US Bank 2004 Annual Report Download - page 23
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Please find page 23 of the 2004 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.transaction valued at $720 million. State Street Corporate of $446 million. Included in total assets were mortgage
Trust was a leading provider, particularly in the Northeast, servicing rights and other intangibles of $173 million and
of corporate trust and agency services to a variety of goodwill of $18 million. Leader specializes in acquiring
municipalities, corporations, government agencies and other servicing of loans originated for state and local housing
financial institutions serving approximately 20,000 client authorities.
issuances representing over $689 billion of assets under Refer to Notes 3, 4 and 5 of the Notes to Consolidated
administration. The transaction represented total assets Financial Statements for additional information regarding
acquired of $677 million and total liabilities assumed of discontinued operations, business combinations and merger
$39 million. Included in total assets were contract and other and restructuring-related items.
intangibles with a fair value of $218 million and goodwill
STATEMENT OF INCOME ANALYSIS
of $520 million. The goodwill reflected the strategic value
of the combined organization’s leadership position in the Net Interest Income Net interest income, on a taxable-
corporate trust business and processing economies of scale equivalent basis, was $7.1 billion in 2004, compared with
resulting from the transaction. $7.2 billion in 2003 and $6.8 billion in 2002. The decline
On November 1, 2002, the Company acquired in net interest income in 2004 reflected modest growth in
57 branches and a related operations facility in northern average earning assets, more than offset by lower net
California from Bay View Bank (‘‘Bay View’’), a wholly- interest margins. Also contributing to the year-over-year
owned subsidiary of Bay View Capital Corporation, in a decline in net interest income was a $37.6 million reduction
cash transaction. The transaction represented total assets in loan fees, the result of fewer loan prepayments in a rising
acquired of $853 million and total liabilities assumed rate environment. Average earning assets were
(primarily retail and small business deposits) of $3.3 billion. $168.1 billion for 2004, compared with $160.8 billion and
Included in total assets were approximately $336 million of $147.4 billion for 2003 and 2002, respectively. The
select loans primarily with depository relationships, core $7.3 billion (4.5 percent) increase in average earning assets
deposit intangibles of $56 million and goodwill of for 2004, compared with 2003, was primarily driven by
$427 million. The goodwill reflected the strategic value of increases in residential mortgages, retail loans and
expanding the Company’s market within the San Francisco investment securities, partially offset by a decline in
Bay area. commercial loans and loans held for sale related to
On April 1, 2002, the Company acquired Cleveland- mortgage banking activities. The decline in average
based The Leader Mortgage Company, LLC (‘‘Leader’’), a commercial loans from a year ago reflected soft loan
wholly-owned subsidiary of First Defiance Financial Corp., demand in 2003 and through the third quarter of 2004.
in a cash transaction. The transaction represented total The Company began to experience growth in commercial
assets acquired of $531 million and total liabilities assumed
Analysis of Net Interest Income
2004 2003
(Dollars in Millions) 2004 2003 2002 v 2003 v 2002
Components of net interest income
Income on earning assets (taxable-equivalent basis) (a) **** $ 9,215.1 $ 9,286.2 $ 9,526.8 $ (71.1) $ (240.6)
Expense on interest-bearing liabilities ******************** 2,075.2 2,068.7 2,679.6 6.5 (610.9)
Net interest income (taxable-equivalent basis)**************** $ 7,139.9 $ 7,217.5 $ 6,847.2 $ (77.6) $ 370.3
Net interest income, as reported *************************** $ 7,111.3 $ 7,189.3 $ 6,814.3 $ (78.0) $ 375.0
Average yields and rates paid
Earning assets yield (taxable-equivalent basis) ************ 5.48% 5.77% 6.46% (.29)% (.69)%
Rate paid on interest-bearing liabilities ******************* 1.53 1.60 2.26 (.07) (.66)
Gross interest margin (taxable-equivalent basis) ************** 3.95% 4.17% 4.20% (.22)% (.03)%
Net interest margin (taxable-equivalent basis) **************** 4.25% 4.49% 4.65% (.24)% (.16)%
Average balances
Investment securities ********************************** $ 43,009 $ 37,248 $ 28,829 $5,761 $ 8,419
Loans*********************************************** 122,141 118,362 114,453 3,779 3,909
Earning assets *************************************** 168,123 160,808 147,410 7,315 13,398
Interest-bearing liabilities******************************* 136,055 129,004 118,697 7,051 10,307
Net free funds (b)************************************* 32,068 31,804 28,713 264 3,091
(a) Interest and rates are presented on a fully taxable-equivalent basis utilizing a tax rate of 35 percent.
(b) Represents noninterest-bearing deposits, allowance for loan losses, unrealized gain (loss) on available-for-sale securities, non-earning assets, other noninterest-bearing liabilities and equity.
U.S. BANCORP 21
Table 2