US Bank 2011 Annual Report Download - page 94

The following table provides a summary of TDR loans that defaulted (fully or partially charged-off or became 90 days or more
past due) during 2011 that were modified as TDRs within 12 months previous to default:
(Dollars in Millions)
Number
of Loans
Amount
Defaulted
Commercial ............................................................................................................. 665 $ 26
Commercial real estate .................................................................................................. 64 67
Residential mortgages ................................................................................................... 623 127
Credit card .............................................................................................................. 8,046 43
Other retail .............................................................................................................. 529 8
Total loans, excluding GNMA and covered loans ..................................................................... 9,927 271
Loans purchased from GNMA mortgage pools .......................................................................... 857 124
Covered loans ........................................................................................................... 11 26
Total loans ............................................................................................................ 10,795 $421
Covered assets represent loans and other assets acquired from the FDIC, subject to loss sharing agreements, and include expected
reimbursements from the FDIC. The carrying amount of the covered assets at December 31, consisted of purchased impaired
loans, purchased nonimpaired loans, and other assets as shown in the following table:
2011 2010
(Dollars in Millions)
Purchased
Impaired
Loans
Purchased
Nonimpaired
Loans
Other
Assets Total
Purchased
Impaired
Loans
Purchased
Nonimpaired
Loans
Other
Assets Total
Commercial loans .......................... $ 68 $ 137 $ – $ 205 $ 70 $ 260 $ – $ 330
Commercial real estate loans .............. 1,956 4,037 – 5,993 2,254 5,952 – 8,206
Residential mortgage loans ................ 3,830 1,360 – 5,190 3,819 1,620 – 5,439
Credit card loans ........................... – 6 – 6 – 5 – 5
Other retail loans ........................... – 867 – 867 – 925 – 925
Losses reimbursable by the FDIC .......... – – 2,526 2,526 – – 3,137 3,137
Covered loans ........................... 5,854 6,407 2,526 14,787 6,143 8,762 3,137 18,042
Foreclosed real estate ...................... – – 274 274 – – 453 453
Total covered assets .................... $5,854 $6,407 $2,800 $15,061 $6,143 $8,762 $3,590 $18,495
At December 31, 2011, $.2 billion of the purchased
impaired loans included in covered loans were classified as
nonperforming assets, compared with $.5 billion at
December 31, 2010, because the expected cash flows are
primarily based on the liquidation of underlying collateral and
the timing and amount of the cash flows could not be
reasonably estimated. Interest income is recognized on other
purchased impaired loans through accretion of the difference
between the carrying amount of those loans and their
expected cash flows. The initial determination of the fair value
of the purchased loans includes the impact of expected credit
losses and, therefore, no allowance for credit losses is
recorded at the purchase date. To the extent credit
deterioration occurs after the date of acquisition, the
Company records an allowance for credit losses.
The Company has an equity interest in a joint venture
that is accounted for utilizing the equity method. The
principal activities of this entity are to lend to entities that
develop land, and construct and sell residential homes. The
Company provides a warehousing line to this joint venture.
Warehousing advances to this joint venture are repaid when
the sale of loans is completed or the real estate is permanently
refinanced by others. At December 31, 2011 and 2010, the
Company had $716 million and $825 million, respectively, of
outstanding advances to this joint venture. These advances are
included in commercial real estate loans.
Net gains on the sale of loans of $546 million, $574
million and $710 million for the years ended December 31,
2011, 2010 and 2009, respectively, were included in
noninterest income, primarily in mortgage banking revenue.
NOTE 7 Leases
The components of the net investment in sales-type and direct financing leases at December 31 were as follows:
(Dollars in Millions) 2011 2010
Aggregate future minimum lease payments to be received ................................................................. $10,882 $10,437
Unguaranteed residual values accruing to the lessor’s benefit.............................................................. 1,079 1,191
Unearned income ........................................................................................................... (1,332) (1,402)
Initial direct costs ........................................................................................................... 181 189
Total net investment in sales-type and direct financing leases (a) ........................................................ $10,810 $10,415
(a) The accumulated allowance for uncollectible minimum lease payments was $91 million and $118 million at December 31, 2011 and 2010, respectively.
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