US Bank 2015 Annual Report Download - page 32

TABLE 3 NET INTEREST INCOME — CHANGES DUE TO RATE AND VOLUME (a)
2015 v 2014 2014 v 2013
Year Ended December 31 (Dollars in Millions) Volume Yield/Rate Total Volume Yield/Rate Total
Increase (decrease) in
Interest Income
Investment securities ..................................... $282 $(153) $ 129 $ 359 $(135) $ 224
Loans held for sale ...................................... 108 (30) 78 (92) 17 (75)
Loans
Commercial .......................................... 245 (192) 53 272 (212) 60
Commercial real estate ................................. 71 4 75 98 (112) (14)
Residential mortgages .................................. 1 (36) (35) 157 (115) 42
Credit card ........................................... 43 109 152 83 43 126
Other retail ........................................... 32 (153) (121) 60 (237) (177)
Total loans, excluding covered loans .................... 392 (268) 124 670 (633) 37
Covered loans ........................................ (154) (27) (181) (159) (32) (191)
Total loans ......................................... 238 (295) (57) 511 (665) (154)
Other earning assets ..................................... 46 (31) 15 (27) (27) (54)
Total earning assets ................................. 674 (509) 165 751 (810) (59)
Interest Expense
Interest-bearing deposits
Interest checking ...................................... 2 (7) (5) 3 (4) (1)
Money market savings ................................. 28 47 75 12 29 41
Savings accounts ..................................... 4 (10) (6) 3 (6) (3)
Time deposits ........................................ (40) (32) (72) (30) (103) (133)
Total interest-bearing deposits ......................... (6) (2) (8) (12) (84) (96)
Short-term borrowings ................................... (20) 2 (18) 33 (123) (90)
Long-term debt ......................................... 192 (218) (26) 189 (231) (42)
Total interest-bearing liabilities ......................... 166 (218) (52) 210 (438) (228)
Increase (decrease) in net interest income .................... $508 $(291) $ 217 $ 541 $(372) $ 169
(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.
Average total deposits for 2014 were $16.2 billion
(6.5 percent) higher than 2013. Average noninterest-bearing
deposits for 2014 were $4.4 billion (6.4 percent) higher than
2013, reflecting growth in Consumer and Small Business
Banking, including the impact of the Charter One branch
acquisitions, Wholesale Banking and Commercial Real Estate,
and Wealth Management and Securities Services balances.
Average total savings deposits for 2014 were $15.2 billion
(11.2 percent) higher than 2013, reflecting growth in
Consumer and Small Business Banking, including the impact
of the Charter One branch acquisitions, Wholesale Banking
and Commercial Real Estate and corporate trust balances.
Average time deposits, which are managed based on funding
needs and relative pricing, decreased $3.5 billion
(7.6 percent) in 2014, compared with 2013.
Provision for Credit Losses The provision for credit losses
reflects changes in the size and credit quality of the entire
portfolio of loans. The Company maintains an allowance for
credit losses 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 2015, the provision for credit losses was $1.1 billion,
compared with $1.2 billion and $1.3 billion in 2014 and 2013,
respectively. The provision for credit losses was lower than
net charge-offs by $40 million in 2015, $105 million in 2014
and $125 million in 2013. The $97 million (7.9 percent)
decrease in the provision for credit losses in 2015, compared
with 2014, reflected improving credit trends and the
underlying risk profile of the loan portfolio as economic
conditions continued to slowly improve during the period,
partially offset by portfolio growth. Nonperforming assets
decreased $285 million (15.8 percent) from December 31,
2014 to December 31, 2015, primarily driven by
nonperforming asset reductions in the commercial real estate,
residential mortgages, and home equity and second
mortgage portfolios, as economic conditions continued to
slowly improve during the period. In addition, accruing loans
ninety days or more past due decreased by $114 million (12.1
percent) from December 31, 2014 to December 31, 2015.
Net charge-offs decreased $162 million (12.1 percent) in
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