US Bank 2008 Annual Report Download - page 58

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wholesale funding mix during a period of significant
volatility in short-term funding markets.
Noninterest income in the fourth quarter of 2008 was
$1,463 million, compared with $1,811 million in the same
period of 2007. Noninterest income declined $348 million
(19.2 percent) from the fourth quarter of 2007, as fee-based
revenue in a number of revenue categories was lower as
deteriorating economic conditions adversely impacted
consumer and business behavior. In addition, total
noninterest income was unfavorably impacted by
impairment charges related to structured investment
securities and other market valuation losses and higher retail
lease residual losses from a year ago, partially offset by a
$59 million Visa Gain in the fourth quarter of 2008. Credit
and debit card revenue, corporate payment products revenue
and merchant processing services revenue were lower in the
fourth quarter of 2008 than the fourth quarter of 2007 by
$29 million (10.2 percent), $12 million (7.2 percent) and
$10 million (3.6 percent), respectively. All categories were
impacted by lower transaction volumes compared with the
prior year’s quarter. Trust and investment management fees
declined $44 million (12.8 percent) primarily due to the
adverse impact of equity market conditions. Deposit service
charges decreased $17 million (6.1 percent) year-over-year,
primarily due to lower overdraft fees as overdraft
transactions declined. Mortgage banking revenue decreased
$25 million (52.1 percent) due to an unfavorable net change
in the valuation of MSRs and related economic hedging
activities, partially offset by increases in mortgage servicing
income and production revenue. Net securities gains (losses)
were lower than a year ago by $257 million due to the
impact of impairment charges primarily related to structured
investment securities. ATM processing services increased by
$11 million (13.1 percent) due to growth in transaction
volumes and business expansion. Treasury Management fees
increased $11 million (9.4 percent) due primarily to the
favorable impact of declining rates on customer
compensating balances. Commercial products revenue
increased $10 million (8.3 percent) year-over-year due to
higher foreign exchange revenue, letters of credit and other
commercial loan fees. Other income increased $15 million
(32.6 percent) year-over-year, as the Visa Gain and the net
change in market valuation losses were partially offset by
the adverse impact of higher retail lease residual losses and
lower equity investment revenue.
Noninterest expense was $1,960 million in the fourth
quarter of 2008, a decrease of $8 million (.4 percent) from
the fourth quarter of 2007. Noninterest expense was
relatively flat year-over-year as higher costs associated with
business initiatives designed to expand the Company’s
geographical presence and strengthen customer relationships,
including acquisitions and investments in relationship
56 U.S. BANCORP
Table 22 FOURTH QUARTER RESULTS
(Dollars and Shares in Millions, Except Per Share Data) 2008 2007
Three Months Ended
December 31,
Condensed Income Statement
Net interest income (taxable-equivalent basis) (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,161 $1,763
Noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,716 1,807
Securities gains (losses), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (253) 4
Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,624 3,574
Noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,960 1,968
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,267 225
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397 1,381
Taxable-equivalent adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 22
Applicable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 417
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 330 $ 942
Net income applicable to common equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 260 $ 927
Per Common Share
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .15 $ .54
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 .53
Dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .425 .425
Average common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,754 1,726
Average diluted common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,764 1,746
Financial Ratios
Return on average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51% 1.63%
Return on average common equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 18.3
Net interest margin (taxable-equivalent basis) (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.81 3.51
Efficiency ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.6 55.1
(a) Interest and rates are presented on a fully taxable-equivalent basis utilizing a tax rate of 35 percent.