US Bank 2009 Annual Report Download - page 36

deposits increased $31.6 billion (23.2 percent) over 2008,
reflecting an increase in all major deposit categories.
Noninterest-bearing deposits at December 31, 2009,
increased $.7 billion (1.8 percent) from December 31, 2008.
The increase was primarily attributable to higher business
demand balances as well as the FBOP acquisition. The
increase was partially offset by lower broker-dealer balances.
Average noninterest-bearing deposits increased $9.1 billion
(31.7 percent) in 2009, compared with 2008, due primarily
to higher business demand deposits, partially offset by lower
trust demand deposits.
Interest-bearing savings deposits increased $28.7 billion
(42.6 percent) at December 31, 2009, compared with
December 31, 2008. The increase in these deposit balances
was primarily related to higher savings, interest checking
and money market savings balances. The $7.8 billion
(86.2 percent) increase in savings account balances reflected
strong participation in a new savings product introduced in
late 2008 by Consumer Banking, higher broker-dealer
balances, and the impact of the FBOP acquisition. The
$6.2 billion (19.2 percent) increase in interest checking
account balances was due to higher branch-based and
broker-dealer balances, as well as the impact of the FBOP
acquisition. The $14.7 billion (56.3 percent) increase in
money market savings account balances reflected higher
corporate trust, institutional trust and custody, and broker-
dealer balances, as well as the impact of the FBOP
acquisition. Average interest-bearing savings deposits in
2009 increased $18.4 billion (29.0 percent), compared with
2008, primarily driven by higher savings account balances of
$7.2 billion, interest checking account balances of
$5.7 billion (18.4 percent) and money market savings
account balances of $5.5 billion (20.9 percent).
Interest-bearing time deposits at December 31, 2009,
decreased $5.5 billion (10.1 percent), compared with
December 31, 2008, driven primarily by a decrease in time
deposits greater than $100,000, as a result of the Company’s
funding and pricing decisions. Time certificates of deposit
less than $100,000 increased $541 million (2.9 percent) at
December 31, 2009, compared with December 31, 2008.
Average time certificates of deposit less than $100,000 in
2009 increased $4.3 billion (31.6 percent), compared with
2008, due primarily to acquisitions. Time deposits greater
than $100,000 decreased $6.0 billion (16.8 percent) at
December 31, 2009, compared with December 31, 2008.
Average time deposits greater than $100,000 in 2009
decreased $200 million (.7 percent), compared with 2008.
Time deposits greater than $100,000 are managed as an
alternative to other funding sources, such as wholesale
borrowing, based largely on relative pricing.
Borrowings The Company utilizes both short-term and long-
term borrowings to fund growth of assets in excess of
deposit growth. Short-term borrowings, which include
federal funds purchased, commercial paper, repurchase
agreements, borrowings secured by high-grade assets and
other short-term borrowings, were $31.3 billion at
December 31, 2009, compared with $34.0 billion at
December 31, 2008. Short-term funding is managed within
approved liquidity policies. The decrease of $2.7 billion
(7.9 percent) in short-term borrowings reflected reduced
borrowing needs as a result of increases in deposits.
Long-term debt was $32.6 billion at December 31,
2009, compared with $38.4 billion at December 31, 2008,
primarily reflecting $4.5 billion of medium-term note
maturities and repayments, $500 million of subordinated
debt maturities and a $5.7 billion net decrease in Federal
Home Loan Bank advances, partially offset by issuances of
$4.5 billion of medium-term notes and $501 million of
junior subordinated debentures during 2009. Refer to
Note 13 of the Notes to Consolidated Financial Statements
for additional information regarding long-term debt and the
“Liquidity Risk Management” section for discussion of
liquidity management of the Company.
Corporate Risk Profile
Overview Managing risks is an essential part of successfully
operating a financial services company. The most prominent
risk exposures are credit, residual value, operational, interest
rate, market and liquidity risk. Credit risk is the risk of not
collecting the interest and/or the principal balance of a loan,
investment or derivative contract when it is due. Residual
value risk is the potential reduction in the end-of-term value
of leased assets. Operational risk includes risks related to
fraud, legal and compliance risk, processing errors,
technology, breaches of internal controls and business
continuation and disaster recovery risk. Interest rate risk is
the potential reduction of net interest income as a result of
changes in interest rates, which can affect the re-pricing of
assets and liabilities differently. Market risk arises from
fluctuations in interest rates, foreign exchange rates, and
security prices that may result in changes in the values of
financial instruments, such as trading and available-for-sale
securities that are accounted for on a mark-to-market basis.
Liquidity risk is the possible inability to fund obligations to
depositors, investors or borrowers. In addition, corporate
strategic decisions, as well as the risks described above,
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