US Bank 2004 Annual Report Download - page 28
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Please find page 28 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.Noninterest Expense
2004 2003
(Dollars in Millions) 2004 2003 2002 v 2003 v 2002
Compensation ******************************************* $2,252.2 $2,176.8 $2,167.5 3.5% .4%
Employee benefits **************************************** 389.4 328.4 317.5 18.6 3.4
Net occupancy and equipment***************************** 630.8 643.7 658.7 (2.0) (2.3)
Professional services************************************** 148.9 143.4 129.7 3.8 10.6
Marketing and business development *********************** 193.5 180.3 171.4 7.3 5.2
Technology and communications *************************** 429.6 417.4 392.1 2.9 6.5
Postage, printing and supplies ***************************** 248.4 245.6 243.2 1.1 1.0
Other intangibles ***************************************** 550.1 682.4 553.0 (19.4) 23.4
Merger and restructuring-related charges ******************** — 46.2 321.2 * (85.6)
Debt prepayment***************************************** 154.8 — (.2) * *
Other *************************************************** 786.8 732.7 786.4 7.4 (6.8)
Total noninterest expense ****************************** $5,784.5 $5,596.9 $5,740.5 3.4% (2.5)%
Efficiency ratio (a)***************************************** 45.3% 45.6% 48.8%
(a) Computed as noninterest expense divided by the sum of net interest income on a taxable-equivalent basis and noninterest income excluding securities gains (losses), net.
* Not meaningful
expansion of in-store branches, the expansion of the completion of integration activities in 2002 associated with
Company’s merchant acquiring business in Europe and the merger of Firstar and the former U.S. Bancorp of
other initiatives. Stock-based compensation was higher due Minneapolis (‘‘USBM’’). During 2003, noninterest expense
to lower employee stock-award forfeitures relative to prior included an MSR impairment of $208.7 million, a net
years. Employee benefits increased primarily as a result of increase of $22.6 million, compared with 2002. The year-
higher payroll taxes and pension expense; pension and over-year changes in the valuation of MSRs were caused by
retirement expense increased $34.6 million in 2004, fluctuations in mortgage interest rates and related
principally reflecting recognition of actuarial losses resulting prepayment speeds due to refinancing activities. Acquisitions
from lower expected returns in prior years. Marketing and in 2002, including Leader, Bay View and State Street
business development increased $13.2 million in 2004, Corporate Trust, accounted for an increase of
compared with 2003, related to corporate brand advertising $124.9 million in noninterest expense from 2002 to 2003.
and an increase in product marketing campaigns. Pension Plans Because of the long-term nature of pension
Technology and communications expense was higher year- plans, the administration and accounting for pensions is
over-year by $12.2 million in 2004, compared with 2003, complex and can be impacted by several factors, including
reflecting technology investments that increased software investment and funding policies, accounting methods and
amortization and the write-off of capitalized software being the plan’s actuarial assumptions. The Company and its
replaced. Included in 2004 results were charges of Compensation Committee have an established process for
$154.8 million related to the prepayment of a portion of evaluating the plans, their performance and significant plan
the Company’s long-term debt. Other expense increased assumptions, including the assumed discount rate and the
$54.1 million in 2004, compared with 2003. The increase long-term rate of return (‘‘LTROR’’). At least annually, an
was related to higher fraud and operating losses, insurance independent consultant is engaged to assist U.S. Bancorp’s
costs, operating costs associated with affordable housing Compensation Committee in evaluating plan objectives,
investments and merchant processing costs for payment funding policies and investment policies considering its
services products, the result of the EuroConex expansion long-term investment time horizon and asset allocation
and increases in transaction volume year-over-year. strategies. Note 19 of the Notes to Consolidated Financial
The decrease in noninterest expense in 2003, compared Statements provides further information on funding
with 2002, of $143.6 million (2.5 percent) was primarily practices, investment policies and asset allocation strategies.
the result of business initiatives, cost savings from Periodic pension expense (or credits) includes service
integration activities and lower merger and restructuring- costs, interest costs based on the assumed discount rate, the
related charges, partially offset by an increase in MSR expected return on plan assets based on an actuarially
impairments, incremental pension and retirement expense of derived market-related value and amortization of actuarial
$39.9 million and expenses related to acquisitions. gains and losses. The Company’s pension accounting policy
Noninterest expense related to merger and restructuring- follows guidance outlined in Statement of Financial
related charges declined by $275.0 million (85.6 percent) in Accounting Standards No. 87, ‘‘Employer’s Accounting for
2003, compared with 2002. The decline in merger and Pension Plans’’ (‘‘SFAS 87’’), and reflects the long-term
restructuring-related charges was primarily due to the nature of benefit obligations and the investment horizon of
26 U.S. BANCORP
Table 5