US Bank 2011 Annual Report Download - page 96

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$202 million of the held-to-maturity investment securities on
the Company’s consolidated balance sheet related to the
conduit, compared with $400 million at December 31, 2010.
The Company also sponsors a municipal bond securities
tender option bond program. The Company controls the
activities of the program’s entities, is entitled to the residual
returns and provides credit, liquidity and remarketing
arrangements to the program. As a result, the Company has
consolidated the program’s entities. At December 31, 2011,
$5.4 billion of available-for-sale securities and $5.3 billion of
short-term borrowings on the consolidated balance sheet were
related to the tender option bond program, compared with
$5.3 billion of available-for-sale securities and $5.7 billion of
short-term borrowings at December 31, 2010.
The Company is not required to consolidate VIEs in
which it has concluded it does not have a controlling financial
interest, and thus is not the primary beneficiary. In such cases,
the Company does not have both the power to direct the
entities’ most significant activities and the obligation to
absorb losses or right to receive benefits that could potentially
be significant to the VIEs. The Company’s investments in
unconsolidated VIEs ranged from less than $1 million to
$37 million, with an aggregate amount of approximately
$1.8 billion at December 31, 2011, and from less than
$1 million to $41 million, with an aggregate amount of
approximately $2.0 billion at December 31, 2010. The
Company’s investments in these unconsolidated VIEs
generally are carried in other assets on the consolidated
balance sheet. While the Company believes potential losses
from these investments are remote, the Company’s maximum
exposure to loss from these unconsolidated VIEs was
approximately $4.8 billion at December 31, 2011, compared
with $5.0 billion at December 31, 2010. The maximum
exposure to loss was primarily related to community
development tax-advantaged investments and included
$1.8 billion at December 31, 2011 and $1.9 billion at
December 31, 2010 recorded on the Company’s consolidated
balance sheet and $3.0 billion at December 31, 2011 and
2010 of previously recorded tax credits which remain subject
to recapture by taxing authorities based on compliance
features required to be met at the project level. The remaining
amounts related to investments in private investment funds
and partnerships for which the maximum exposure to loss
included amounts recorded on the consolidated balance sheet
and any unfunded commitments. The maximum exposure was
determined by assuming a scenario where the separate
investments within the individual private funds were to
become worthless, and the community-based business and
housing projects and related tax credits completely failed and
did not meet certain government compliance requirements.
NOTE 9 Premises and Equipment
Premises and equipment at December 31 consisted of the following:
(Dollars in Millions) 2011 2010
Land ..................................................................................................................... $ 525 $ 516
Buildings and improvements ............................................................................................ 3,144 3,073
Furniture, fixtures and equipment ....................................................................................... 2,449 2,791
Capitalized building and equipment leases .............................................................................. 95 88
Construction in progress ................................................................................................ 44 50
6,257 6,518
Less accumulated depreciation and amortization ....................................................................... (3,600) (4,031)
Total .................................................................................................................. $2,657 $ 2,487
NOTE 10 Mortgage Servicing Rights
The Company serviced $191.1 billion of residential
mortgage loans for others at December 31, 2011, and
$173.9 billion at December 31, 2010. The net impact
included in mortgage banking revenue of fair value changes
of MSRs and derivatives used to economically hedge MSRs
were net gains of $183 million, $139 million and $147
million for the years ended December 31, 2011, 2010 and
2009, respectively. Loan servicing fees, not including
valuation changes, included in mortgage banking revenue,
were $651 million, $600 million and $512 million for the
years ended December 31, 2011, 2010 and 2009,
respectively.
94 U.S. BANCORP