US Bank 2008 Annual Report Download - page 72

Notes to Consolidated Financial Statements
Note 1 SIGNIFICANT ACCOUNTING POLICIES
U.S. Bancorp and its subsidiaries (the “Company”) is a
multi-state financial services holding company headquartered
in Minneapolis, Minnesota. The Company provides a full
range of financial services including lending and depository
services through banking offices principally in 24 states. The
Company also engages in credit card, merchant, and ATM
processing, mortgage banking, insurance, trust and
investment management, brokerage, and leasing activities
principally in domestic markets.
Basis of Presentation The consolidated financial statements
include the accounts of the Company and its subsidiaries
and all variable interest entities (“VIEs”) for which the
Company is the primary beneficiary. Consolidation
eliminates all significant intercompany accounts and
transactions. Certain items in prior periods have been
reclassified to conform to the current presentation.
Uses of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that affect the amounts reported in the financial statements
and accompanying notes. Actual experience could differ
from those estimates.
BUSINESS SEGMENTS
Within the Company, financial performance is measured by
major lines of business based on the products and services
provided to customers through its distribution channels. The
Company has five reportable operating segments:
Wholesale Banking Wholesale Banking offers lending,
equipment finance and small-ticket leasing, depository,
treasury management, capital markets, foreign exchange,
international trade services and other financial services to
middle market, large corporate, commercial real estate and
public sector clients.
Consumer Banking Consumer Banking delivers products and
services through banking offices, telephone servicing and
sales, on-line services, direct mail and ATM processing. It
encompasses community banking, metropolitan banking, in-
store banking, small business banking, consumer lending,
mortgage banking, consumer finance, workplace banking,
student banking and 24-hour banking.
Wealth Management & Securities Services Wealth
Management & Securities Services provides trust, private
banking, financial advisory, investment management, retail
brokerage services, insurance, custody and mutual fund
servicing through five businesses: Wealth Management,
Corporate Trust, FAF Advisors, Institutional Trust &
Custody and Fund Services.
Payment Services Payment Services includes consumer and
business credit cards, stored-value cards, debit cards,
corporate and purchasing card services, consumer lines of
credit and merchant processing.
Treasury and Corporate Support Treasury and Corporate
Support includes the Company’s investment portfolios,
funding, capital management, asset securitization, interest
rate risk management, the net effect of transfer pricing
related to average balances and the residual aggregate of
those expenses associated with corporate activities that are
managed on a consolidated basis.
Segment Results Accounting policies for the lines of
business are the same as those used in preparation of the
consolidated financial statements with respect to activities
specifically attributable to each business line. However, the
preparation of business line results requires management to
allocate funding costs and benefits, expenses and other
financial elements to each line of business. For details of
these methodologies and segment results, see “Basis for
Financial Presentation” and Table 23 “Line of Business
Financial Performance” included in Management’s
Discussion and Analysis which is incorporated by reference
into these Notes to Consolidated Financial Statements.
SECURITIES
Realized gains or losses on securities are determined on a
trade date basis based on the specific amortized cost of the
investments sold.
Trading Securities Debt and equity securities held for resale
are classified as trading securities and reported at fair value.
Realized gains or losses are reported in noninterest income.
Available-for-sale Securities These securities are not trading
securities but may be sold before maturity in response to
changes in the Company’s interest rate risk profile, funding
needs, demand for collateralized deposits by public entities
or other reasons. Available-for-sale securities are carried at
fair value with unrealized net gains or losses reported within
other comprehensive income (loss) in shareholders’ equity.
Declines in fair value considered other-than-temporary, if any,
are reported in noninterest income.
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