US Bank 2001 Annual Report Download - page 66

approximately $3.7 billion during 2001. The Company No valuation allowances were required during 2001 or
received fee revenue of $57.6 million and $18.0 million 2000 on servicing assets. Servicing assets are reported in
from the loan conduit in 2001 and 2000, respectively. aggregate but measured on a transaction speciÑc basis.
Under a credit enhancement agreement with the conduit, Market values were determined using discounted cash Öows,
the Company would be required to make payments to the utilizing the assumptions noted in the table below.
conduit in speciÑed amounts if the conduit experiences Key economic assumptions used in valuing servicing assets
payment defaults on its loans. No credit enhancements at the date of sale resulting from sales completed during
were needed during 2001 or 2000. In addition, the 2001 and 2000 were as follows:
Company maintains a reserve to reÖect its obligation to
2001 2000
provide credit enhancements to the conduit. (Dollars in Millions) SBA Loans(a) SBA Loans(a)
For the years ended December 31, 2001 and 2000, the Fair value of assets recognized $9.1 $7.9
Company sold $147.5 million and $255.7 million of the Prepayment speed(b) ÏÏÏÏÏÏÏÏÏ 21 CPR 21 CPR
U.S. government guaranteed portions of loans originated Weighted-average life (years)ÏÏ 3.7 3.9
Expected credit losses ÏÏÏÏÏÏÏÏÏ NA NA
under Small Business Administration (SBA) programs,
Discount rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12% 12%
recognizing a pre-tax gain on sale of $6.3 million and
Variable returns to transferees NA NA
$10.6 million, respectively. The SBA covers losses occurring
(a) All were adjustable rate loans based on the Wall Street Journal prime rate.
on these guaranteed portions. Although the Company (b) The Company used a prepayment vector based on loan seasoning for valuation. The
retains no credit recourse relating to these sales, it does given speed was the eÅective prepayment speed that yields the same weighted-
average life calculated using the prepayment vector.
continue to own a portion of the non-guaranteed elements
of the loans. The Company continues to service the loans The Company also established a securitization trust
and is required under the SBA programs to retain speciÑed which held credit card receivables originated by the
yield amounts. A portion of the yield is recognized as Company. This trust was terminated in December 2000. At
servicing fee income as it occurs and the remainder is termination, $509 million of credit card receivables were
capitalized as a servicing asset, and included in the gain on transferred from the trust to the Company in exchange for
sale calculation. the seller's certiÑcates held by the Company. In 2000,
$665 million of proceeds from collections of credit card
Servicing Asset Position receivables were reinvested in the trust. The Company
2001 2000 received $18.0 million in servicing fee revenue from the
(Dollars in Millions) SBA Loans SBA Loans
trust in 2000 and recorded a $2.2 million gain upon the
Servicing assets at beginning of
termination of the trust.
year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $6.9 $ 4.3
Servicing assets recognized
during the yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.8 4.0
Amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2.2) (1.4)
Servicing assets at end of year ÏÏÏ $7.5 $ 6.9
U.S. Bancorp
64