US Bank 2004 Annual Report Download - page 61
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Please find page 61 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.(8.7 percent) and merchant processing revenue unit and are identified as net shared services expense.
(20.1 percent). The $89.0 million growth in credit and debit Treasury and Corporate Support recorded operating
card revenue was muted somewhat by the impact of the earnings of $466.2 million in 2004, a decrease of
settlement of the debit card antitrust litigation brought 18.5 percent, compared with 2003.
against VISA USA and MasterCard by Wal-Mart stores, Total net revenue was $1,154.6 million in 2004,
Sears Roebuck and Co. and other retailers, which lowered compared with total net revenue of $1,298.7 million in
interchange rates on signature debit transactions beginning 2003. The year-over-year decline of $144.1 million
in August 2003. The change in interchange rate, in addition (11.1 percent) in total net revenue in 2004 was attributable
to higher customer loyalty rewards expense, was more than to reductions in net interest income of $96.6 million
offset by higher transaction volumes and rate changes. (9.2 percent) and securities gains (losses) of $74.0 million,
Corporate payment products revenue increased partially offset by increases in fee-based noninterest income
$45.5 million due to increases in sales volume and pricing of $26.5 million (13.7 percent). The decrease in net interest
enhancements. ATM processing services revenue increased income was primarily attributable to the Company’s
$9.5 million due to transaction growth and new product asset/liability management decisions to invest in adjustable-
sales. Merchant processing revenue increased $113.1 million rate securities and utilize higher-cost fixed-rate funding
due to increases in sales and transaction processing volumes given the current rising interest rate environment. It also
and the expansion of the merchant acquiring business in reflects the residual effect of transfer pricing caused by
Europe, which accounted for approximately $58.6 million changes in the mix of earning assets and the yield curve
of the revenue growth. Other revenue increased $8.1 million from a year ago. The increase in fee-based noninterest
in 2004, compared with 2003, due to increases in insurance income was primarily attributable to higher equity
product revenue and EuroConex. investment revenue. Net securities losses of $22.6 million in
Noninterest expense was $957.2 million in 2004, an 2004 were principally related to asset/liability decisions,
increase of $94.9 million (11.0 percent), compared with compared with net securities gains of $51.4 million in 2003.
2003. The increase in noninterest expense was primarily Noninterest expense was $868.0 million in 2004,
attributable to higher compensation and employee benefit compared with $556.2 million in 2003, a $311.8 million
costs for processing associated with increased credit and increase (56.1 percent). The increase in noninterest expense
debit card transaction volumes, corporate payment products was principally driven by several factors. Stock-based
and merchant processing sales volumes, in addition to compensation was higher by $33.8 million primarily due to
higher merchant acquiring costs resulting from the lower employee stock-award forfeitures relative to a year
expansion of the merchant acquiring business in Europe, ago. Pension expenses increased $35.5 million reflecting
which accounted for approximately $56.8 million of the recognition of deferred actuarial (gains) losses resulting
increase in 2004. from lower asset returns in prior years. Debt prepayment
The provision for credit losses was $362.6 million in costs of $154.8 million were incurred as a result of
2004, a decrease of $50.1 million (12.1 percent), compared prepaying borrowings in connection with asset/liability
with 2003, due to lower net charge-offs of the business line. management activities during 2004. Corporate insurance
As a percentage of average loans, net charge-offs were costs increased by $17.0 million from a year ago primarily
3.42 percent in 2004, compared with 4.13 percent of due to premium increases by insurance carriers.
average loans in 2003. The favorable change in credit losses Additionally, operating costs associated with incremental
was due to improvements in ongoing collection efforts and investments in affordable housing increased $20.4 million
risk management activities, as well as improvements in from a year ago. Finally, the residual in costs associated
economic conditions from a year ago. with centralized support functions that were not allocated
to other business lines increased by $27.7 million.
Treasury and Corporate Support includes the Company’s The provision for credit losses for this business unit
investment portfolios, funding, capital management and represents the residual aggregate of the net credit losses
asset securitization activities, interest rate risk management, allocated to the reportable business units and the
the net effect of transfer pricing related to average balances Company’s recorded provision determined in accordance
and the residual aggregate of expenses associated with with accounting principles generally accepted in the United
business activities managed on a corporate basis, including States. The provision for credit losses was a net recovery of
enterprise-wide operations and administrative support $100.9 million in 2004, compared with a net recovery of
functions. Operational expenses incurred by Treasury and $1.8 million in 2003. The favorable variance is primarily
Corporate Support on behalf of the other business lines are due to the Company’s decision to reduce the allowance for
allocated back primarily based on customer transaction credit losses by approximately $98.5 million in 2004,
volume and account activities to the appropriate business reflecting the continued improvement in credit quality and
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