US Bank 2007 Annual Report Download - page 53

(“FHLB”) that provide a source of funding through FHLB
advances. The Company maintains a Grand Cayman branch
for issuing eurodollar time deposits. The Company also issues
commercial paper through its Canadian branch. In addition,
the Company establishes relationships with dealers to issue
national market retail and institutional savings certificates and
short-term and medium-term bank notes. The Company’s
subsidiary banks also have significant correspondent banking
networks and corporate accounts. Accordingly, the Company
has access to national fed funds, funding through repurchase
agreements and sources of stable, regionally-based certificates
of deposit and commercial paper.
The Company’s ability to raise negotiated funding at
competitive prices is influenced by rating agencies’ views of
the Company’s credit quality, liquidity, capital and earnings.
On February 14, 2007, Standard & Poor’s Ratings Services
upgraded the Company’s credit ratings to AA/A-1+. At
December 31, 2007, the credit ratings outlook for the
Company was considered “Positive” by Fitch and “Stable”
by Standard & Poor’s Ratings Services, Moody’s Investors
Service and Dominion Bond Ratings Service. The debt
ratings noted in Table 19 reflect the rating agencies’
recognition of the Company’s sector-leading core earnings
performance and lower credit risk profile.
The parent company’s routine funding requirements
consist primarily of operating expenses, dividends paid to
shareholders, debt service, repurchases of common stock and
funds used for acquisitions. The parent company obtains
funding to meet its obligations from dividends collected
from its subsidiaries and the issuance of debt securities.
Under United States Securities and Exchange
Commission rules, the parent company is classified as a
“well-known seasoned issuer,” which allows it to file a
registration statement that does not have a limit on issuance
capacity. “Well-known seasoned issuers” generally include
those companies with outstanding common securities with a
market value of at least $700 million held by non-affiliated
parties or those companies that have issued at least $1 billion
in aggregate principal amount of non-convertible securities,
other than common equity, in the last three years. However,
the parent company’s ability to issue debt and other
securities under a registration statement filed with the United
States Securities and Exchange Commission under these rules
is limited by the debt issuance authority granted by the
Company’s Board of Directors and/or ALPC policy.
At December 31, 2007, parent company long-term debt
outstanding was $10.7 billion, compared with $11.4 billion at
December 31, 2006. The $.7 billion decrease was primarily
due to repayments of $2.6 billion of convertible senior
debentures and $1.4 billion of maturities of subordinated and
medium-term notes, partially offset by the issuances of
$3.0 billion of convertible senior debentures and $.5 billion of
junior subordinated debentures. Total parent company debt
scheduled to mature in 2008 is $.5 billion. These debt
obligations may be met through medium-term note and
capital security issuances and dividends from subsidiaries, as
well as from parent company cash and cash equivalents.
Federal banking laws regulate the amount of dividends
that may be paid by banking subsidiaries without prior
approval. The amount of dividends available to the parent
company from its banking subsidiaries after meeting the
regulatory capital requirements for well-capitalized banks
was approximately $1.1 billion at December 31, 2007. For
further information, see Note 22 of the Notes to
Consolidated Financial Statements.
Off-Balance Sheet Arrangements Off-balance sheet
arrangements include any contractual arrangement to which an
unconsolidated entity is a party, under which the Company has
an obligation to provide credit or liquidity enhancements or
market risk support. Off-balance sheet arrangements include
U.S. BANCORP 51
Table 19 DEBT RATINGS
Moody’s
Standard &
Poor’s Fitch
Dominion
Bond
Rating Service
U.S. Bancorp
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1+ R-1 (middle)
Senior debt and medium-term notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa2 AA AA- AA
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa3 AA- A+ AA (low)
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1 A+ A+
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-1 A-1+ F1+ R-1 (middle)
U.S. Bank National Association
Short-term time deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-1 A-1+ F1+ R-1 (high)
Long-term time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa1 AA+ AA AA (high)
Bank notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa1/P-1 AA+/A-1+ AA-/F1+ AA (high)
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa2 AA A+ AA
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-1 A-1+ F1+ R-1 (high)