US Bank 2010 Annual Report Download - page 61

$1.4 billion at December 31, 2010, compared with
$1.3 billion at December 31, 2009. Nonperforming assets as
a percentage of period-end loans were 1.34 percent at
December 31, 2010, compared with 1.35 percent at
December 31, 2009. Refer to the “Corporate Risk Profile”
section for further information on factors impacting the
credit quality of the loan portfolios.
Wealth Management and Securities Services Wealth
Management and Securities Services provides private
banking, financial advisory services, investment
management, retail brokerage services, insurance, trust,
custody and fund servicing through five businesses: Wealth
Management, Corporate Trust Services, U.S. Bancorp Asset
Management, Institutional Trust & Custody and
Fund Services. Wealth Management and Securities Services
contributed $220 million of the Company’s net income in
2010, a decrease of $114 million (34.1 percent), compared
with 2009.
Total net revenue decreased $68 million (4.6 percent) in
2010, compared with 2009, driven by adverse capital
markets. Net interest income, on a taxable-equivalent basis,
increased $18 million (6.0 percent) in 2010, compared with
2009. The increase in net interest income was primarily due
to higher deposit volumes as customers migrated from
money market funds to deposit products, partially offset by
a decline in the related margin benefit. Noninterest income
decreased $86 million (7.2 percent) in 2010, compared with
2009, as low interest rates negatively impacted money
market investment fees and lower money market fund
balances led to a decline in account-level fees.
Total noninterest expense increased $118 million
(12.6 percent) in 2010, compared with 2009. The increase in
noninterest expense was primarily due to higher total
compensation, employee benefits expense and FDIC
insurance assessments.
Payment Services Payment Services includes consumer and
business credit cards, stored-value cards, debit cards,
corporate and purchasing card services, consumer lines of
credit and merchant processing. Payment Services
contributed $773 million of the Company’s net income in
2010, or an increase of $495 million compared with 2009.
The increase was primarily due to an increase in total net
revenue and a decrease in the provision for credit losses,
partially offset by higher noninterest expense.
Total net revenue increased $315 million (7.5 percent)
in 2010, compared with 2009. Net interest income, on a
taxable-equivalent basis, increased $169 million
(14.4 percent) in 2010, compared with 2009, primarily due
to strong growth in credit card loan balances and improved
loan spreads, partially offset by the cost of rebates on the
government card program, as well as reduced loan fees from
the implementation of the Credit Card Accountability,
Responsibility and Disclosure Act of 2009 beginning in the
second quarter of 2010. Noninterest income increased
$146 million (4.9 percent) in 2010, compared with 2009,
driven by higher transaction volumes across all products,
partially offset by a fourth quarter of 2009 contract
termination gain.
Total noninterest expense increased $189 million
(11.1 percent) in 2010, compared with 2009, due to higher
total compensation, employee benefits and professional
services expense, partially offset by lower marketing and
business development expense.
The provision for credit losses decreased $660 million
(33.1 percent) in 2010, compared with 2009, primarily due
to a reduction in the reserve allocation, as the level of stress
in economic conditions moderated. As a percentage of
average loans outstanding, net charge-offs were 6.31 percent
in 2010, compared with 6.16 percent in 2009.
Treasury and Corporate Support Treasury and Corporate
Support includes the Company’s investment portfolios, most
covered commercial and commercial real estate loans and
related OREO, funding, capital management, asset
securitization, interest rate risk management, the net effect
of transfer pricing related to average balances and the
residual aggregate of expenses associated with corporate
activities that are managed on a consolidated basis. Treasury
and Corporate Support recorded net income of $1.2 billion
in 2010, compared with $571 million in 2009.
Total net revenue increased $896 million (85.0 percent)
in 2010, compared with 2009. Net interest income, on a
taxable-equivalent basis, increased $493 million
(39.8 percent) in 2010, compared with 2009, reflecting the
impact of the FBOP acquisition, the current interest rate
environment, wholesale funding decisions and the
Company’s asset/liability position. Total noninterest income
increased $403 million in 2010, compared with 2009,
primarily due to lower net securities losses, the 2010 Nuveen
Gain and higher gains on the Company’s investment in Visa
Inc., partially offset by a gain on a corporate real estate
transaction recognized in the first quarter of 2009.
Total noninterest expense increased $71 million
(8.8 percent) in 2010, compared with 2009. The increase in
noninterest expense was driven by higher total compensation
and employee benefits expense, increased costs related to
affordable housing and other tax advantaged projects and
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