US Bank 2008 Annual Report Download - page 128

Significant legal actions could subject the Company to
substantial uninsured liabilities The Company is from time
to time subject to claims related to its operations. These
claims and legal actions, including supervisory actions by the
Company’s regulators, could involve large monetary claims
and significant defense costs. To protect itself from the cost
of these claims, the Company maintains insurance coverage
in amounts and with deductibles that it believes are
appropriate for its operations. However, the Company’s
insurance coverage may not cover all claims against the
Company or continue to be available to the Company at a
reasonable cost. As a result, the Company may be exposed
to substantial uninsured liabilities, which could adversely
affect the Company’s results of operations and financial
condition.
The Company is exposed to risk of environmental liability
when it takes title to properties In the course of the
Company’s business, the Company may foreclose on and
take title to real estate. As a result, the Company could be
subject to environmental liabilities with respect to these
properties. The Company may be held liable to a
governmental entity or to third parties for property damage,
personal injury, investigation and clean-up costs incurred by
these parties in connection with environmental
contamination or may be required to investigate or clean up
hazardous or toxic substances or chemical releases at a
property. The costs associated with investigation or
remediation activities could be substantial. In addition, if the
Company is the owner or former owner of a contaminated
site, it may be subject to common law claims by third
parties based on damages and costs resulting from
environmental contamination emanating from the property.
If the Company becomes subject to significant
environmental liabilities, its financial condition and results
of operations could be adversely affected.
A natural disaster could harm the Company’s business
Natural disasters could harm the Company’s operations
through interference with communications, including the
interruption or loss of the Company’s websites, which would
prevent the Company from gathering deposits, originating
loans and processing and controlling its flow of business, as
well as through the destruction of facilities and the
Company’s operational, financial and management
information systems.
The Company faces systems failure risks as well as
security risks, including “hacking” and “identity theft” The
computer systems and network infrastructure the Company
and others use could be vulnerable to unforeseen problems.
These problems may arise in both our internally developed
systems and the systems of our third-party service providers.
Our operations are dependent upon our ability to protect
computer equipment against damage from fire, power loss
or telecommunication failure. Any damage or failure that
causes an interruption in our operations could adversely
affect our business and financial results. In addition, our
computer systems and network infrastructure present
security risks, and could be susceptible to hacking or identity
theft.
The Company relies on dividends from its subsidiaries for
its liquidity needs The Company is a separate and distinct
legal entity from its bank subsidiaries and non-bank
subsidiaries. The Company receives substantially all of its
cash from dividends paid by its subsidiaries. These dividends
are the principal source of funds to pay dividends on the
Company’s stock and interest and principal on its debt.
Various federal and state laws and regulations limit the
amount of dividends that our bank subsidiaries and certain
of our non-bank subsidiaries may pay to the Company. Also,
the Company’s right to participate in a distribution of assets
upon a subsidiary’s liquidation or reorganization is subject
to prior claims of the subsidiary’s creditors.
The Company has non-banking businesses that are subject
to various risks and uncertainties The Company is a
diversified financial services company, and the Company’s
business model is based on a mix of businesses that provide
a broad range of products and services delivered through
multiple distribution channels. In addition to banking, the
Company provides payment services, investments, mortgages
and corporate and personal trust services. Although the
Company believes its diversity helps lessen the effect of
downturns in any one segment of its industry, it also means
the Company’s earnings could be subject to various specific
risks and uncertainties related to these non-banking
businesses.
The Company’s stock price can be volatile The Company’s
stock price can fluctuate widely in response to a variety of factors,
including: actual or anticipated variations in the Company’s
quarterly operating results; recommendations by securities analysts;
significant acquisitions or business combinations; strategic
partnerships, joint ventures or capital commitments by or involving
the Company or the Company’s competitors; operating and stock
price performance of other companies that investors deem
comparable to the Company; new technology used or services
offered by the Company’s competitors; news reports relating to
trends, concerns and other issues in the financial services industry;
and changes in government regulations. General market
fluctuations, industry factors and general economic and political
conditions and events have recently caused a significant decline in
the Company’s stock price, and these factors as well as interest rate
changes, continued unfavorable credit loss trends, currency
fluctuations, or unforeseen events such as terrorist attacks could
cause the Company’s stock price to continue to decrease regardless
of the Company’s operating results.
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