US Bank 2012 Annual Report Download - page 44

after are with borrowers who met the Company’s program
guidelines and have a credit score that generally is at or below
a threshold of 620 to 650 depending on the program. Sub-
prime loans originated during periods prior to June 2009 were
based upon program level guidelines without regard to credit
score.
Covered loans included $1.3 billion in loans with
negative-amortization payment options at December 31,
2012, compared with $1.5 billion at December 31, 2011.
Other than covered loans, the Company does not have any
residential mortgages with payment schedules that would
cause balances to increase over time.
Home equity and second mortgages were $16.7 billion at
December 31, 2012, compared with $18.1 billion at
December 31, 2011, and included $5.1 billion of home equity
lines in a first lien position and $11.6 billion of home equity
and second mortgage loans and lines in a junior lien position.
Loans and lines in a junior lien position at December 31,
2012, included approximately $3.7 billion of loans and lines
for which the Company also serviced the related first lien
loan, and approximately $7.9 billion where the Company did
not service the related first lien loan. The Company was able
to determine the status of the related first liens using
information the Company has as the servicer of the first lien,
information it received from its primary regulator on loans
serviced by other large servicers or information reported on
customer credit bureau files. The Company also evaluates
other indicators of credit risk for these junior lien loans and
lines including delinquency, estimated average CLTV ratios
and weighted-average credit scores in making its assessment of
credit risk, related loss estimates and determining the
allowance for credit losses.
The following table provides a summary of delinquency
statistics and other credit quality indicators for the Company’s
junior lien positions at December 31, 2012:
Junior Liens Behind
(Dollars in Millions)
Company
Owned or
Serviced
First Lien
Third Party
First Lien Total
Total.................................. $3,673 $7,950 $11,623
Percent 30 – 89 days past due ....... .85% 1.19% 1.08%
Percent 90 days or more past due . . . .26% .28% .27%
Weighted-average CLTV ............. 86% 85% 85%
Weighted-average credit score ...... 750 746 747
See the Analysis and Determination of the Allowance for
Credit Losses section for additional information on how the
Company determines the allowance for credit losses for loans
in a junior lien position.
Credit card and other retail loans principally reflect the
Company’s focus on consumers within its geographical
footprint of branches and certain niche lending activities that
are nationally focused. Approximately 68.6 percent of the
Company’s credit card balances relate to cards originated
through the Company’s branches or co-branded, travel and
affinity programs that generally experience better credit
quality performance than portfolios generated through other
channels.
Tables 9, 10 and 11 provide a geographical summary of
the residential mortgage, credit card and other retail loan
portfolios, respectively.
Assets acquired by the Company in FDIC-assisted
transactions included nonperforming loans and other loans
with characteristics indicative of a high credit risk profile,
including a substantial concentration in California, loans with
negative-amortization payment options, and homebuilder and
other construction finance loans. Because most of these loans
are covered under loss sharing agreements with the FDIC, the
Company’s financial exposure to losses from these assets is
substantially reduced. To the extent actual losses exceed the
Company’s estimates at acquisition, the Company’s financial
risk would only be its share of those losses under the loss
sharing agreements.
40 U.S. BANCORP