US Bank 2007 Annual Report Download - page 40

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Loan Delinquencies Trends in delinquency ratios represent
an indicator, among other considerations, of credit risk
within the Company’s loan portfolios. The entire balance of
an account is considered delinquent if the minimum payment
contractually required to be made is not received by the
specified date on the billing statement. The Company
measures delinquencies, both including and excluding
nonperforming loans, to enable comparability with other
companies. Advances made pursuant to servicing agreements
to Government National Mortgage Association (“GNMA”)
mortgage pools whose repayments of principal and interest
are substantially insured by the Federal Housing
Administration or guaranteed by the Department of Veterans
Affairs are excluded from delinquency statistics. In addition,
under certain situations, a retail customer’s account may be
re-aged to remove it from delinquent status. Generally, the
intent of a re-aged account is to assist customers who have
recently overcome temporary financial difficulties, and have
demonstrated both the ability and willingness to resume
regular payments. To qualify for re-aging, the account must
have been open for at least one year and cannot have been
re-aged during the preceding 365 days. An account may not
be re-aged more than two times in a five-year period. To
qualify for re-aging, the customer must also have made three
regular minimum monthly payments within the last 90 days.
In addition, the Company may re-age the retail account of a
customer who has experienced longer-term financial
difficulties and apply modified, concessionary terms and
conditions to the account. Such additional re-ages are
limited to one in a five-year period and must meet the
qualifications for re-aging described above. All re-aging
strategies must be independently approved by the Company’s
credit administration function and are limited to credit card
and credit line accounts. Commercial loans are not subject
to re-aging policies.
Accruing loans 90 days or more past due totaled
$584 million at December 31, 2007, compared with
$349 million at December 31, 2006, and $253 million at
December 31, 2005. The increase in 90 day delinquent loans
from December 31, 2006, to December 31, 2007, was
primarily related to residential mortgages, credit cards and
home equity loans. These loans were not included in
nonperforming assets and continue to accrue interest because
they are adequately secured by collateral, and/or are in the
process of collection and are reasonably expected to result in
repayment or restoration to current status. The ratio of
90 day delinquent loans to total loans was .38 percent at
December 31, 2007, compared with .24 percent at
December 31, 2006.
To monitor credit risk associated with retail loans, the
Company also monitors delinquency ratios in the various
stages of collection, including nonperforming status. The
following table provides summary delinquency information
for residential mortgages and retail loans:
December 31,
(Dollars in Millions) 2007 2006 2007 2006
Amount
As a Percent of
Ending
Loan Balances
Residential Mortgages
30-89 days . . . . . . . . . . . $233 $140 1.02% .66%
90 days or more . . . . . . . 196 89 .86 .42
Nonperforming. . . . . . . . . 54 36 .24 .17
Tota l ............ $483 $265 2.12% 1.25%
Retail
Credit card
30-89 days . . . . . . . . . . . $268 $204 2.44% 2.35%
90 days or more . . . . . . . 212 152 1.94 1.75
Nonperforming. . . . . . . . . 14 31 .13 .36
Tota l ............ $494 $387 4.51% 4.46%
Retail leasing
30-89 days . . . . . . . . . . . $ 39 $ 34 .65% .49%
90 days or more . . . . . . . 6 2 .10 .03
Nonperforming. . . . . . . . . – – – –
Tota l ............ $ 45 $ 36 .75% .52%
Home equity and second
mortgages
30-89 days . . . . . . . . . . . $107 $ 93 .65% .60%
90 days or more . . . . . . . 64 34 .39 .22
Nonperforming. . . . . . . . . 11 14 .07 .09
Tota l ............ $182 $141 1.11% .91%
Other retail
30-89 days . . . . . . . . . . . $177 $131 1.02% .80%
90 days or more . . . . . . . 62 44 .36 .27
Nonperforming. . . . . . . . . 4 3 .02 .02
Tota l ............ $243 $178 1.40% 1.09%
38 U.S. BANCORP