US Bank 2011 Annual Report Download - page 25

2009, respectively. The provision for credit losses was lower
than net charge-offs by $500 million in 2011, and exceeded
net charge-offs by $175 million in 2010 and $1.7 billion in
2009. The $2.0 billion (46.2 percent) decrease in the provision
for credit losses in 2011, compared with 2010, reflected
improving credit trends and the underlying risk profile of the
loan portfolio as economic conditions continued to further
stabilize. Accruing loans ninety days or more past due
decreased by $251 million (22.9 percent) (excluding covered
loans) from December 31, 2010 to December 31, 2011,
reflecting a continued moderation in the level of stress in
economic conditions during 2011. Nonperforming assets
decreased $777 million (23.2 percent) (excluding covered
assets) from December 31, 2010 to December 31, 2011, led
by a reduction in commercial and commercial real estate
nonperforming assets. Commercial real estate nonperforming
assets declined $394 million (30.5 percent), as the Company
continued to resolve and reduce exposure to these assets. Net
charge-offs decreased $1.3 billion (32.0 percent) from 2010,
due to the improvement in the commercial, commercial real
estate, credit card and other retail loan portfolios.
The $1.2 billion decrease in the provision for credit losses
in 2010, compared with 2009, reflected improving credit
trends and the underlying risk profile of the loan portfolio as
economic conditions continued to stabilize in 2010. Accruing
loans ninety days or more past due decreased by $431 million
(excluding covered loans) from December 31, 2009 to
December 31, 2010, reflecting a moderation in the level of
stress in economic conditions during 2010. Delinquencies in
most major loan portfolio classes began to decrease in the
third quarter of 2010. Nonperforming assets decreased $553
million (excluding covered assets) from December 31, 2009 to
December 31, 2010, principally in the construction and land
development portfolios. However, net charge-offs increased
$313 million (8.1 percent) in 2010 over 2009, as borrowers
impacted by weak economic conditions and real estate
markets defaulted on loans.
Refer to “Corporate Risk Profile” for further information
on the provision for credit losses, net charge-offs,
nonperforming assets and other factors considered by the
Company in assessing the credit quality of the loan portfolio
and establishing the allowance for credit losses.
Noninterest Income Noninterest income in 2011 was
$8.8 billion, compared with $8.4 billion in 2010 and $8.0
billion in 2009. The $400 million (4.8 percent) increase in
2011 over 2010 was due to higher payments-related revenues
of 3.5 percent due to continued growth in transaction volumes
and new business initiatives, partially offset by a decline in
credit and debit card revenue due to the impact of legislative-
related changes to debit card interchange fees; higher ATM
processing services income of 6.9 percent largely due to
increased transaction volumes; an increase in commercial
products revenue of 9.1 percent due to higher commercial
leasing revenue, syndication fees and other commercial loan
fees; a 16.2 percent increase in investment products fees and
commissions due to business initiatives; lower net securities
losses of 60.3 percent, primarily due to lower impairments
and an increase in other income. The increase in other income
of 38.3 percent reflected the 2011 merchant settlement gain
and the FCB gain, in addition to higher retail lease residual
revenue, partially offset by the Nuveen gain recognized in
2010. Offsetting these positive variances was a decrease in
deposit service charges of 7.2 percent as a result of 2010
legislative and pricing changes. Trust and investment
management fees declined 7.4 percent as a result of the sale of
the Company’s proprietary long-term mutual fund business in
the fourth quarter of 2010 and lower money market
investment management fees, due to the low interest rate
environment, partially offset by the positive impact of the
securitization trust administration acquisition and improved
equity market conditions. Mortgage banking revenue
decreased 1.7 percent, principally due to lower origination
and sales revenue, partially offset by higher loan servicing
TABLE 4 Noninterest Income
Year Ended December 31 (Dollars in Millions) 2011 2010 2009
2011
v 2010
2010
v 2009
Credit and debit card revenue ................................................. $1,073 $1,091 $1,055 (1.6)% 3.4%
Corporate payment products revenue ......................................... 734 710 669 3.4 6.1
Merchant processing services ................................................. 1,355 1,253 1,148 8.1 9.1
ATM processing services ...................................................... 452 423 410 6.9 3.2
Trust and investment management fees ....................................... 1,000 1,080 1,168 (7.4) (7.5)
Deposit service charges ....................................................... 659 710 970 (7.2) (26.8)
Treasury management fees .................................................... 551 555 552 (.7) .5
Commercial products revenue ................................................. 841 771 615 9.1 25.4
Mortgage banking revenue .................................................... 986 1,003 1,035 (1.7) (3.1)
Investment products fees and commissions ................................... 129 111 109 16.2 1.8
Securities gains (losses), net ................................................... (31) (78) (451) 60.3 82.7
Other ........................................................................... 1,011 731 672 38.3 8.8
Total noninterest income .................................................... $8,760 $8,360 $7,952 4.8% 5.1%
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