Question

Consolidated Balance Sheet - USD ($)
$ in Millions

Dec. 31, 2018

Dec. 31, 2017

Assets
Cash and due from banks $ 21,453 $ 19,505
Investment securities
Held-to-maturity (fair value $44,964 and $43,723, respectively) 46,050 44,362
Available-for-sale ($2,057 and $689 pledged as collateral, respectively) [1] 66,115 68,137
Loans held for sale (including $2,035 and $3,534 of mortgage loans carried at fair value, respectively) 2,056 3,554
Loans
Commercial 102,444 97,561
Commercial real estate 39,539 40,463
Residential mortgages 65,034 59,783
Credit card 23,363 22,180
Other retail 56,430 57,324
Covered loans 3,121
Total loans 286,810 280,432
Less allowance for loan losses (3,973) (3,925)
Net loans 282,837 276,507
Premises and equipment 2,457 2,432
Goodwill 9,369 9,434
Other intangible assets 3,392 3,228
Other assets (including $843 and $238 of trading securities at fair value pledged as collateral, respectively) [1] 33,645 34,881
Total assets 467,374 462,040
Deposits
Noninterest-bearing 81,811 87,557
Interest-bearing [2] 263,664 259,658
Total deposits 345,475 347,215
Short-term borrowings 14,139 16,651
Long-term debt 41,340 32,259
Other liabilities 14,763 16,249
Total liabilities 415,717 412,374
Shareholders' equity
Preferred stock 5,984 5,419
Common stock, par value $0.01 a share - authorized: 4,000,000,000 shares; issued: 2018 and 2017 - 2,125,725,742 shares 21 21
Capital surplus 8,469 8,464
Retained earnings 59,065 54,142
Less cost of common stock in treasury: 2018 - 517,391,021 shares; 2017 - 470,080,231 shares (20,188) (17,602)
Accumulated other comprehensive income (loss) (2,322) (1,404)
Total U.S. Bancorp shareholders' equity 51,029 49,040
Noncontrolling interests 628 626
Total equity 51,657 49,666
Total liabilities and equity $ 467,374 $ 462,040
[1] Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.
[2] lncludes time deposits greater than $250,000 balances of $15.3 billion and $6.8 billion at December 31, 2018 and 2017, respectively.

Consolidated Statement of Income - USD ($)
shares in Millions, $ in Millions

12 Months Ended

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Interest Income
Loans $ 13,120 $ 11,788 $ 10,777
Loans held for sale 165 144 154
Investment securities 2,616 2,232 2,078
Other interest income 272 182 125
Total interest income 16,173 14,346 13,134
Interest Expense
Deposits 1,869 1,041 622
Short-term borrowings 378 141 92
Long-term debt 1,007 784 754
Total interest expense 3,254 1,966 1,468
Net interest income 12,919 12,380 11,666
Provision for credit losses 1,379 1,390 1,324
Net interest income after provision for credit losses 11,540 10,990 10,342
Noninterest Income
Credit and debit card revenue 1,401 1,289 1,206
Corporate payment products revenue 644 575 541
Merchant processing services 1,531 1,486 1,498
ATM processing services 308 303 277
Trust and investment management fees 1,619 1,522 1,427
Deposit service charges 762 732 706
Treasury management fees 594 618 583
Commercial products revenue 895 954 971
Mortgage banking revenue 720 834 979
Investment products fees 188 173 169
Securities gains (losses), net
Realized gains (losses), net 30 57 27
Total other-than-temporary impairment (6)
Portion of other-than-temporary impairment recognized in other comprehensive income (loss) 1
Total securities gains (losses), net 30 57 22
Other 910 774 911
Total noninterest income 9,602 9,317 9,290
Noninterest Expense
Compensation 6,162 5,746 5,212
Employee benefits 1,231 1,134 1,008
Net occupancy and equipment 1,063 1,019 988
Professional services 407 419 502
Marketing and business development 429 542 435
Technology and communications 978 903 877
Postage, printing and supplies 324 323 311
Other intangibles 161 175 179
Other 1,709 2,529 2,015
Total noninterest expense 12,464 12,790 11,527
Income before income taxes 8,678 7,517 8,105
Applicable income taxes 1,554 1,264 2,161
Net income 7,124 6,253 5,944
Net (income) loss attributable to noncontrolling interests (28) (35) (56)
Net income attributable to U.S. Bancorp 7,096 6,218 5,888
Net income applicable to U.S. Bancorp common shareholders $ 6,784 $ 5,913 $ 5,589
Earnings per common share $ 4.15 $ 3.53 $ 3.25
Diluted earnings per common share $ 4.14 $ 3.51 $ 3.24
Average common shares outstanding 1,634 1,677 1,718
Average diluted common shares outstanding 1,638 1,683 1,724

Compute the following ratios for as many years as you can, showing your numerator and denominator, as well as the ratio result:

Return on equity

Return on assets

Net interest margin

Net noninterest margin

Earnings spread

Net operating margin

Net profit margin (use net income/total revenue)

Tax management efficiency ratio

Expense control efficiency ratio

Asset utilization ratio (total revenue/total assets)

Equity multiplier (total assets/total stockholders’ equity).

Complete the following: Create a table that shows the final results of all these ratios for the past two years (2017-2018) - SHOW SOLUTIONS PLEASE.

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Answer #1
Dec. 31, 2018 Dec. 31, 2017
Return on Equity = Net income applicable to U.S. Bancorp common shareholders/Average Total equity 13.39% 11.91%
Average total Equity = (Equity of 2018+Equity of 2017)/2
Return on Assets=Net income applicable to U.S. Bancorp common shareholders/Average Total Assets 1.27% 1.21%
Average total Assets = Assets of 2018+ Assets of 2017)/2
Net interest margin=Net Interest Income/ Net Loan 4.57% 4.48%
Net Non-Interest income= (non-interest income - non-interest expense)/ (total earning assets). -0.63% -0.77%
Total Earing Assets= Total Assets-goodwill-other intangible assets
Earnings Spread= (Total Interest Income / Total Earning Assets) - (Total Interest Expense / Total Interest-Bearing Liabilities) 0.023 0.024
Net operating margin=Income before taxes/(total Non interest income+interesr income) 0.337 0.318
Net profit margin= Net income applicable to U.S. Bancorp common shareholders/(total Non interest income+interesr income) 0.263 0.250
Tax management efficiency ratio=Net Income after Tax / Net Operating Income before Tax 0.821 0.832
Efficiency ratio = Noninterest Expenses/ (Operating Income – Loan Loss Provision) 2.649 3.561
Asset utilization ratio =(total Non interest income+interesr income)/total assets) 0.055 0.051
Equity multiplier =(total assets/total stockholders’ equity). 9.048 9.303
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