US Bank 2008 Annual Report Download - page 25

Download and view the complete annual report

Please find page 25 of the 2008 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.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

to higher rate products, and other funding sources. An
increase in loan fees partially offset these factors.
Average loans in 2007 were higher by $6.7 billion
(4.8 percent), compared with 2006, driven by growth in
retail loans, commercial loans and residential mortgages.
Average investment securities were $1.4 billion (3.4 percent)
higher in 2007, compared with 2006, principally reflecting
higher balances in the municipal securities portfolio and the
purchase in the fourth quarter of 2007 of securities of
certain money market funds managed by an affiliate.
Average noninterest-bearing deposits in 2007 were
$1.4 billion (4.8 percent) lower than in 2006. The decrease
reflected a decline in personal and business demand deposits,
partially offset by higher trust deposits. Average total savings
products increased $.9 billion (1.7 percent) in 2007,
compared with 2006, as increases in interest checking
balances more than offset declines in money market and
savings balances. Average interest checking balances
increased from 2006 to 2007 by $2.6 billion (10.9 percent)
due to higher broker-dealer, government and institutional
trust balances. Average money market savings account
balances declined from 2006 to 2007 by $1.3 billion
(5.0 percent) as a result of the Company’s deposit pricing
decisions for money market products in relation to other
fixed-rate deposit products offered. Average time certificates
of deposit less than $100,000 grew $.9 billion (6.5 percent)
in 2007 compared with 2006, primarily driven by the
migration of money market balances to certificates of
deposit within the Consumer Banking and Wealth
Management & Securities Services business lines, as
customers migrated balances to higher rate deposits. Average
time deposits greater than $100,000 were approximately the
same in 2007 as in 2006.
Provision for Credit Losses The provision for credit losses
reflects changes in the credit quality of the entire portfolio of
loans, considering the credit loss protection from the Loss
Sharing Agreements with the FDIC, and is maintained at a
level considered appropriate by management for probable
and estimable incurred losses, based on factors discussed in
the “Analysis and Determination of Allowance for Credit
Losses” section.
In 2008, the provision for credit losses was
$3,096 million, compared with $792 million and
$544 million in 2007 and 2006, respectively. The
U.S. BANCORP 23
Table 3 NET INTEREST INCOME — CHANGES DUE TO RATE AND VOLUME (a)
(Dollars in Millions) Volume Yield/Rate Total Volume Yield/Rate Total
2008 v 2007 2007 v 2006
Increase (decrease) in
Interest Income
Investment securities . . . . . . . . . . . . . . . . $ 83 $ (162) $ (79) $ 70 $ 106 $176
Loans held for sale . . . . . . . . . . . . . . . . . (25) (25) (50) 41 – 41
Loans
Commercial loans . . . . . . . . . . . . . . . . 427 (868) (441) 155 19 174
Commercial real estate . . . . . . . . . . . . 183 (491) (308) (12) (13) (25)
Residential mortgage . . . . . . . . . . . . . . 72 (7) 65 60 70 130
Retail loans . . . . . . . . . . . . . . . . . . . . 560 (506) 54 279 199 478
Total loans, excluding covered assets . . . 1,242 (1,872) (630) – – –
Covered assets. . . . . . . . . . . . . . . . . . 61 – 61 – – –
Total loans . . . . . . . . . . . . . . . . . . 1,303 (1,872) (569) 482 275 757
Other earning assets . . . . . . . . . . . . . . . . 80 (61) 19 (22) 6 (16)
Total earning assets . . . . . . . . . . . . 1,441 (2,120) (679) 571 387 958
Interest Expense
Interest-bearing deposits
Interest checking. . . . . . . . . . . . . . . . . 67 (167) (100) 25 93 118
Money market accounts . . . . . . . . . . . . 25 (346) (321) (28) 110 82
Savings accounts . . . . . . . . . . . . . . . . 2 (1) 1 (1) 1 –
Time certificates of deposit less than
$100,000 . . . . . . . . . . . . . . . . . . . (47) (125) (172) 34 86 120
Time deposits greater than $100,000 . . . 400 (681) (281) 2 43 45
Total interest-bearing deposits . . . . . 447 (1,320) (873) 32 333 365
Short-term borrowings . . . . . . . . . . . . . . . 493 (880) (387) 229 60 289
Long-term debt . . . . . . . . . . . . . . . . . . . . (269) (252) (521) 201 129 330
Total interest-bearing liabilities . . . . . 671 (2,452) (1,781) 462 522 984
Increase (decrease) in net interest income . . $ 770 $ 332 $ 1,102 $109 $(135) $ (26)
(a) This table shows the components of the change in net interest income by volume and rate on a taxable-equivalent basis utilizing a tax rate of 35 percent. This table does not take into
account the level of noninterest-bearing funding, nor does it fully reflect changes in the mix of assets and liabilities. The change in interest not solely due to changes in volume or rates has
been allocated on a pro-rata basis to volume and yield/rate.