U.S. Bancorp (NYSE:USB) Q4 2014 Earnings Conference Call - Final Transcript

Jan 21, 2015 • 09:30 am ET


U.S. Bancorp (NYSE:USB) Q4 2014 Earnings Conference Call - Final Transcript


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Welcome to U.S. Bancorp's fourth-quarter 2014 earnings conference call. Following a review of the results by Richard Davis, Chairman, President and Chief Executive Officer, and Andy Cecere, U.S. Bancorp's Vice Chairman and Chief Financial Officer, there will be a formal question-and-answer session. (Operator Instructions).

This call will be recorded and available for replay beginning today at approximately noon EDT through Wednesday, January 28 at midnight EDT. I will now turn the conference call over to Sean O'Connor, Director of Investor Relations for U.S. Bancorp.

Sean O''Connor

Thank you, Paula and good morning to everyone who has joined our call. Richard Davis, Andy Cecere, Bill Parker and Kathy Rogers are here with me today to review U.S. Bancorp's fourth-quarter and full year 2014 results and to answer your questions. Richard and Andy will be referencing a slide presentation during their prepared remarks. A copy of the slide presentation as well as our earnings release and supplemental analyst schedules are available on our website at USBank.com.

Unidentified Speaker

(Cautionary Forward-Looking Statements) I'll now turn the call over to Richard.

Richard K. Davis

I'll begin with the few highlights from US Bank's 2014 full-year results on page 3 of the presentation. US Bank reported record net income of $5.9 billion for the full year of 2014 or $3.08 per diluted common share. We achieved industry leading profitability with the return on average assets of 1.54%. Return on average common equity of 14.7% and an efficiency ratio of 53.2%. Total average loans grew by 6.3% and average deposits grew as strong 6.5% year-over-year.

Credit quality continued to improve, with an 8.9% decline in net charge-offs and 11.2% decrease in non-performing assets. Our capital position enter the year stronger with the common equity Tier 1 capital ratio, estimated for the Basel III standardize approach as a fully implemented of 9%. In total return we return $4 billion or 72% of our 2014 earnings to the shareholders in the form of dividends and buybacks.

Turning to slide 4 and our quarterly highlights US bank reported net income of $1.5 billion for the fourth quarter of 2014 or $0.79 per diluted common share. Total average loans grew by 5.9% year-over-year and 1% linked quarter. In addition, we continue to experience strong loan growth -- strong growth in average deposits. Credit quality remained strong. Total net charge-offs decreased by 8.3% from the prior quarter.

Our total non-performing assets declined 6% on a linked quarter basis. We continue to generate significant capital this quarter. Our common equity Tier 1 capital ratio, estimated for the Basel III standardize approach fully implemented was 9% at December 31st. We repurchased 11 million shares of common stock during the fourth quarter, which along with our dividend resulted in a 66% return of earnings to our shareholders in the fourth quarter.

Slide 5 provides you with the five quarter history of our performance metrics. And they continue to be among the best in the industry. Return on average assets in the fourth quarter was 1.5%. And return on average common equity was