarter noninterest income, before nonrecurring items, was $561.1
million, an increase of $155.5 million, or 38.3 percent, from the same quarter
of 1997. The increase for the quarter without the Piper Jaffray acquisition was
$56.3 million, or 13.9 percent. The increase resulted principally from growth
in credit card and trust and investment management fee revenue. Credit card fee
revenue increased by $48.8 million, or 49.4 percent, as a result of higher
volumes for purchasing and corporate cards and the Northwest Airlines WorldPerks
credit card. Second quarter credit card fees were also enhanced by the renewal
of the Northwest Airlines WorldPerks program (4Q97) and the buyout of the third
party interest in a merchant processing alliance (1Q98). Without these items,
credit card fees increased by $35.1 million, or 35.5 percent. Trust and
investment management fees were up over the second quarter of 1997 by $20.8
million, or 23.9 percent, due to growth in the corporate, institutional and
personal trust businesses and the addition of Piper Jaffray. Without Piper
Jaffray, trust and investment management fees grew by $12.9 million, or 14.8
percent. Investment products fees and
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 7
commissions, trading account profits and commissions and investment banking
revenue were higher by $40.8 million, $21.2 million and $29.0 million,
respectively, reflecting the acquisition of Piper Jaffray. Other noninterest
income was lower than the second quarter of 1997 by $7.1 million, or 7.2
percent. The reduction was primarily related to distributions from investment
partnerships recorded by the former U.S. Bancorp of Portland in the second
quarter of 1997.
<TABLE>
<CAPTION>
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NONINTEREST EXPENSE
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($ in millions)
2Q 2Q PERCENT YTD YTD PERCENT
1998 1997 CHANGE 1998 1997 CHANGE
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Salaries and employee benefits $362.1 $304.1 19.1 $655.8 $605.8 8.3
Net occupancy 47.9 45.2 6.0 91.4 91.0 0.4
Furniture and equipment 39.6 44.2 (10.4) 75.0 87.0 (13.8)
Goodwill and intangibles 36.0 25.8 39.5 69.4 53.2 30.5
Advertising and marketing 17.8 16.6 7.2 33.5 28.9 15.9
Telephone 17.0 15.7 8.3 32.5 29.3 10.9
Other personnel costs 16.8 16.4 2.4 29.9 32.8 (8.8)
Professional services 15.3 15.1 1.3 26.6 28.6 (7.0)
Other 112.6 106.4 5.8 210.1 208.4 0.8
-------------------- --------------------
Subtotal* 665.1 589.5 12.8 1,224.2 1,165.0 5.1
Merger-related 59.5 -- 106.0 --
-------------------- --------------------
Nonrecurring charges 59.5 -- 106.0 --
-------------------- --------------------
Total noninterest expense $724.6 $589.5 $1,330.2 $1,165.0
-------------------- --------------------
-------------------- --------------------
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* Excluding Piper Jaffray, noninterest expense, before nonrecurring items, decreased by $24.9 million, or 4.2%.
</TABLE>
NONINTEREST EXPENSE
Second quarter noninterest expense, before nonrecurring items, totaled
$665.1 million, an increase of $75.6 million, or 12.8 percent, from the second
quarter of 1997. Without the effect of Piper Jaffray, noninterest expense,
before nonrecurring items, decreased by $24.9 million, or 4.2 percent.
Excluding Piper Jaffray, expense categories showing the largest decreases over
the second quarter of 1997 included salaries and employee benefits, furniture
and fixtures and other expenses which were
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 8
favorable by $13.7 million, $8.3 million and $7.0 million, respectively.
Goodwill and other intangibles expense was higher than the second quarter of
1997 by $10.2 million, or 39.5 percent, as a result of the Piper Jaffray
acquisition, plus several small bank and portfolio purchases during 1997 and the
buyout of a merchant processing alliance.
The $59.5 million of nonrecurring, merger-related expenses incurred in the
second quarter of 1998 included $57.8 million of conversion expense for the
former U.S. Bancorp of Portland and $1.7 million related to the acquisition of
Piper Jaffray. Additional USBC merger-related charges of approximately $53
million, after tax, are expected to be incurred in 1998. Total merger-related
charges for USBC will be approximately $475 million, after tax, compared to the
Company's original estimate of $450 million, after tax, or 5.6 percent higher,
primarily due to an increase in estimated systems conversion related expense.
<TABLE>
<CAPTION>
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ALLOWANCE FOR CREDIT LOSSES
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($ in millions) 2Q 1Q 4Q 3Q 2Q
1998 1998 1997 1997 1997
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of period $995.5 $1,008.7 $1,019.9 $999.4 $993.4
Net charge-offs*
Commercial 16.7 14.1 14.7 83.8 25.2
Consumer 90.0 89.1 88.6 80.7 72.8
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Total 106.7 103.2 103.3 164.5 98.0
Provision for credit losses 93.0 90.0 90.0 90.0 101.1
Merger-related provision for credit losses -- -- -- 95.0 --
Acquisitions and other additions -- -- 2.1 -- 2.9
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Balance, end of period $981.8 $995.5 $1,008.7 $1,019.9 $999.4
--------------------------------------------------------------------------
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Net charge-offs to average loans (%) 0.77 0.77 0.75 1.22 0.73
Allowance for credit losses to
period-end loans (%) 1.76 1.81 1.84 1.88 1.85
* 3Q 1997 includes merger-related commercial charge-offs of $55.3 million and consumer charge-offs of $7.0 million
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</TABLE>
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 9
CREDIT QUALITY
Total net charge-offs in the second quarter of 1998 were $106.7 million,
$3.5 million higher than the first quarter of 1998 and $8.7 million higher than
the second quarter of 1997. Consumer loan net charge-offs of $90.0 million were
$.9 million higher than the first quarter of 1998 and higher than the same
period of 1997 by $17.2 million. Credit card loan net charge-offs were 4.84
percent of average loans for the second quarter of 1998, higher than the first
quarter of 1998 ratio of 4.20 percent and the second quarter of 1997 ratio of
4.03 percent, primarily due to seasonally higher bankruptcies and fraud-related
charge-offs. Other consumer loan net charge-offs were 1.33 percent, lower than
the first quarter of 1998 ratio of 1.53 percent, but higher than the second
quarter of 1997 ratio of 1.21 percent. A portion of the improvement over the
first quarter of 1998 reflects a decrease in charge-offs in the northwest
region's portfolio of installment loans.
Consumer loans (excluding first mortgage loans) 30 days or more past due
were 2.02 percent of the portfolio at June 30, 1998, compared with 1.97 percent
in the first quarter of 1998 and 2.26 percent in the second quarter of 1997.
Commercial loan net charge-offs were $16.7 million for the second quarter,
compared with net charge-offs of $14.1 million in the first quarter of 1998 and
$25.2 million in the second quarter of 1997.
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 10
<TABLE>
<CAPTION>
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CONSUMER CREDIT
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(Percent)
JUN 30 MAR 31 DEC 31 SEP 30 JUN 30
1998 1998 1997 1997 1997
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Charge-off Ratios:*
Credit cards 4.84 4.20 3.87 4.23 4.03
Other consumer 1.33 1.53 1.59 1.28 1.21
Subtotal, excl. first mortgage 2.18 2.19 2.16 1.98 1.85
First mortgage 0.15 0.22 0.16 0.13 0.05
Total consumer 1.77 1.76 1.70 1.54 1.40
Delinquency Ratios (including NPLs):
Total consumer, excl. first mortgage
Past due 30+ days 2.02 1.97 2.36 2.17 2.26
Past due 90+ days 0.50 0.51 0.49 0.43 0.42
Total consumer
Past due 30+ days 2.31 2.38 2.76 2.57 2.47
Past due 90+ days 0.70 0.77 0.70 0.66 0.67
* annualized and calculated on average loan balances
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The allowance for credit losses was $981.8 million at June 30, 1998, down
from $999.4 million at June 30, 1997. The ratio of allowance for credit losses
to nonperforming loans was 359 percent at June 30, 1998, compared to 340 percent
at March 31, 1998, and 310 percent at June 30, 1997.
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 11
<TABLE>
<CAPTION>
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ASSET QUALITY
- --------------------------------------------------------------------------------------------------------------------------------
($ in millions)
JUN 30 MAR 31 DEC 31 SEP 30 JUN 30
1998 1998 1997 1997 1997
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming loans
Commercial $140.2 $161.5 $179.1 $176.2 $199.4
Commercial real estate 68.9 61.3 60.3 62.4 59.4
Consumer 64.4 70.1 57.7 58.5 63.2
------------------------------------------------------------------------
Total 273.5 292.9 297.1 297.1 322.0
Other real estate 17.3 21.6 30.1 29.0 22.7
Other nonperforming assets 9.6 10.9 12.3 12.1 8.1
------------------------------------------------------------------------
Total nonperforming assets* $300.4 $325.4 $339.5 $338.2 $352.8
------------------------------------------------------------------------
------------------------------------------------------------------------
Accruing loans 90 days past due $86.6 $91.7 $93.8 $79.5 $86.0
------------------------------------------------------------------------
------------------------------------------------------------------------
Allowance to nonperforming loans (%) 359 340 340 343 310
Allowance to nonperforming assets (%) 327 306 297 302 283
Nonperforming assets to loans
plus ORE (%) 0.54 0.59 0.62 0.62 0.65
* does not include accruing loans 90 days past due
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</TABLE>
Nonperforming assets at June 30, 1998, totaled $300.4 million, lower by
$25.0 million, or 7.7 percent, than March 31, 1998, and lower by $52.4 million,
or 14.9 percent, than June 30, 1997. The ratio of nonperforming assets to loans
and other real estate was .54 percent at June 30, 1998, lower than the ratio at
March 31, 1998, of .59 percent and at June 30, 1997, of .65 percent.
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 12
<TABLE>
<CAPTION>
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CAPITAL POSITION
- ----------------------------------------------------------------------------------------------------------------------------------
(Percent) JUN 30 MAR 31 DEC 31 SEP 30 JUN 30
1998 1998 1997 1997 1997
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common equity to assets 8.3 8.6 8.3 8.0 8.0
Total shareholders' equity to assets 8.3 8.6 8.3 8.2 8.2
Tangible common equity to assets* 6.5 7.4 7.0 6.7 6.7
Tier 1 capital ratio 7.2 7.8 7.4 7.2 7.6
Total risk-based capital ratio 11.5 11.9 11.6 11.4 11.9
Leverage ratio 7.4 7.7 7.3 7.3 7.5
* calculated by deducting goodwill from common equity and assets
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</TABLE>
CAPITAL
At June 30, 1998, the common-equity-to-assets ratio was 8.3 percent,
compared with a ratio of 8.0 percent at June 30, 1997, and the regional bank
peer group average of 8.1 percent at March 31, 1998.
<TABLE>
<CAPTION>
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COMMON SHARES
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(Millions)
2Q 1Q 4Q 3Q 2Q
1998 1998 1997 1997 1997
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning shares outstanding 742.5 739.9 735.1 732.6 735.6
Shares issued for stock option and stock
purchase plans and other corporate purposes 3.8 2.6 4.9 4.0 4.0
Shares repurchased (6.6) -- (0.1) (1.5) (7.0)
Ending shares outstanding 739.7 742.5 739.9 735.1 732.6
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</TABLE>
On June 9, 1998, the Company announced a $2.5 billion share repurchase
program. Between June 9, 1998 and June 30, 1998, the Company repurchased 6.6
million shares for a total dollar value of $275.2 million in both open market
and privately negotiated transactions.
<PAGE>
U.S. Bancorp Reports Second Quarter 1998 Results
July 15, 1998
Page 13
Minneapolis-based U.S. Bancorp ("USB"), with $74 billion in assets, is the
14th largest bank holding company in the nation and operates approximately 1,000
banking offices in 17 Midwestern and Western states. The company provides
comprehensive banking, trust, investment and payment systems products and
services to consumers, businesses and institutions. It operates a network of
4,800 ATMs and provides 24 hour, seven days a week telephone customer service.
The company offers full-service brokerage services at 91 offices in the West and
Midwest through Piper Jaffray Inc., the 11th largest brokerage in the nation.
The company is the largest provider of Visa corporate and purchasing cards in
the world, and is one of the largest providers of corporate trust services in
the nation.
FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements that involve
inherent risks and uncertainties. U.S. Bancorp cautions readers that a number
of important factors could cause actual results to differ materially from those
in the forward-looking statements. These factors include economic conditions
and competition in the geographic and business areas in which the Company
operates, inflation, fluctuations in interest rates, legislation and
governmental regulation and the progress of integrating the former U.S. Bancorp.
###
<PAGE>
U. S. Bancorp
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------------------------------------
(Dollars in Millions, Except Per Share Data) June 30 June 30 June 30 June 30
(Unaudited) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $1,225.6 $1,197.6 $2,429.8 $2,350.8
Securities:
Taxable 78.2 95.4 164.0 192.0
Exempt from federal income taxes 15.6 17.4 31.7 34.7
Other interest income 30.2 18.4 49.2 35.5
------------------------------------------------------------
Total interest income 1,349.6 1,328.8 2,674.7 2,613.0
INTEREST EXPENSE
Deposits 352.2 363.6 707.3 715.4
Federal funds purchased and repurchase agreements 41.8 50.8 75.4 98.7
Other short-term funds borrowed 14.3 33.1 27.1 70.0
Long-term debt 157.8 104.2 314.2 192.5
Company-obligated mandatorily redeemable preferred securities of
subsidiary trusts holding solely the junior subordinated
debentures of the parent company 18.5 12.3 30.8 24.6
------------------------------------------------------------
Total interest expense 584.6 564.0 1,154.8 1,101.2
------------------------------------------------------------
Net interest income 765.0 764.8 1,519.9 1,511.8
Provision for credit losses 93.0 101.1 183.0 185.3
------------------------------------------------------------
Net interest income after provision for credit losses 672.0 663.7 1,336.9 1,326.5
NONINTEREST INCOME
Credit card fee revenue 147.6 98.8 274.4 189.5
Trust and investment management fees 108.0 87.2 202.9 171.8
Service charges on deposit accounts 99.4 97.4 197.3 192.8
Investment products fees and commissions 57.5 16.7 75.7 32.5
Trading account profits and commissions 28.0 6.8 35.1 17.3
Investment banking revenue 29.0 -- 29.0 --
Securities gains -- 1.9 12.6 3.6
Other 91.6 98.7 192.6 177.5
------------------------------------------------------------
Total noninterest income 561.1 407.5 1,019.6 785.0
NONINTEREST EXPENSE
Salaries 303.3 246.9 542.9 487.5
Employee benefits 58.8 57.2 112.9 118.3
Net occupancy 47.9 45.2 91.4 91.0
Furniture and equipment 39.6 44.2 75.0 87.0
Goodwill and other intangible assets 36.0 25.8 69.4 53.2
Advertising and marketing 17.8 16.6 33.5 28.9
Telephone 17.0 15.7 32.5 29.3
Other personnel costs 16.8 16.4 29.9 32.8
Professional services 15.3 15.1 26.6 28.6
Merger-related 59.5 -- 106.0 --
Other 112.6 106.4 210.1 208.4
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Total noninterest expense 724.6 589.5 1,330.2 1,165.0
------------------------------------------------------------
Income before income taxes 508.5 481.7 1,026.3 946.5
Applicable income taxes 187.9 177.8 377.2 349.3
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Net income $320.6 $303.9 $649.1 $597.2
------------------------------------------------------------
------------------------------------------------------------
Net income applicable to common equity $320.6 $300.8 $649.1 $591.1
------------------------------------------------------------
------------------------------------------------------------
EARNINGS PER COMMON SHARE
Average shares outstanding 739,630,613 733,120,503 739,171,968 734,170,890
Earnings per share $.43 $.41 $.88 $.81
------------------------------------------------------------
------------------------------------------------------------
Diluted average shares outstanding 752,410,125 741,450,456 752,049,262 742,466,421
Diluted earnings per share $.43 $.41 $.86 $.80
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</TABLE>
Page 14
<PAGE>
U.S. Bancorp
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30 December 31 June 30
(Dollars in Millions) 1998 1997 1997
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash and due from banks $4,537 $4,739 $4,299
Federal funds sold 743 62 1,538
Securities purchased under agreements to resell 594 630 486
Trading account securities 411 195 176
Available-for-sale securities 5,923 6,885 6,112
Held-to-maturity securities (fair value: June 30, 1997 - $773) -- -- 760
Loans 55,778 54,708 54,158
Less allowance for credit losses 982 1,009 999
-------------------------------------------
Net loans 54,796 53,699 53,159
Premises and equipment 901 860 963
Interest receivable 414 405 409
Customers' liability on acceptances 292 535 780
Goodwill and other intangible assets 1,967 1,482 1,417
Other assets 3,172 1,803 1,576
-------------------------------------------
Total assets $73,750 $71,295 $71,675
-------------------------------------------
-------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $15,745 $14,544 $15,978
Interest-bearing 33,562 34,483 34,834
-------------------------------------------
Total deposits 49,307 49,027 50,812
Federal funds purchased 546 800 860
Securities sold under agreements to repurchase 1,460 1,518 1,372
Other short-term funds borrowed 1,484 974 2,354
Long-term debt 11,381 10,247 7,583
Company-obligated mandatorily redeemable preferred securities of subsidiary
trusts holding solely the junior subordinated debentures of the parent company 950 600 600
Acceptances outstanding 292 535 780
Other liabilities 2,203 1,704 1,461
-------------------------------------------
Total liabilities 67,623 65,405 65,822
Shareholders' equity:
Preferred stock -- -- 150
Common stock 931 925 946
Capital surplus 1,358 1,261 1,142
Retained earnings 4,034 3,645 4,154
Accumulated other comprehensive income 58 59 5
Treasury stock (254) -- (544)
-------------------------------------------
Total shareholders' equity 6,127 5,890 5,853
-------------------------------------------
Total liabilities and shareholders' equity $73,750 $71,295 $71,675
-------------------------------------------
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</TABLE>
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