US Bank 2010 Annual Report Download - page 140

Company’s operational, financial and management
information systems. Additionally, natural disasters may
significantly affect loan portfolios by damaging properties
pledged as collateral and by impairing the ability of certain
borrowers to repay their loans. The nature and level of
natural disasters cannot be predicted and may be
exacerbated by global climate change. The ultimate impact
of a natural disaster on future financial results is difficult to
predict and would be affected by a number of factors,
including the extent of damage to the Company’s assets or
the relevant collateral, the extent to which damaged
collateral is not covered by insurance, the extent to which
unemployment and other economic conditions caused by the
natural disaster adversely affect the ability of borrowers to
repay their loans, and the cost of collection and foreclosure
moratoriums, loan forbearances and other accommodations
granted to borrowers and other customers.
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 the Company’s internally
developed systems and the systems of its third-party service
providers. The Company’s operations are dependent upon its
ability to protect computer equipment against damage from
fire, power loss or telecommunication failure. Any damage
or failure that causes an interruption in its operations could
adversely affect its business and financial results. In addition,
the Company’s 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 its bank subsidiaries and certain of its non-bank
subsidiaries may pay to the Company without regulatory
approval. 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, except to the extent that any of the Company’s
claims as a creditor of that subsidiary may be recognized.
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, as well as
interest rate changes, currency fluctuations, or unforeseen
events such as terrorist attacks could cause the Company’s
stock price to decrease regardless of the Company’s
operating results.
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