US Bank 2015 Annual Report Download - page 34

The $390 million (4.4 percent) increase in noninterest
income in 2014 from 2013 was principally due to increases in
a majority of fee revenue categories and other income,
partially offset by a reduction in mortgage banking revenue.
Trust and investment management fees increased 9.9
percent in 2014, compared with 2013, reflecting account
growth, improved market conditions and business expansion.
Merchant processing services revenue was 3.6 percent
higher as a result of an increase in fee-based product revenue
and higher volumes, partially offset by lower rates. Credit and
debit card revenue and corporate payment products revenue
increased 5.8 percent and 2.5 percent, respectively, primarily
due to higher transaction volumes. Deposit service charges
were 3.4 percent higher due to account growth, the Charter
One branch acquisitions and pricing changes. Investment
products fee revenue increased 7.3 percent primarily due to
higher transaction volumes. Other income increased 82.8
percent in 2014, compared with 2013, reflecting higher equity
investment income, including 2014 gains on Visa stock sales
and the Nuveen gain, and higher retail leasing revenue. The
decrease in mortgage banking revenue in 2014 of 25.6
percent, compared with 2013, was primarily due to lower
origination and sales revenue, partially offset by favorable
changes in the valuation of MSRs, net of hedging activities.
Noninterest Expense Noninterest expense in 2015 was
$10.9 billion, compared with $10.7 billion in 2014 and
$10.3 billion in 2013. The Company’s efficiency ratio was 53.8
percent in 2015, compared with 53.2 percent in 2014 and
52.4 percent in 2013. The $216 million (2.0 percent) increase
in noninterest expense in 2015 over 2014 reflected higher
compensation, employee benefits and other costs related to
compliance activities during 2015. Compensation expense
increased 6.4 percent, reflecting the impact of merit increases,
higher staffing for risk and compliance activities, as well as the
Charter One branch acquisitions. Employee benefits expense
increased 12.1 percent, primarily the result of higher pension
costs. In addition, technology and communications expense
increased 2.8 percent in 2015 over 2014, reflecting higher
software license and maintenance costs. Offsetting these
increases was a 5.5 percent decrease in marketing and
business development expense reflecting higher charitable
contributions in 2014, a 9.5 percent decrease in postage,
printing and supplies expense due to a 2015 reimbursement
from a business partner, and a 12.6 percent decrease in other
intangibles expense due to the reduction or completion of
amortization of certain intangibles. In addition, other expense
decreased 8.0 percent, reflecting the impact of the 2014 FHA
DOJ settlement and prior year legal accruals, partially offset by
higher current year compliance-related expenses.
TABLE 5 NONINTEREST EXPENSE
Year Ended December 31 (Dollars in Millions) 2015 2014 2013
2015
v 2014
2014
v 2013
Compensation .................................................... $ 4,812 $ 4,523 $ 4,371 6.4% 3.5%
Employee benefits ................................................. 1,167 1,041 1,140 12.1 (8.7)
Net occupancy and equipment ....................................... 991 987 949 .4 4.0
Professional services ............................................... 423 414 381 2.2 8.7
Marketing and business development .................................. 361 382 357 (5.5) 7.0
Technology and communications ..................................... 887 863 848 2.8 1.8
Postage, printing and supplies ........................................ 297 328 310 (9.5) 5.8
Other intangibles ................................................... 174 199 223 (12.6) (10.8)
Other ............................................................ 1,819 1,978 1,695 (8.0) 16.7
Total noninterest expense ......................................... $10,931 $10,715 $10,274 2.0% 4.3%
Efficiency ratio(a) ................................................... 53.8% 53.2% 52.4%
(a) Computed as noninterest expense divided by the sum of net interest income on a taxable-equivalent basis and noninterest income excluding net securities gains (losses).
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