U.S. Bancorp's earnings of $1.68 billion increased 13.8%.
Chicago: Fitch Ratings said U.S. Bancorp's (USB) (rated 'AA'/'F1+'/Outlook Stable) fourth quarter 2017 (4Q17) earnings of $1.68 billion increased 13.8% year-over-year and had a net benefit from a gain related to tax changes in the U.S.
With the passage of the Tax Cuts and Jobs Act (Tax Act), USB realized a $910 million gain due to the revaluation in the company's deferred tax liability (DTL). USB's operating performance in 4Q17 as measured by annualized return on average assets was 1.46% including the benefit noted above and 1.33% excluding the benefit noted above, which is one basis point higher than the result in the year-ago quarter. The company's annualized return on average equity in 4Q17 was 14.7% including the benefit noted above, and 13.4% excluding the benefit, which was 30 basis points higher than the year ago quarter.
Fitch Ratings is a nationally recognized statistical rating organization (NRSRO) designated by the U.S. Securities and Exchange Commission. Offsetting this gain, was a $608 million legal and regulatory accrual related to its Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance programs and related to an investigation by the United States Attorney's Office in Manhattan into a legacy banking relationship with a payday lending business associated with a former customer. The company believes this legal and regulatory accrual will satisfy the financial obligations associated with its BSA/AML remediation program. USB also incurred a charge of $67 million related to an employee bonus payment of $1000 for eligible employees as well as a $150 million contribution to its community foundation. These actions combined to net a $150 million after tax benefit to the company's 4Q17 earnings.
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|Publication:||Daily the Pak Banker (Lahore, Pakistan)|
|Date:||Apr 3, 2018|
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