US Bank 2011 Annual Report Download - page 23

TABLE 2 Analysis of Net Interest Income (a)
Year Ended December 31 (Dollars in Millions) 2011 2010 2009
2011
v 2010
2010
v 2009
Components of Net Interest Income
Income on earning assets (taxable-equivalent basis) ...... $ 12,870 $ 12,375 $ 11,748 $ 495 $ 627
Expense on interest-bearing liabilities (taxable-equivalent
basis) .................................................... 2,522 2,587 3,032 (65) (445)
Net interest income (taxable-equivalent basis) ............... $ 10,348 $ 9,788 $ 8,716 $ 560 $ 1,072
Net interest income, as reported ............................. $ 10,123 $ 9,579 $ 8,518 $ 544 $ 1,061
Average Yields and Rates Paid
Earning assets yield (taxable-equivalent basis) ............ 4.54% 4.91% 4.95% (.37)% (.04)%
Rate paid on interest-bearing liabilities (taxable-
equivalent basis) ........................................ 1.14 1.24 1.55 (.10) (.31)
Gross interest margin (taxable-equivalent basis) ............. 3.40% 3.67% 3.40% (.27)% .27%
Net interest margin (taxable-equivalent basis) ................ 3.65% 3.88% 3.67% (.23)% .21%
Average Balances
Investment securities ...................................... $ 63,645 $ 47,763 $ 42,809 $15,882 $ 4,954
Loans ...................................................... 201,427 193,022 185,805 8,405 7,217
Earning assets ............................................. 283,290 252,042 237,287 31,248 14,755
Interest-bearing liabilities .................................. 221,690 209,113 195,614 12,577 13,499
Net free funds (b) .......................................... 61,600 42,929 41,673 18,671 1,256
(a) Interest and rates are presented on a fully taxable-equivalent basis utilizing a federal tax rate of 35 percent.
(b) Represents noninterest-bearing deposits, other noninterest-bearing liabilities and equity, allowance for loan losses and unrealized gain (loss) on available-for-sale securities less non-earning
assets.
Average investment securities in 2011 were $15.9 billion
(33.3 percent) higher than 2010, primarily due to planned
purchases of U.S. Treasury and government agency
mortgage-backed securities, as the Company increased its
on-balance sheet liquidity in response to anticipated
regulatory requirements.
Average total deposits for 2011 were $28.4 billion (15.4
percent) higher than 2010. Excluding deposits from
acquisitions, 2011 average total deposits increased $19.3
billion (10.5 percent) over 2010. Average noninterest-bearing
deposits in 2011 were $13.7 billion (34.1 percent) higher than
2010, primarily due to growth in Wholesale Banking and
Commercial Real Estate, and Wealth Management and
Securities Services balances. Average total savings deposits
were $13.8 billion (13.7 percent) higher in 2011, compared
with 2010, primarily due to growth in corporate and
institutional trust balances, including the impact of the
securitization trust administration acquisition, as well as an
increase in Consumer and Small Business Banking balances
resulting from continued strong participation in a product
offering that includes multiple bank products in a package.
These increases were partially offset by lower broker-dealer
balances. Average time certificates of deposit less than
$100,000 were lower in 2011 by $1.4 billion (8.4 percent),
compared with 2010, a result of maturities and lower
renewals. Average time deposits greater than $100,000 were
$2.3 billion (8.5 percent) higher in 2011, compared with
2010, primarily due to the impact of the securitization trust
administration and FCB acquisitions.
The $1.1 billion (12.3 percent) increase in net interest
income in 2010, compared with 2009, was primarily the
result of growth in lower cost core deposit funding and
increases in average earning assets. Average earning assets
were $14.8 billion (6.2 percent) higher in 2010 compared
with 2009, driven by increases in average loans and
investment securities. Average deposits increased $16.9 billion
(10.1 percent) in 2010, compared with 2009.
Average total loans increased $7.2 billion (3.9 percent) in
2010, compared with 2009, driven by growth in residential
mortgages, credit card loans, other retail loans, commercial
real estate loans and acquisition-related covered loans,
partially offset by a $5.8 billion (11.0 percent) decline in
commercial loans, which was principally the result of lower
utilization of available commitments by customers.
Residential mortgage growth of $3.2 billion
(13.2 percent) reflected increased origination and refinancing
activity. Average credit card balances for 2010 were
$1.5 billion (9.8 percent) higher than 2009, reflecting growth
in existing portfolios and portfolio purchases. Average other
retail loans increased $600 million (1.3 percent), driven by an
increase in installment loans (primarily automobile). Growth
in average commercial real estate balances of $518 million
(1.5 percent) reflected the impact of new business activity,
partially offset by customer deleveraging. Average covered
loans were $19.9 billion in 2010, compared with $12.7 billion
in 2009, reflecting covered loans acquired from the FDIC in
the fourth quarter of 2009.
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