US Bank 2008 Annual Report Download - page 45

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(.12 percent of average loans outstanding) in 2006. The
increase in net charge-offs in 2008, compared with 2007 and
the increase in 2007, compared with 2006, reflected the
continuing stress within the portfolios, especially residential
homebuilding and related industry sectors.
Residential mortgage loan net charge-offs for 2008 were
$234 million (1.01 percent of average loans outstanding),
compared with $61 million (.28 percent of average loans
outstanding) in 2007 and $41 million (.19 percent of
average loans outstanding) in 2006. The increase in
residential mortgage losses in 2008 was primarily a result of
a domestic economic recession, combined with rapidly
decreasing residential real estate values in some markets.
Retail loan net charge-offs in 2008 were $1,066 million
(1.92 percent of average loans outstanding), compared with
$572 million (1.17 percent of average loans outstanding) in
2007 and $415 million (.92 percent of average loans
outstanding) in 2006. The increase in retail loan net charge-
offs in 2008 reflected the Company’s growth in credit card
and other consumer loan balances, as well as the adverse
impact of current economic conditions on consumers. The
increase in retail loan net charge-offs in 2007 reflected
growth in the credit card and installment loan portfolios. In
addition, net charge-offs for 2006 reflected the beneficial
impact of bankruptcy legislation changes that occurred in
the fourth quarter of 2005.
The following table provides an analysis of net charge-offs
as a percent of average loans outstanding managed by the
consumer finance division, compared with other retail
related loans:
Year Ended December 31
(Dollars in Millions) 2008 2007 2008 2007
Average Loans
Percent of
Average
Loans
Consumer Finance (a)
Residential mortgages . . . $ 9,923 $ 9,129 1.96% .58%
Home equity and second
mortgages . ....... 2,050 1,850 5.71 2.70
Other retail . . . ....... 461 414 5.86 3.38
Other Retail
Residential mortgages . . . $13,334 $12,956 .30% .06%
Home equity and second
mortgages . ....... 15,500 14,073 .39 .17
Other retail . . . ....... 20,210 16,436 1.29 .90
Total Company
Residential mortgages . . . $23,257 $22,085 1.01% .28%
Home equity and second
mortgages . ....... 17,550 15,923 1.01 .46
Other retail . . . ....... 20,671 16,850 1.39 .96
(a) Consumer finance category included credit originated and managed by the consumer
finance division, as well as the majority of home equity and second mortgages with a
loan-to-value greater than 100 percent that were originated in the branches.
U.S. BANCORP 43
Table 15 NET CHARGE-OFFS AS A PERCENT OF AVERAGE LOANS OUTSTANDING
Year Ended December 31 2008 2007 2006 2005 2004
Commercial
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53% .24% .15% .12% .29%
Lease financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.36 .61 .46 .85 1.42
Total commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 .29 .18 .20 .43
Commercial Real Estate
Commercial mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 .06 .01 .03 .09
Construction and development . . . . . . . . . . . . . . . . . . . . . . . 1.48 .11 .01 (.04) .13
Total commercial real estate . . . . . . . . . . . . . . . . . . . . . . .55 .08 .01 .01 .10
Residential Mortgages ............................ 1.01 .28 .19 .20 .20
Retail
Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.73 3.34 2.88 4.20 4.14
Retail leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 .25 .20 .35 .59
Home equity and second mortgages . . . . . . . . . . . . . . . . . . . 1.01 .46 .33 .46 .54
Other retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.39 .96 .85 1.33 1.35
Total retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.92 1.17 .92 1.30 1.36
Total loans, excluding covered assets . . . . . . . . . . . . . . . . . . . . 1.10 .54 .39 .52 .64
Covered assets ................................. .38––––
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10% .54% .39% .52% .64%