US Bank 2011 Annual Report Download - page 143

The Company is exposed to risk of environmental liability
when it takes title to properties In the course of the
Company’s business, the Company may foreclose on and take
title to real estate. As a result, the Company could be subject
to environmental liabilities with respect to these properties.
The Company may be held liable to a governmental entity or
to third parties for property damage, personal injury,
investigation and clean-up costs incurred by these parties in
connection with environmental contamination or may be
required to investigate or clean up hazardous or toxic
substances or chemical releases at a property. The costs
associated with investigation or remediation activities could
be substantial. In addition, if the Company is the owner or
former owner of a contaminated site, it may be subject to
common law claims by third parties based on damages and
costs resulting from environmental contamination emanating
from the property. If the Company becomes subject to
significant environmental liabilities, its financial condition and
results of operations could be adversely affected.
The Company’s business and financial performance could
be adversely affected, directly or indirectly, by disasters,
by terrorist activities or by international hostilities Neither
the occurrence nor the potential impact of disasters, terrorist
activities or international hostilities can be predicted. However,
these occurrences could impact the Company directly (for
example, by interrupting the Company’s systems, which could
prevent the Company from obtaining deposits, originating
loans and processing and controlling its flow of business,
causing significant damage to the Company’s facilities or
otherwise preventing the Company from conducting business
in the ordinary course), or indirectly as a result of their impact
on the Company’s borrowers, depositors, other customers,
suppliers or other counterparties (for example, by damaging
properties pledged as collateral for the Company’s loans or
impairing the ability of certain borrowers to repay their loans).
The Company could also suffer adverse consequences to the
extent that disasters, terrorist activities or international
hostilities affect the financial markets or the economy in
general or in any particular region. These types of impacts
could lead, for example, to an increase in delinquencies,
bankruptcies or defaults that could result in the Company
experiencing higher levels of nonperforming assets, net charge-
offs and provisions for credit losses.
The Company’s ability to mitigate the adverse
consequences of these occurrences is in part dependent on the
quality of the Company’s resiliency planning, and the
Company’s ability, if any, to anticipate the nature of any such
event that occurs. The adverse impact of disasters, terrorist
activities or international hostilities also could be increased to
the extent that there is a lack of preparedness on the part of
national or regional emergency responders or on the part of
other organizations and businesses that the Company transacts
with, particularly those that it depends upon, but has no
control over. Additionally, the nature and level of natural
disasters may be exacerbated by global climate change.
The Company’s information systems may experience
interruptions or breaches in security The Company relies
heavily on communications and information systems to
conduct its business. Any failure, interruption or breach in
security of these systems could result in failures or disruptions
to its accounting, deposit, loan and other systems, and could
adversely affect its customer relationships. While the Company
has policies and procedures designed to prevent or limit the
effect of these possible events, there can be no assurance that
any such failure, interruption or security breach will not occur
or, if any does occur, that it will be adequately addressed. The
occurrence of any failure, interruption or security breach of the
Company’s systems could damage its reputation, result in a
loss of customer business, subject it to additional regulatory
scrutiny, or expose it to civil litigation and possible financial
liability.
The Company relies on dividends from its subsidiaries for
its liquidity needs The Company is a separate and distinct
legal entity from its bank subsidiaries and non-bank
subsidiaries. The Company receives a significant portion of its
cash from dividends paid by its subsidiaries. These dividends
are the principal source of funds to pay dividends on the
Company’s stock and interest and principal on its debt.
Various federal and state laws and regulations limit the
amount of dividends that its bank subsidiaries and certain of
its non-bank subsidiaries may pay to the Company without
regulatory approval. Also, the Company’s right to participate
in a distribution of assets upon a subsidiary’s liquidation or
reorganization is subject to prior claims of the subsidiary’s
creditors, except to the extent that any of the Company’s
claims as a creditor of that subsidiary may be recognized.
The Company has non-banking businesses that are
subject to various risks and uncertainties The Company is
a diversified financial services company, and the Company’s
business model is based on a mix of businesses that provide a
broad range of products and services delivered through
multiple distribution channels. In addition to banking, the
Company provides payment services, investments, mortgages
and corporate and personal trust services. Although the
Company believes its diversity helps lessen the effect of
downturns in any one segment of its industry, it also means the
Company’s earnings could be subject to various specific risks
and uncertainties related to these non-banking businesses.
The Company’s stock price can be volatile The Company’s
stock price can fluctuate widely in response to a variety of
factors, including: actual or anticipated variations in the
Company’s quarterly operating results; recommendations by
securities analysts; significant acquisitions or business
combinations; strategic partnerships, joint ventures or capital
commitments by or involving the Company or the Company’s
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