US Bank 2011 Annual Report Download - page 95

The minimum future lease payments to be received from sales-type and direct financing leases were as follows at December 31,
2011:
(Dollars in Millions)
2012 ...................................................................................................................................... $2,586
2013 ...................................................................................................................................... 2,581
2014 ...................................................................................................................................... 3,751
2015 ...................................................................................................................................... 1,288
2016 ...................................................................................................................................... 378
Thereafter ................................................................................................................................ 298
NOTE 8 Accounting for Transfers and Servicing of Financial Assets and Variable Interest Entities
The Company sells financial assets in the normal course of
business. The majority of the Company’s financial asset sales
are residential mortgage loan sales primarily to government-
sponsored enterprises through established programs, the sale
or syndication of tax-advantaged investments, commercial
loan sales through participation agreements, and other
individual or portfolio loan and securities sales. In accordance
with the accounting guidance for asset transfers, the Company
considers any ongoing involvement with transferred assets in
determining whether the assets can be derecognized from the
balance sheet. For loans sold under participation agreements,
the Company also considers the terms of the loan
participation agreement and whether they meet the definition
of a participating interest and thus qualify for derecognition.
With the exception of servicing and certain performance-
based guarantees, the Company’s continuing involvement
with financial assets sold is minimal and generally limited to
market customary representation and warranty clauses. The
guarantees provided to certain third-parties in connection
with the sale or syndication of certain assets, primarily loan
portfolios and tax-advantaged investments, are further
discussed in Note 22. When the Company sells financial
assets, it may retain servicing rights and/or other interests in
the transferred financial assets. The gain or loss on sale
depends on the previous carrying amount of the transferred
financial assets and the consideration received and any
liabilities incurred in exchange for the transferred assets. Upon
transfer, any servicing assets and other interests that continue
to be held by the Company are initially recognized at fair
value. For further information on MSRs, refer to Note 10. On
a limited basis, the Company may acquire and package high-
grade corporate bonds for select corporate customers, in
which the Company generally has no continuing involvement
with these transactions. Additionally, the Company also is an
authorized Ginnie Mae issuer and issues Ginnie Mae securities
on a regular basis. The Company has no other asset
securitizations or similar asset-backed financing arrangements
that are off-balance sheet.
The Company is involved in various entities that are
considered to be VIEs. The Company’s investments in VIEs
primarily represent private investment funds or partnerships
that make equity investments, provide debt financing or
support community-based investments in affordable housing
development entities that provide capital for communities
located in low-income districts and for historic rehabilitation
projects that may enable the Company to ensure regulatory
compliance with the Community Reinvestment Act. In
addition, the Company sponsors entities to which it transfers
tax-advantaged investments. The Company’s investments in
these entities are designed to generate a return primarily
through the realization of federal and state income tax credits
over specified time periods. The Company realized federal and
state income tax credits related to these investments of
$756 million, $713 million and $685 million for the years
ended December 31, 2011, 2010 and 2009, respectively. The
Company amortizes its investments in these entities as the tax
credits are realized. Tax credit amortization expense is
recorded in tax expense for investments meeting certain
characteristics, and in other noninterest expense for other
investments. Amortization expense recorded in tax expense
was $278 million, $228 million and $265 million, and in
other noninterest expense was $528 million, $546 million and
$436 million for the years ended December 31, 2011, 2010
and 2009, respectively.
At December 31, 2011, approximately $5.6 billion of the
Company’s assets and $4.0 billion of its liabilities included on
the consolidated balance sheet were related to community
development and tax-advantaged investment VIEs, compared
with $3.8 billion and $2.6 billion, respectively, at
December 31, 2010. The majority of the assets of these
consolidated VIEs are reported in other assets, and the
liabilities are reported in long-term debt. The assets of a
particular VIE are the primary source of funds to settle its
obligations. The creditors of the VIEs do not have recourse to
the general credit of the Company. The Company’s exposure
to the consolidated VIEs is generally limited to the carrying
value of its variable interests plus any related tax credits
previously recognized or sold to others.
In addition, the Company sponsors a conduit to which it
previously transferred high-grade investment securities. The
Company consolidates the conduit because of its ability to
manage the activities of the conduit. At December 31, 2011,
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