US Bank 2009 Annual Report Download - page 91

For the years ended December 31, 2009, 2008 and
2007, the Company had net gains on the sale of loans of
$710 million, $220 million and $163 million, respectively,
which were included in noninterest income, primarily in
mortgage banking revenue.
The Company has an equity interest in a joint venture
that is accounted for utilizing the equity method. The
principal activities of this entity are to develop land, and
construct and sell residential homes.
The Company provides a warehousing line to this joint
venture. Warehousing advances to the joint venture are
repaid when the sale of loans is completed or the real estate
is permanently refinanced by others. At December 31, 2009
and 2008, the Company had $890 million and $894 million,
respectively, of outstanding advances to this joint venture.
Note 7 Leases
The components of the net investment in sales-type and direct financing leases at December 31 were as follows:
(Dollars in Millions) 2009 2008
Aggregate future minimum lease payments to be received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,797 $12,712
Unguaranteed residual values accruing to the lessor’s benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322 339
Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,539) (1,693)
Initial direct costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 250
Total net investment in sales-type and direct financing leases (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,798 $11,608
(a) The accumulated allowance for uncollectible minimum lease payments was $198 million and $224 million at December 31, 2009 and 2008, respectively.
The minimum future lease payments to be received from sales-type and direct financing leases were as follows at December 31,
2009:
(Dollars in Millions)
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,200
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,288
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,967
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,498
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322
Note 8 Accounting for Transfers and Servicing of Financial Assets and Variable
Interest Entities
When the Company sells financial assets, it may retain
servicing rights and/or other beneficial interests in the
transferred financial assets. The gain or loss on sale depends,
in part, on the previous carrying amount of the transferred
financial assets and the consideration other than beneficial
interests in the transferred assets received in exchange. Upon
transfer, any servicing assets are initially recognized at fair
value. The remaining carrying amount of the transferred
financial asset is allocated between the assets sold and any
interests that continue to be held by the Company based on
the relative fair values as of the date of transfer.
The Company is involved in various entities that are
considered to be variable interest entities (“VIEs”) as defined
by applicable authoritative accounting guidance. Generally, a
VIE is a corporation, partnership, trust or any other legal
structure that does not have equity investors with
substantive voting rights or has equity investors that do not
have sufficient equity at risk for the entity to independently
finance its activities. The Company’s investments in VIEs
primarily represent private investment funds or partnerships
that make equity investments, provide debt financing or
support community-based investments in affordable housing,
development entities that provide capital for communities
located in low-income districts and for historic rehabilitation
projects that may enable the Company to ensure regulatory
compliance with the Community Reinvestment Act. In
addition, the Company sponsors entities to which it transfers
a pool of tax credit investments. These entities are
consolidated by the Company as it continues to absorb the
majority of the entities’ expected losses. The Company
expects to consolidate additional entities and deconsolidate
other entities beginning in 2010 as a result of a change in
accounting rules for VIEs.
U.S. BANCORP 89