US Bank 2011 Annual Report Download - page 60

is evaluated regularly by management in deciding how to
allocate resources and assess performance.
Basis for Financial Presentation Business line results are
derived from the Company’s business unit profitability
reporting systems by specifically attributing managed balance
sheet assets, deposits and other liabilities and their related
income or expense. Goodwill and other intangible assets are
assigned to the lines of business based on the mix of business
of the acquired entity. Within the Company, capital levels are
evaluated and managed centrally; however, capital is allocated
to the operating segments to support evaluation of business
performance. Business lines are allocated capital on a risk-
adjusted basis considering economic and regulatory capital
requirements. Generally, the determination of the amount of
capital allocated to each business line includes credit and
operational capital allocations following a Basel II regulatory
framework. Interest income and expense is determined based
on the assets and liabilities managed by the business line.
Because funding and asset liability management is a central
function, funds transfer-pricing methodologies are utilized to
allocate a cost of funds used or credit for funds provided to all
business line assets and liabilities, respectively, using a
matched funding concept. Also, each business unit is allocated
the taxable-equivalent benefit of tax-exempt products. The
residual effect on net interest income of asset/liability
management activities is included in Treasury and Corporate
Support. Noninterest income and expenses directly managed
by each business line, including fees, service charges, salaries
and benefits, and other direct revenues and costs are
accounted for within each segment’s financial results in a
manner similar to the consolidated financial statements.
TABLE 24 Line of Business Financial Performance
Wholesale Banking and
Commercial Real Estate
Consumer and Small
Business Banking
Year Ended December 31
(Dollars in Millions) 2011 2010
Percent
Change 2011 2010
Percent
Change
Condensed Income Statement
Net interest income (taxable-equivalent basis) ...................... $ 2,123 $ 2,004 5.9% $ 4,604 $ 4,411 4.4%
Noninterest income .................................................. 1,224 1,128 8.5 2,756 2,757 –
Securities gains (losses), net ........................................ – (1) * – – –
Total net revenue ............................................... 3,347 3,131 6.9 7,360 7,168 2.7
Noninterest expense ................................................ 1,269 1,215 4.4 4,569 4,282 6.7
Other intangibles .................................................... 16 16 – 72 96 (25.0)
Total noninterest expense ........................................ 1,285 1,231 4.4 4,641 4,378 6.0
Income before provision and income taxes .................... 2,062 1,900 8.5 2,719 2,790 (2.5)
Provision for credit losses ........................................... 424 1,255 (66.2) 1,395 1,695 (17.7)
Income before income taxes ........................................ 1,638 645 * 1,324 1,095 20.9
Income taxes and taxable-equivalent adjustment ................... 597 234 * 481 398 20.9
Net income .......................................................... 1,041 411 * 843 697 20.9
Net (income) loss attributable to noncontrolling interests ........... 4 2 * (1) (3) 66.7
Net income attributable to U.S. Bancorp ............................ $ 1,045 $ 413 * $ 842 $ 694 21.3
Average Balance Sheet
Commercial ......................................................... $37,459 $33,329 12.4% $ 7,366 $ 7,272 1.3%
Commercial real estate .............................................. 19,204 19,595 (2.0) 15,537 13,821 12.4
Residential mortgages ............................................... 67 80 (16.3) 33,245 27,242 22.0
Credit card .......................................................... – – – – – –
Other retail........................................................... 5 34 (85.3) 45,730 45,036 1.5
Total loans, excluding covered loans ............................. 56,735 53,038 7.0 101,878 93,371 9.1
Covered loans ....................................................... 1,495 1,974 (24.3) 8,394 9,542 (12.0)
Total loans ........................................................ 58,230 55,012 5.8 110,272 102,913 7.2
Goodwill ............................................................. 1,604 1,608 (.2) 3,520 3,538 (.5)
Other intangible assets .............................................. 52 69 (24.6) 2,042 1,906 7.1
Assets ............................................................... 64,062 60,208 6.4 124,361 117,332 6.0
Noninterest-bearing deposits........................................ 25,172 17,226 46.1 17,903 16,601 7.8
Interest checking .................................................... 12,691 13,547 (6.3) 26,565 23,800 11.6
Savings products .................................................... 9,309 11,614 (19.8) 40,566 36,120 12.3
Time deposits ....................................................... 14,511 11,594 25.2 24,437 25,835 (5.4)
Total deposits ..................................................... 61,683 53,981 14.3 109,471 102,356 7.0
Total U.S. Bancorp shareholders’ equity ............................ 5,586 5,378 3.9 9,431 8,614 9.5
* Not meaningful
58 U.S. BANCORP