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U.S. Bancorp's payment-services division generated fourth quarter net income of $235 million, down 25.2% from $314 million a year earlier. Payment services include consumer and business credit, stored-value, debit and purchasing cards, and consumer lines of credit and merchant processing. Net interest income for the payment-services division was $292 million, up 26% from $232 million for the same period last year. Merchant processing earned $272 million in noninterest income, down 4.6% from $285 million. Noninterest credit and debit card revenue totaled $254 million, down 10.9% from $285 million. Corporate payment products revenue fell 7%, to $154 million from $166 million a year earlier. The company set aside a $209 million provision for payment services credit losses during the quarter, up 90% from $110 million. The bank managed $13 billion in average credit card loans during the quarter, up 22.6% from $10.6 billion during the same period a year earlier. Average net credit card charge-offs were 5.18% of receivables, up 189 basis points from 3.29%. The company expects credit card charge-offs to rise to between 6% and 6.5% of receivables by the end of 2009, Andy Cecere, U.S. Bancorp vice chairman and chief financial officer, told analysts during a conference call this morning. The recession may be "deeper and more protracted than we thought it would be in more places," Richard Davis, president and CEO, noted during the call. However, he added, "I'm looking forward to getting to the other side because our core fundamentals haven't been affected, and we're still operating kind of the old-fashioned way, of a balance-sheet bank growing the business with fees and spending money to ensure that there is a future." U.S. Bancorp's credit card charge volume was $20 billion during the quarter, down less than 1% from $20.1 billion a year earlier. The corporation owned 4,897 ATMs at the end of 2008, up slightly from 4,867 ATMs a year earlier. The bank drove 32,819 ATMs as of Dec. 31, down 12.4% from 37,468. Debit card transaction volume totaled $8.8 billion during the quarter, up 1.1% from $8.78 billion.
