US Bank 2006 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 of the 2006 US Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

in interim and annual periods subsequent to initial assets and liabilities either based on fair value or lower of
recognition. The disclosures focus on the inputs used to cost or market (‘‘LOCOM’’). The Company elected to
measure fair value and for recurring fair value adopt SFAS 156 effective January 1, 2006, utilizing the fair
measurements using significant unobservable inputs, the value measurement option for MSRs and continuing the
effect of the measurements on earnings or changes in net LOCOM method for all other servicing assets and
assets for the period. The Company is currently assessing liabilities. Adopting the fair value measurement method
the impact of this guidance on its financial statements. resulted in the Company recording a cumulative-effect
accounting adjustment to increase beginning retained
Accounting for Uncertainty in Income Taxes In June 2006, earnings by $4 million (net of tax). Additional information
the FASB issued Interpretation No. 48 (‘‘FIN 48’’), regarding MSRs is disclosed in Note 9 in the Notes to
‘‘Accounting for Uncertainty in Income Taxes, an Consolidated Financial Statements.
interpretation of FASB Statement No. 109, Accounting for
Income Taxes,’’ effective for the Company beginning on Fair Value Option for Financial Assets and Financial
January 1, 2007. FIN 48 clarifies the recognition threshold Liabilities In February 2007, the FASB issued Statement of
a tax position is required to meet before being recognized in Financial Accounting Standards No. 159 (‘‘SFAS 159’’),
the financial statements. FIN 48 also provides guidance on ‘‘The Fair Value Option for Financial Assets and Financial
disclosure and other matters. Currently, the Company does Liabilities’’, effective for the Company beginning on
not expect this guidance to have a material impact on its January 1, 2008. This Statement provides entities with an
financial statements. option to report selected financial assets and liabilities at
fair value, with the objective to reduce both the complexity
Accounting for Servicing of Financial Assets In March in accounting for financial instruments and the volatility in
2006, the FASB issued Statement of Financial Accounting earnings caused by measuring related assets and liabilities
Standards No. 156, ‘‘Accounting for Servicing of Financial differently. The Company is currently assessing the impact
Assets’’ (‘‘SFAS 156’’), which amends accounting and of this guidance on its financial statements.
reporting standards for servicing assets and liabilities under
Statement of Financial Accounting Standards No. 140, RESTRICTIONS ON CASH AND DUE
‘‘Accounting for Transfers and Servicing of Financial Assets FROM BANKS
and Extinguishments of Liabilities’’. Specifically, SFAS 156
Bank subsidiaries are required to maintain minimum
requires that all separately recognized servicing assets and
average reserve balances with the Federal Reserve Bank.
servicing liabilities be initially measured at fair value, if
The amount of those reserve balances was approximately
practicable. For subsequent measurement purposes,
$359 million at December 31, 2006.
SFAS 156 permits an entity to choose to measure servicing
INVESTMENT SECURITIES
The amortized cost, gross unrealized holding gains and losses, and fair value of held-to-maturity and available-for-sale
securities at December 31 were as follows:
2006 2005
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
December 31 (Dollars in Millions) Cost Gains Losses Value Cost Gains Losses Value
HELD-TO-MATURITY (a)
Mortgage-backed securities ************************** $7 $– $– $7 $8 $– $– $8
Obligations of state and political subdivisions *********** 67 5 – 72 84 5 (1) 88
Other debt securities ******************************* 13––1317––17
Total held-to-maturity securities ******************* $ 87 $ 5 $ – $ 92 $ 109 $ 5 $ (1) $ 113
AVAILABLE-FOR-SALE (b)
U.S. Treasury and agencies ************************** $ 472 $ 1 $ (6) $ 467 $ 496 $ 2 $ (9) $ 489
Mortgage-backed securities ************************** 34,465 103 (781) 33,787 38,161 86 (733) 37,514
Asset-backed securities ***************************** 7––712––12
Obligations of state and political subdivisions *********** 4,463 82 (6) 4,539 640 3 (6) 637
Other securities and investments********************** 1,223 13 (6) 1,230 1,012 2 (7) 1,007
Total available-for-sale securities******************* $40,630 $199 $(799) $40,030 $40,321 $93 $(755) $39,659
(a) Held-to-maturity securities are carried at historical cost adjusted for amortization of premiums and accretion of discounts.
(b) Available-for-sale securities are carried at fair value with unrealized net gains or losses reported within other comprehensive income in shareholders’ equity.
U.S. BANCORP 73
Note 3
Note 4