US Bank 2002 Annual Report Download - page 25

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transition out of a specific segment of the health care revenues of $248.7 million (6.3 percent) and increases
industry not meeting the lower risk appetite of the resulting from acquisitions, including NOVA, Pacific
combined company; a $76.6 million provision for losses Century, Leader and Bay View, which accounted for
related to the sales of high LTV home equity loans and the approximately $301.3 million of the increase in noninterest
indirect automobile loan portfolio of USBM; and a income in 2002. Offsetting these favorable variances was a
$14.3 million charge related to the restructuring of a co- decline in capital markets-related revenue of $97.1 million
branding credit card relationship. Refer to Note 5 of the (10.3 percent), reflecting continued softness in the equity
Notes to Consolidated Financial Statements for further capital markets that has reduced investment banking
information on merger and restructuring-related items. activities, brokerage transaction volumes and fees based on
Overall, the level of the provision for credit losses and the valuation of assets under management. Credit and debit
the level of the allowance for credit losses still reflected card revenue, corporate payment products revenue and
elevated levels of nonperforming assets and net charge-offs, ATM processing services revenue were higher in 2002,
continued stress in certain segments of the portfolio and the compared with 2001, by $51.1 million (11.0 percent),
economic uncertainty existing at year-end 2002. $28.0 million (9.4 percent) and $6.3 million (4.8 percent),
Refer to the ‘‘Corporate Risk Profile’’ section for respectively, primarily reflecting growth in sales and card
further information on the provision for credit losses, net usage. Merchant processing services revenue grew by
charge-offs, nonperforming assets and other factors $258.4 million (83.7 percent), primarily due to the
considered by the Company in assessing the credit quality acquisition of NOVA in July of 2001. Deposit service
of the loan portfolio and establishing the allowance for charges increased in 2002 by $46.7 million (7.0 percent),
credit losses. primarily due to fee enhancements and new account
growth. Cash management fees and commercial products
Noninterest Income Noninterest income in 2002 was revenue grew by $69.6 million (20.0 percent) and
$5.9 billion, compared with $5.4 billion in 2001 and $41.8 million (9.6 percent), respectively, primarily driven by
$4.9 billion in 2000. Noninterest income in 2001 included changes in the earnings credit rate for business deposits,
$62.2 million of merger and restructuring-related gains in growth in commercial business activities, fees related to
connection with the sale of 14 branches representing loan conduit activities and product enhancements.
$771 million in deposits. Refer to Note 5 of the Notes to Commercial product revenue growth was offset somewhat
Consolidated Financial Statements for further information by lease residual impairments in 2002. In addition to the
on merger and restructuring-related items. impact of the acquisition of Leader, the $96.2 million
Excluding merger and restructuring-related gains, (41.1 percent) increase in mortgage banking revenue was
noninterest income was $5.9 billion in 2002, an increase of also due to higher levels of mortgage originations and sales
$529.7 million (9.9 percent), compared with 2001. The and loan servicing revenue in 2002, compared with 2001.
growth in noninterest income in 2002, compared with 2001 Included in noninterest income were net securities gains of
was primarily driven by growth in banking product
Noninterest Income
2002 2001
(Dollars in Millions) 2002 2001 2000 v 2001 v 2000
Credit and debit card revenue *************************** $ 517.0 $ 465.9 $ 431.0 11.0% 8.1%
Corporate payment products revenue********************* 325.7 297.7 299.2 9.4 (.5)
ATM processing services******************************** 136.9 130.6 141.9 4.8 (8.0)
Merchant processing services *************************** 567.3 308.9 120.0 83.7 *
Trust and investment management fees******************* 899.1 894.4 926.2 .5 (3.4)
Deposit service charges ******************************** 714.0 667.3 555.6 7.0 20.1
Cash management fees********************************* 416.9 347.3 292.4 20.0 18.8
Commercial products revenue *************************** 479.2 437.4 350.0 9.6 25.0
Mortgage banking revenue ****************************** 330.2 234.0 189.9 41.1 23.2
Trading account profits and commissions ***************** 206.5 221.6 258.4 (6.8) (14.2)
Investment products fees and commissions *************** 428.9 460.1 466.6 (6.8) (1.4)
Investment banking revenue ***************************** 207.4 258.2 360.3 (19.7) (28.3)
Securities gains, net ************************************ 299.9 329.1 8.1 (8.9) *
Other ************************************************* 339.6 286.4 526.8 18.6 (45.6)
Total operating noninterest income ******************** 5,868.6 5,338.9 4,926.4 9.9 8.4
Merger and restructuring-related gains******************** — 62.2 — * *
Total noninterest income ***************************** $5,868.6 $5,401.1 $4,926.4 8.7% 9.6%
* Not meaningful
U.S. Bancorp 23
Table 5