US Bank 2003 Annual Report Download - page 68

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Notes to Consolidated Financial Statements
Payment Services includes consumer and business credit
Significant Accounting Policies
cards, corporate and purchasing card services, ATM
U.S. Bancorp and its subsidiaries (the ‘‘Company’’) is a processing, merchant processing and debit cards.
multi-state financial services holding company Customized products and services, coupled with cutting-
headquartered in Minneapolis, Minnesota. The Company edge technology are provided to consumer and business
provides a full range of financial services including lending customers, government clients, correspondent financial
and depository services through banking offices principally institutions, merchants and co-brand partners.
in 24 states. The Company also engages in credit card,
Treasury and Corporate Support includes the Company’s
merchant, and ATM processing, mortgage banking,
investment portfolios, funding, capital management and
insurance, trust and investment management, brokerage,
asset securitization activities, interest rate risk management,
and leasing activities principally in domestic markets.
the net effect of transfer pricing related to average balances,
Basis of Presentation The consolidated financial statements and the change in residual allocations associated with the
include the accounts of the Company and its subsidiaries. provision for loan losses. It also includes business activities
The consolidation eliminates all significant intercompany managed on a corporate basis, including income and
accounts and transactions. Certain items in prior periods expense of enterprise-wide operations and administrative
have been reclassified to conform to the current support functions.
presentation. The consolidated financial statements have
Segment Results Accounting policies for the lines of
been retroactively restated due to the adoption of the fair
business are the same as those used in preparation of the
value method of accounting for stock-based compensation
consolidated financial statements with respect to activities
as described in Note 2 and to report the results of Piper
specifically attributable to each business line. However, the
Jaffray Companies as discontinued operations as described
preparation of business line results requires management to
in Note 4 of the Notes to Consolidated Financial
establish methodologies to allocate funding costs and
Statements.
benefits, expenses and other financial elements to each line
Uses of Estimates The preparation of financial statements of business. For details of these methodologies and segment
in conformity with generally accepted accounting principles results, see ‘‘Basis for Financial Presentation’’ and Table 22
requires management to make estimates and assumptions ‘‘Line of Business Financial Performance’’ included in
that affect the amounts reported in the financial statements Management’s Discussion and Analysis which is
and accompanying notes. Actual experience could differ incorporated by reference into these Notes to Consolidated
from those estimates. Financial Statements.
BUSINESS SEGMENTS SECURITIES
Within the Company, financial performance is measured by Realized gains or losses on securities are determined on a
major lines of business based on the products and services trade date basis based on the specific carrying value of the
provided to customers through its distribution channels. investments being sold.
The Company has five reportable operating segments:
Trading Securities Debt and equity securities held for resale
Wholesale Banking offers lending, depository, treasury are classified as trading securities and reported at fair value.
management and other financial services to middle market, Realized gains or losses are reported in noninterest income.
large corporate and public sector clients.
Available-for-sale Securities These securities are not
Consumer Banking delivers products and services to the trading securities but may be sold before maturity in
broad consumer market and small businesses through response to changes in the Company’s interest rate risk
banking offices, telemarketing, on-line services, direct mail profile, funding needs or demand for collateralized deposits
and automated teller machines (‘‘ATMs’’). by public entities. Available-for-sale securities are carried at
fair value with unrealized net gains or losses reported
Private Client, Trust and Asset Management provides trust,
within other comprehensive income in shareholders’ equity.
private banking, financial advisory, investment management
When sold, the amortized cost of the specific securities is
and mutual fund processing services to affluent individuals,
used to compute the gain or loss. Declines in fair value that
businesses, institutions and mutual funds.
66 U.S. Bancorp
Note 1