US Bank 2011 Annual Report Download - page 87

Download and view the complete annual report

Please find page 87 of the 2011 US Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 149

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149

At December 31, 2011, certain investment securities had a fair value below amortized cost. The following table shows the gross
unrealized losses and fair value of the Company’s investments with unrealized losses, aggregated by investment category and
length of time the individual securities have been in continuous unrealized loss positions, at December 30, 2011:
Less Than 12 Months 12 Months or Greater Total
(Dollars in Millions)
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Held-to-maturity
Mortgage-backed securities
Residential
Agency ................................................................ $ 697 $ (3) $ – $ – $ 697 $ (3)
Non-agency non-prime (a) ............................................ – – 1 – 1 –
Commercial non-agency ................................................ – – 3 (2) 3 (2)
Asset-backed securities
Collateralized debt obligations/Collaterized loan obligations ............ – – 29 (2) 29 (2)
Other .................................................................... – – 14 (7) 14 (7)
Obligations of state and political subdivisions ............................. – – 9 (1) 9 (1)
Other debt securities ....................................................... – – 92 (29) 92 (29)
Total held-to-maturity ................................................. $ 697 $ (3) $ 148 $ (41) $ 845 $ (44)
Available-for-sale
U.S. Treasury and agencies ................................................ $ 22 $ (1) $ – $ – $ 22 $ (1)
Mortgage-backed securities
Residential
Agency ................................................................ 2,689 (3) 676 (1) 3,365 (4)
Non-agency (a)
Prime (b) ............................................................ 102 (6) 649 (107) 751 (113)
Non-prime .......................................................... 47 (4) 685 (250) 732 (254)
Commercial non-agency ................................................ 21 (2) 1 – 22 (2)
Asset-backed securities
Collateralized debt obligations/Collaterized loan obligations ............ 14 (2) 9 (3) 23 (5)
Other .................................................................... 497 (14) 116 (15) 613 (29)
Obligations of state and political subdivisions ............................. 73 – 879 (22) 952 (22)
Obligations of foreign governments ........................................ 6 – – – 6 –
Corporate debt securities .................................................. 156 (1) 580 (173) 736 (174)
Perpetual preferred securities .............................................. 78 (19) 162 (67) 240 (86)
Other investments .......................................................... 1 – 2 (1) 3 (1)
Total available-for-sale ................................................ $3,706 $(52) $3,759 $(639) $7,465 $(691)
(a) The Company has $367 million of unrealized losses on residential non-agency mortgage-backed securities. Credit-related other-than-temporary impairment on these securities may occur if
there is further deterioration in underlying collateral pool performance. Borrower defaults may increase if current economic conditions persist or worsen. Additionally, further deterioration in
home prices may increase the severity of projected losses.
(b) Prime securities are those designated as such by the issuer or those with underlying asset characteristics and/or credit enhancements consistent with securities designated as prime.
The Company does not consider these unrealized losses
to be credit-related. These unrealized losses primarily relate to
changes in interest rates and market spreads subsequent to
purchase. A substantial portion of securities that have
unrealized losses are either corporate debt or mortgage-
backed securities issued with high investment grade credit
ratings. In general, the issuers of the investment
securities are contractually prohibited from prepayment at less
than par, and the Company did not pay significant purchase
premiums for these securities. At December 31, 2011, the
Company had no plans to sell securities with unrealized
losses, and believes it is more likely than not it would not be
required to sell such securities before recovery of their
amortized cost.
U.S. BANCORP 85