US Bank 2007 Annual Report Download - page 79

eliminate separate recognition of the acquired allowance for
loan losses on the acquirer’s balance sheet as credit related
factors will be incorporated directly into the fair value of the
loans recorded at the acquisition date. Other significant
changes include recognizing transaction costs and most
restructuring costs as expenses when incurred. Early
adoption is not permitted. The Company is currently
assessing the impact of this guidance on potential future
business combinations that may occur on or after the
January 1, 2009 effective date.
Noncontrolling Interests In December 2007, the FASB issued
Statement of Financial Accounting Standards No. 160
(“SFAS 160”), “Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51”,
effective for the Company beginning on January 1, 2009.
SFAS 160 will change the accounting and reporting for
minority interests, which will be recharacterized as
noncontrolling interests and classified as a component of
equity, separate from the Company’s own equity, in the
consolidated balance sheet. This Statement also requires the
amount of net income attributable to the entity and to the
noncontrolling interests to be shown separately on the face
of the consolidated statement of income. SFAS 160 also
requires expanded disclosures that clearly identify and
distinguish between the interests of the entity and those of
the noncontrolling owners. The Company is currently
assessing the impact of this guidance on its financial
statements.
Loan Commitments In November 2007, the Securities and
Exchange Commission (“SEC”) issued Staff Accounting
Bulletin No. 109 (“SAB 109”), “Written Loan Commitments
Recorded at Fair Value Through Earnings”, which revises
and rescinds portions of Staff Accounting Bulletin No. 105,
“Application of Accounting Principles to Loan
Commitments.” SAB 109 is effective for written loan
commitments issued or modified by the Company beginning
on January 1, 2008. SAB 109 provides the SEC’s views on
the accounting for written loan commitments recorded at
fair value through earnings under accounting principles
generally accepted in the United States, and specifically
states that the expected net future cash flows related to the
servicing of a loan should be included in the measurement of
all such written loan commitments. The adoption of SAB 109
is not expected to have a material impact on the Company’s
financial statements.
Fair Value Option In February 2007, the FASB issued
Statement of Financial Accounting Standards No. 159
(“SFAS 159”), “The Fair Value Option for Financial Assets
and Financial Liabilities”, effective for the Company
beginning on January 1, 2008. This Statement provides
entities with an option to report selected financial assets and
liabilities at fair value, with the objective to reduce both the
complexity in accounting for financial instruments and the
volatility in earnings caused by measuring related assets and
liabilities differently. The Company’s adoption of SFAS 159
is not expected to have a material impact on the Company’s
financial statements.
Fair Value Measurements In September 2006, the FASB
issued Statement of Financial Accounting Standards No. 157
(“SFAS 157”), “Fair Value Measurements”, effective for the
Company beginning on January 1, 2008. This Statement
defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair value
measurements. This Statement provides a consistent
definition of fair value which focuses on exit price and
prioritizes market-based inputs obtained from sources
independent of the entity over those from the entity’s own
inputs that are not corroborated by observable market data.
SFAS 157 also requires consideration of nonperformance
risk when determining fair value measurements.
This Statement expands disclosures about the use of fair
value to measure assets and liabilities in interim and annual
periods subsequent to initial recognition. The disclosures
focus on the inputs used to measure fair value, and for
recurring fair value measurements using significant
unobservable inputs, the effect of the measurements on
earnings or changes in net assets for the period. The
Company’s adoption of SFAS 157 will result in certain
changes in the measurement of fair value and, at the time of
adoption, is expected to reduce earnings per diluted common
share by two cents in the first quarter of 2008.
Uncertainty in Income Taxes In June 2006, the FASB issued
Interpretation No. 48 (“FIN 48”), “Accounting for
Uncertainty in Income Taxes, an interpretation of FASB
Statement No. 109, Accounting for Income Taxes”, effective
for the Company beginning on January 1, 2007. FIN 48
clarifies the recognition threshold a tax position is required
to meet before being recognized in the financial statements.
FIN 48 also provides guidance on disclosure and other
matters. The adoption of FIN 48 did not have a material
impact on the Company’s financial statements.
Note 3 RESTRICTIONS ON CASH AND DUE
FROM BANKS
The Federal Reserve Bank requires bank subsidiaries to
maintain minimum average reserve balances. The amount of
the reserve requirement was approximately $1.0 billion at
December 31, 2007.
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