US Bank 2009 Annual Report Download - page 136

materially different results than would have been reported
under a different alternative.
Certain accounting policies are critical to presenting the
Company’s financial condition and results. They require
management to make difficult, subjective or complex
judgments about matters that are uncertain. Materially
different amounts could be reported under different
conditions or using different assumptions or estimates. These
critical accounting policies include: the allowance for credit
losses; estimations of fair value; the valuation of purchased
loans and related indemnification assets; the valuation of
mortgage servicing rights; the valuation of goodwill and
other intangible assets; and income taxes. Because of the
uncertainty of estimates involved in these matters, the
Company may be required to do one or more of the
following: significantly increase the allowance for credit
losses and/or sustain credit losses that are significantly
higher than the reserve provided; recognize significant
impairment on its goodwill and other intangible asset
balances; or significantly increase its accrued taxes liability.
For more information, refer to “Critical Accounting
Policies” in this Annual Report.
Changes in accounting standards could materially impact
the Company’s financial statements From time to time, the
Financial Accounting Standards Board changes the financial
accounting and reporting standards that govern the
preparation of the Company’s financial statements. These
changes can be hard to predict and can materially impact
how the Company records and reports its financial condition
and results of operations. In some cases, the Company could
be required to apply a new or revised standard retroactively,
resulting in the Company’s restating prior period financial
statements.
Acquisitions may not produce revenue enhancements or
cost savings at levels or within timeframes originally
anticipated and may result in unforeseen integration
difficulties The Company regularly explores opportunities to
acquire financial services businesses or assets and may also
consider opportunities to acquire other banks or financial
institutions. The Company cannot predict the number, size
or timing of acquisitions.
Difficulty in integrating an acquired business or
company may cause the Company not to realize expected
revenue increases, cost savings, increases in geographic or
product presence, and/or other projected benefits from the
acquisition. The integration could result in higher than
expected deposit attrition (run-off), loss of key employees,
disruption of the Company’s business or the business of the
acquired company, or otherwise adversely affect the
Company’s ability to maintain relationships with customers
and employees or achieve the anticipated benefits of the
acquisition. Also, the negative effect of any divestitures
required by regulatory authorities in acquisitions or business
combinations may be greater than expected.
The Company must generally receive federal regulatory
approval before it can acquire a bank or bank holding
company. In determining whether to approve a proposed
bank acquisition, federal bank regulators will consider,
among other factors, the effect of the acquisition on the
competition, financial condition, and future prospects. The
regulators also review current and projected capital ratios
and levels, the competence, experience, and integrity of
management and its record of compliance with laws and
regulations, the convenience and needs of the communities
to be served (including the acquiring institution’s record of
compliance under the Community Reinvestment Act) and
the effectiveness of the acquiring institution in combating
money laundering activities. In addition, the Company
cannot be certain when or if, or on what terms and
conditions, any required regulatory approvals will be
granted. The Company may be required to sell banks or
branches as a condition to receiving regulatory approval.
If new laws were enacted that restrict the ability of the
Company and its subsidiaries to share information about
customers, the Company’s financial results could be
negatively affected The Company’s business model depends
on sharing information among the family of companies
owned by U.S. Bancorp to better satisfy the Company’s
customer needs. Laws that restrict the ability of the
companies owned by U.S. Bancorp to share information
about customers could negatively affect the Company’s
revenue and profit.
The Company’s business could suffer if the Company fails
to attract and retain skilled people The Company’s success
depends, in large part, on its ability to attract and retain key
people. Competition for the best people in most activities the
Company engages in can be intense. The Company may not
be able to hire the best people or to keep them. Recent
strong scrutiny of compensation practices has resulted and
may continue to result in additional regulation and
legislation in this area as well as additional legislative and
regulatory initiatives, and there is no assurance that this will
not cause increased turnover or impede the Company’s
ability to retain and attract the highest caliber employees.
134 U.S. BANCORP