US Bank 2011 Annual Report Download - page 76

Notes to Consolidated Financial Statements
NOTE 1 Significant Accounting Policies
U.S. Bancorp is a multi-state financial services holding
company headquartered in Minneapolis, Minnesota.
U.S. Bancorp and its subsidiaries (the “Company”) provide a
full range of financial services, including lending and
depository services through banking offices principally in the
Midwest and West regions of the United States. The Company
also engages in credit card, merchant, and ATM processing,
mortgage banking, insurance, trust and investment
management, brokerage, and leasing activities principally in
domestic markets.
Basis of Presentation The consolidated financial statements
include the accounts of the Company and its subsidiaries and
all variable interest entities (“VIEs”) for which the Company
has both the power to direct the activities of the VIE that most
significantly impact the VIE’s economic performance, and the
obligation to absorb losses or right to receive benefits of the
VIE that could potentially be significant to the VIE.
Consolidation eliminates all significant intercompany
accounts and transactions. Certain items in prior periods have
been reclassified to conform to the current presentation.
Uses of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and
accompanying notes. Actual experience could differ from
those estimates.
Business Segments
Within the Company, financial performance is measured by
major lines of business based on the products and services
provided to customers through its distribution channels. The
Company has five reportable operating segments:
Wholesale Banking and Commercial Real Estate Wholesale
Banking and Commercial Real Estate offers lending,
equipment finance and small-ticket leasing, depository,
treasury management, capital markets, foreign exchange,
international trade services and other financial services to
middle market, large corporate, commercial real estate,
financial institution and public sector clients.
Consumer and Small Business Banking Consumer and
Small Business Banking delivers products and services through
banking offices, telephone servicing and sales, on-line services,
direct mail, ATM processing and over mobile devices. It
encompasses community banking, metropolitan banking,
in-store banking, small business banking, consumer lending,
mortgage banking, consumer finance, workplace banking,
student banking and 24-hour banking.
Wealth Management and Securities Services Wealth
Management and Securities Services provides private banking,
financial advisory services, investment management, retail
brokerage services, insurance, trust, custody and mutual fund
servicing through five businesses: Wealth Management,
Corporate Trust Services, U.S. Bancorp Asset Management,
Institutional Trust & Custody and Fund Services.
Payment Services Payment Services includes consumer and
business credit cards, stored-value cards, debit cards,
corporate and purchasing card services, consumer lines of
credit and merchant processing.
Treasury and Corporate Support Treasury and Corporate
Support includes the Company’s investment portfolios, most
covered commercial and commercial real estate loans and
related other real estate (“OREO”), funding, capital
management, asset securitization, interest rate risk
management, the net effect of transfer pricing related to
average balances and the residual aggregate of those expenses
associated with corporate activities that are managed on a
consolidated basis.
Segment Results Accounting policies for the lines of business
are the same as those used in preparation of the consolidated
financial statements with respect to activities specifically
attributable to each business line. However, the preparation of
business line results requires management to allocate funding
costs and benefits, expenses and other financial elements to
each line of business. For details of these methodologies and
segment results, see “Basis for Financial Presentation” and
Table 24 “Line of Business Financial Performance” included
in Management’s Discussion and Analysis which is
incorporated by reference into these Notes to Consolidated
Financial Statements.
Securities
Realized gains or losses on securities are determined on a
trade date basis based on the specific amortized cost of the
investments sold.
Trading Securities Debt and equity securities held for resale
are classified as trading securities and are included in other
assets and reported at fair value. Changes in fair value and
realized gains or losses are reported in noninterest income.
Available-for-sale Securities These securities are not trading
securities but may be sold before maturity in response to
changes in the Company’s interest rate risk profile, funding
needs, demand for collateralized deposits by public entities or
other reasons. Available-for-sale securities are carried at fair
value with unrealized net gains or losses reported within other
comprehensive income (loss) in shareholders’ equity. Declines
in fair value related to other-than-temporary impairment, if
any, are reported in noninterest income.
74 U.S. BANCORP