Capital Structure

U.S. Bancorp’s capital position remained strong. Capital generated from earnings resulted in improved metrics both sequentially and y/y. As of September 30, 2011, return on average assets was 1.57%, up 3 bps sequentially and 31 bps y/y, while return on average common equity was 16.1%, up 2 bps sequentially and 33 bps year over year.

The company also posted improved book value per share, which increased to $16.01 as of September 30, 2011 from $15.50 as of June 30, 2011 and $14.19 as of September 30, 2011.

Total U.S. Bancorp shareholders’ equity was $33.2 billion as of September 30, 2011, compared with $32.5 billion as of June 30, 2011, and $29.2 billion as of September 30, 2010.

As of September 30, 2011, Tier 1 capital ratio also improved to 10.8% from 10.3% in the year-ago quarter but declined slightly from 11.0% in the prior quarter. However, Tier 1 common equity ratio increased to 8.5% from 8.4% as of June 30, 2011 and 7.6% as of September 30, 2010. The tangible common equity ratio was 6.6% as of September 30, 2011, compared with 6.5% as of June 30, 2011, and 6.2% as of September 30, 2010.

Additionally, the Tier 1 common ratio under anticipated Basel III guidelines was 8.2% as of September 30, 2011, compared with 8.1% as of June 30, 2011.

Outlook: Though management awaits the final regulatory guidance as to the amount of capital required to hold as a systemically important financial institution (SIFI), the company anticipates to meet the new guidelines through internal capital generation, which will allow it to move forward with the long-term goal of distributing the majority of the earnings to shareholders through dividends and share buybacks.

Share Repurchase

During 3Q11, the company repurchased 13,078,816 shares at an average price of $24.45 per share under a 50 million share repurchase authorization announced on March 18, 2011. The maximum number of shares that may yet be purchased under the current authorization is 34,395,704.

On March 18, 2011, U.S. Bancorp announced that its Board of Directors had approved an authorization to repurchase 50 million shares of common stock through December 31, 2011. This new authorization replaces the company's previous share repurchase program. U.S. Bancorp's common stock shares may be repurchased through December 2011 in the open market or in privately negotiated transactions. The reacquired common shares will be held as treasury shares and may be reissued for various corporate purposes.

Outlook: Some firms expect share repurchase activity to increase over the next few months, given the company’s strong capital position.

Dividend

On December 13, 2011, the Board of Directors of U.S. Bancorp declared a quarterly dividend of $0.125 per common share, payable on January 17, 2012, to shareholders of record as of the close of business on December 30, 2011. At this quarterly dividend rate, the annual dividend is equivalent to $0.50 per common share.

The Board of Directors also declared the following dividends:

• Regular quarterly dividend of $894.44 per share (equivalent to $8.9444 per depositary share) on U.S. Bancorp's Series A Non-Cumulative Perpetual Preferred Stock, payable on January 17, 2012, to stockholders of record as of the close of business on December 30, 2011.

• Regular quarterly dividend of $223.61 per share (equivalent to $0.22361 per depositary share) on U.S. Bancorp's Series B Non-Cumulative Perpetual Preferred Stock, payable on January 17, 2012, to stockholders of record as of the close of business on December 30, 2011.

• Regular quarterly dividend of $503.13 per share (equivalent to $0.50313 per depositary share) on U.S. Bancorp's Series D Non-Cumulative Perpetual Preferred Stock, payable on January 17, 2012, to stockholders of record as of the close of business on December 30, 2011.

On September 20, 2011, the Board of Directors of U.S. Bancorp declared a quarterly dividend of $0.125 per common share, paid on October 17, 2011, to shareholders of record at the close of business on September 30, 2011. At this quarterly dividend rate, the annual dividend is equivalent to $0.50 per common share.

The Board of Directors also declared the following dividends:

• Regular quarterly dividend of $894.44 per share (equivalent to $8.9444 per depositary share) on U.S. Bancorp's Series A Non-Cumulative Perpetual Preferred Stock, paid on October 17, 2011, to stockholders of record at the close of business on September 30, 2011.

• Regular quarterly dividend of $223.61 per share (equivalent to $0.22361 per depositary share) on U.S. Bancorp's Series B Non-Cumulative Perpetual Preferred Stock, paid on October 17, 2011, to stockholders of record at the close of business on September 30, 2011.

• Regular quarterly dividend of $503.13 per share (equivalent to $0.50313 per depositary share) on U.S. Bancorp's Series D Non-Cumulative Perpetual Preferred Stock, paid on October 17, 2011, to stockholders of record at the close of business on September 30, 2011.