US Bank 2003 Annual Report Download - page 58

in residential mortgages. Commercial and commercial real quarter of 2002, which contributed $63.7 million in 2003,
estate loan balances increased 1.3 percent during the same compared with $47.2 million in 2002. Securities gains were
period. The year-over-year increase in average deposits $193.4 million in 2003, a net increase of $85.6 million
included growth in noninterest-bearing, interest checking, from a year ago. The Company utilizes its investment
savings and money market account balances, partially offset portfolio as an economic hedge to the valuation risk of the
by a reduction in balances associated with time deposits. The portfolio of mortgage servicing rights caused by declining
decline in lower margin time deposits primarily reflected a interest rates and related increases in mortgage prepayments
shift in product mix towards savings products. due to mortgage refinancing activity.
Noninterest income excluding securities gains was Noninterest expense was $2,198.2 million in 2003,
$1,460.1 million in 2003, $42.4 million (3.0 percent) higher compared with $2,074.7 million for 2002, an increase of
compared with 2002. This growth was driven by mortgage $123.5 million (6.0 percent). The year-over-year increase in
banking revenue, deposit service charges, investment noninterest expense was attributable to an increase in MSR
products fees and commissions and acquisitions, partially amortization and impairment of $85.3 million, higher loan
offset by higher end-of-term lease residual losses. The year- origination and repossession costs and incremental
over-year growth in mortgage banking revenue was partially operating costs of $56.4 million related to the Bay View
attributable to the acquisition of Leader in the second Bank and Leader acquisitions.
Line of Business Financial Performance
Wholesale Consumer
Banking Banking
Percent Percent
Year Ended December 31 (Dollars in Millions) 2003 2002 Change 2003 2002 Change
Condensed Income Statement
Net interest income (taxable-equivalent basis) ************************************ $1,877.9 $1,850.2 1.5% $3,634.7 $3,404.3 6.8%
Noninterest income************************************************************ 753.0 731.8 2.9 1,460.1 1,417.7 3.0
Securities gains, net*********************************************************** — — — 193.4 107.8 79.4
Total net revenue ********************************************************** 2,630.9 2,582.0 1.9 5,288.2 4,929.8 7.3
Noninterest expense*********************************************************** 331.1 362.9 (8.8) 1,765.4 1,735.7 1.7
Other intangibles ************************************************************** 19.5 20.6 (5.3) 432.8 339.0 27.7
Total noninterest expense *************************************************** 350.6 383.5 (8.6) 2,198.2 2,074.7 6.0
Operating income (loss) ************************************************* 2,280.3 2,198.5 3.7 3,090.0 2,855.1 8.2
Provision for credit losses ****************************************************** 401.1 444.5 (9.8) 435.8 463.8 (6.0)
Operating earnings (loss), before income taxes *********************************** 1,879.2 1,754.0 7.1 2,654.2 2,391.3 11.0
Income taxes and taxable-equivalent adjustment********************************** 683.9 638.3 7.1 965.8 870.3 11.0
Operating earnings (loss) ****************************************************** $1,195.3 $1,115.7 7.1 $1,688.4 $1,521.0 11.0
Merger and restructuring-related items (after-tax) *********************************
Discontinued operations (after-tax) **********************************************
Cumulative effect of accounting change (after-tax) ********************************
Net income *******************************************************************
Average Balance Sheet Data
Commercial ****************************************************************** $ 28,337 $ 30,015 (5.6)% $ 8,100 $ 8,795 (7.9)%
Commercial real estate ******************************************************** 16,414 15,908 3.2 9,936 9,010 10.3
Residential mortgages ********************************************************* 119 160 (25.6) 11,265 8,013 40.6
Retail ************************************************************************ 57 130 (56.2) 28,832 26,960 6.9
Total loans **************************************************************** 44,927 46,213 (2.8) 58,133 52,778 10.1
Goodwill ********************************************************************* 1,227 1,226 .1 2,242 1,892 18.5
Other intangible assets ******************************************************** 107 127 (15.7) 928 946 (1.9)
Assets *********************************************************************** 51,775 52,572 (1.5) 67,831 61,403 10.5
Noninterest-bearing deposits *************************************************** 14,738 12,993 13.4 13,748 12,939 6.3
Savings products************************************************************** 10,227 5,556 84.1 40,769 35,803 13.9
Time deposits **************************************************************** 3,901 2,592 50.5 18,587 22,632 (17.9)
Total deposits ************************************************************* 28,866 21,141 36.5 73,104 71,374 2.4
Shareholders’ equity*********************************************************** 5,058 5,049 .2 6,022 5,128 17.4
* Not meaningful
56 U.S. Bancorp
Table 22