US Bank 2005 Annual Report Download - page 24

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result of consolidating high credit quality, low margin loans products deposits of $2.6 billion (4.6 percent) and time
from a commercial loan conduit previously maintained by deposits greater than $100,000 of $1.4 billion
the Company onto the Company’s balance sheet beginning in (11.0 percent), partially offset by a decrease in time
the third quarter of 2003. certificates of deposit less than $100,000 of $2.4 billion
Average loans in 2004 were $3.8 billion (3.2 percent) (15.6 percent). The decrease in time certificates of deposit
higher than in 2003, reflecting growth in residential less than $100,000 was primarily due to pricing decisions
mortgages, retail loans and commercial real estate loans of by management in connection with the Company’s overall
$2.6 billion (22.5 percent), $3.0 billion (7.9 percent) and funding and risk management activities. Average net free
$.1 billion (.5 percent), respectively. Growth in these funds increased $.3 billion in 2004, compared with 2003,
categories was offset somewhat by an overall decline in including a decrease in average noninterest-bearing deposits,
average commercial loans of $2.0 billion (4.8 percent). other liabilities and other assets of $1.9 billion
Average investment securities were $5.8 billion (6.0 percent), $1.3 billion (16.7 percent) and $3.1 billion
(15.5 percent) higher in 2004, compared with 2003, (10.5 percent), respectively. The decrease in other assets and
reflecting the reinvestment of proceeds from declining liabilities principally reflected the impact of the spin-off of
average commercial loan balances and loans held for sale. Piper Jaffray Companies.
Average noninterest-bearing deposits in 2004 were lower by Provision for Credit Losses The provision for credit losses
$1.9 billion (6.0 percent), compared with 2003. While is recorded to bring the allowance for credit losses to a level
average branch-based noninterest-bearing deposits increased deemed appropriate by management based on factors
by 2.7 percent from 2003, mortgage-related escrow discussed in the ‘‘Analysis and Determination of Allowance
balances and business-related noninterest-bearing deposits, for Credit Losses’’ section. The provision for credit losses
including corporate banking, mortgage banking and was $666 million in 2005, compared with $669 million and
government deposits, declined. Average interest-bearing $1,254 million in 2004 and 2003, respectively.
deposits were higher by $1.6 billion (1.8 percent), compared The decrease in the provision for credit losses of
with 2003. The year-over-year increase in average interest- $3 million (.4 percent) in 2005 reflected improving levels of
bearing deposits included increases in average savings nonperforming loans resulting in lower total net charge-offs
NET INTEREST INCOME — CHANGES DUE TO RATE AND VOLUME (a)
2005 v 2004 2004 v 2003
(Dollars in Millions) Volume Yield/Rate Total Volume Yield/Rate Total
Increase (decrease) in
Interest income
Investment securities********************* $ (39) $ 165 $ 126 $ 263 $(124) $ 139
Loans held for sale ********************** 11 4 15 (112) 1 (111)
Commercial loans *********************** 185 103 288 (111) 9 (102)
Commercial real estate ******************* 39 222 261 7 (49) (42)
Residential mortgages******************** 211 (22) 189 160 (61) 99
Retail loans ***************************** 207 273 480 210 (264) (54)
Total loans ************************** 642 576 1,218 266 (365) (99)
Other earning assets********************* 4 6 10 (14) 14 —
Total******************************** 618 751 1,369 403 (474) (71)
Interest expense
Interest checking ************************ 6 58 64 8 (21) (13)
Money market accounts****************** (25) 148 123 5 (88) (83)
Savings accounts *********************** ——— 1(7)(6)
Time certificates of deposit less than
$100,000 **************************** 3 45 48 (70) (40) (110)
Time deposits greater than $100,000 ****** 123 297 420 25 (6) 19
Total interest-bearing deposits ********* 107 548 655 (31) (162) (193)
Short-term borrowings ******************* 88 339 427 64 32 96
Long-term debt ************************* 27 312 339 35 68 103
Total******************************** 222 1,199 1,421 68 (62) 6
Increase (decrease) in net interest income*** $396 $ (448) $ (52) $ 335 $(412) $ (77)
(a) This table shows the components of the change in net interest income by volume and rate on a taxable-equivalent basis utilizing a tax rate of 35 percent. This table does not take into
account the level of noninterest-bearing funding, nor does it fully reflect changes in the mix of assets and liabilities. The change in interest not solely due to changes in volume or rates has
been allocated on a pro-rata basis to volume and yield/rate.
22 U.S. BANCORP
Table 3