US Bank 2014 Annual Report Download - page 29

Download and view the complete annual report

Please find page 29 of the 2014 US Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 173

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173

In 2014, the provision for credit losses was $1.2 billion,
compared with $1.3 billion and $1.9 billion in 2013 and 2012,
respectively. The provision for credit losses was lower than
net charge-offs by $105 million in 2014, $125 million in 2013
and $215 million in 2012. The $111 million (8.3 percent)
decrease in the provision for credit losses in 2014, compared
with 2013, reflected improving credit trends in residential
mortgages and home equity and second mortgages as
economic conditions continued to slowly improve, partially
offset by portfolio growth and higher commercial loan net
charge-offs and lower commercial real estate loan
recoveries in 2014. Accruing loans ninety days or more past
due decreased by $244 million (20.5 percent) from
December 31, 2013 to December 31, 2014, primarily
reflecting improvement in the residential mortgages
portfolio. Nonperforming assets decreased $229 million (11.2
percent) from December 31, 2013 to December 31, 2014,
primarily driven by reductions in the commercial,
commercial mortgage and construction and development
portfolios, as well as by improvement in credit card loans.
Net charge-offs decreased $131 million (8.9 percent) from
2013 due to the improvement in the residential mortgages
and home equity and second mortgages portfolios, as
economic conditions continued to slowly improve, partially
offset by higher commercial loan net charge-offs and lower
commercial real estate loan recoveries in 2014.
The $542 million (28.8 percent) decrease in the
provision for credit losses in 2013, compared with 2012,
reflected improving credit trends and the underlying risk
profile of the loan portfolio as economic conditions slowly
improved during 2013, partially offset by portfolio growth.
Accruing loans ninety days or more past due decreased by
$134 million (10.1 percent) from December 31, 2012 to
December 31, 2013, primarily reflecting a decrease in
covered loans, partially offset by an increase in restructured
residential mortgages in trial period arrangements during
2013. Nonperforming assets decreased $634 million (23.7
percent) from December 31, 2012 to December 31, 2013, led
by reductions in commercial mortgages and construction
and development loans, as the Company continued to resolve
and reduce exposure to these problem assets, and covered
assets. Net charge-offs decreased $632 million
(30.1 percent) in 2013, compared with 2012, due to the
improvement in the commercial, commercial real estate,
residential mortgages and home equity and second
mortgages portfolios, as economic conditions slowly
improved during 2013.
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 2014 was
$9.2 billion, compared with $8.8 billion in 2013 and
$9.3 billion in 2012. The $390 million (4.4 percent) increase in
2014 from 2013 was principally due to increases in a majority
of fee revenue categories and other income, partially offset
by a reduction in mortgage banking revenue. Trust and
investment management fees increased 9.9 percent in 2014,
compared with 2013, reflecting account growth, improved
market conditions and business expansion. Merchant
processing services revenue was higher 3.6 percent as a
result of an increase in fee-based product revenue and
higher volumes, partially offset by lower rates. Credit and
debit card revenue and corporate payment products revenue
increased 5.8 percent and 2.5 percent, respectively, primarily
due to higher transaction volumes. Deposit service charges
were higher 3.4 percent due to account growth, the Charter
One acquisition and pricing changes. Investment products
fee revenue increased 7.3 percent primarily due to higher
transaction volumes. Other income increased 82.8 percent in
2014, compared with 2013, reflecting higher equity
investment income, including the Visa sale and Nuveen gain,
and higher retail leasing revenue. The decrease in mortgage
banking revenue in 2014 of 25.6 percent, compared with
2013, was primarily due to lower origination and sales
revenue, partially offset by favorable changes in the valuation
of mortgage servicing rights (“MSRs”), net of hedging
activities.
U.S. BANCORP The power of potential
27