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U.S. Bancorp Reports Fourth Quarter And Full Year 2012 Earnings

Average total deposits increased $4.6 billion (1.9 percent) over the third quarter of 2012. Average noninterest-bearing deposits increased by $4.5 billion (6.6 percent) on a linked quarter basis, driven by growth in Consumer and Small Business Banking, Wholesale Banking and Commercial Real Estate and corporate trust balances. Average total savings deposits increased $4.5 billion (3.7 percent) over the third quarter of 2012 due to higher Consumer and Small Business Banking, Wholesale Banking and Commercial Real Estate and institutional and corporate trust balances. Compared with the third quarter of 2012, average time certificates of deposit less than $100,000 were lower by $.4 billion (2.8 percent), while average time deposits greater than $100,000 decreased $4.0 billion (11.1 percent), primarily in Wholesale Banking and Commercial Real Estate.

                                     
NONINTEREST INCOME                                   Table 6
($ in millions)         Percent   Percent      
Change Change
4Q 3Q 4Q 4Q12 vs 4Q12 vs Full Year Full Year Percent
2012   2012   2011   3Q12   4Q11   2012   2011   Change
 
Credit and debit card revenue $242 $213 $231 13.6 4.8 $892 $1,073 (16.9 )
Corporate payment products revenue 178 201 171 (11.4 ) 4.1 744 734 1.4
Merchant processing services 354 345 378 2.6 (6.3 ) 1,395 1,355 3.0
ATM processing services 83 87 111 (4.6 ) (25.2 ) 346 452 (23.5 )
Trust and investment management fees 276 265 245 4.2 12.7 1,055 1,000 5.5
Deposit service charges 170 174 171 (2.3 ) (.6 ) 653 659 (.9 )
Treasury management fees 130 135 133 (3.7 ) (2.3 ) 541 551 (1.8 )
Commercial products revenue 226 225 220 .4 2.7 878 841 4.4
Mortgage banking revenue 476 519 303 (8.3 ) 57.1 1,937 986 96.5
Investment products fees and commissions 39 38 31 2.6 25.8 150 129 16.3
Securities gains (losses), net 3 1 (9 ) nm nm (15 ) (31 ) 51.6
Other 152   193   446   (21.2 ) (65.9 ) 743     1,011   (26.5 )
 
Total noninterest income $2,329   $2,396   $2,431   (2.8 ) (4.2 ) $9,319     $8,760   6.4
                                             
 

Noninterest Income

Fourth quarter noninterest income was $2,329 million; $102 million (4.2 percent) lower than the fourth quarter of 2011 and $67 million (2.8 percent) lower than the third quarter of 2012. The year-over-year decrease in noninterest income was principally driven by a decline in other income due to the merchant settlement gain, as well as a gain related to the Company’s investment in Visa Inc. (NYSE: V) (“Visa gain”), together totaling $292 million, recorded in the fourth quarter of 2011. In addition, merchant processing services revenue was $24 million (6.3 percent) lower year-over-year due to lower rates and the reversal in the fourth quarter of 2011 of an accrual for a terminated revenue sharing agreement, partially offset by higher volumes, while ATM processing services revenue decreased $28 million (25.2 percent) due to classifying surcharge revenue passed through to others as a reduction of revenue beginning in the first quarter of 2012, rather than as occupancy expense as in previous periods. Offsetting these negative variances was an $11 million (4.8 percent) increase in credit and debit card revenue, principally driven by higher volumes, which was partially offset by the change in the classification of credit card balance transfer fees from noninterest income to interest income beginning in the first quarter of 2012. Corporate payment products revenue was $7 million (4.1 percent) higher as a result of an increase in volume and higher rates. Trust and investment management fees increased $31 million (12.7 percent) year-over-year, reflecting improved market conditions and business expansion. Commercial products revenue was $6 million (2.7 percent) higher than the fourth quarter of last year as higher bond underwriting and commercial leasing revenue were partially offset by lower syndication fees. The $173 million (57.1 percent) increase in mortgage banking revenue over the same quarter of last year was principally due to higher origination and sales revenue, as well as an increase in loan servicing revenue. Investment products fees and commissions increased $8 million (25.8 percent), compared with the prior year driven by higher sales volumes. In addition, there was a $12 million favorable variance in net securities gains (losses).

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