US Bank 2013 Annual Report Download - page 105

Company’s Consolidated Balance Sheet were related to the
conduit, compared with $144 million at December 31, 2012.
The Company also sponsors a municipal bond
securities tender option bond program. The Company
controls the activities of the program’s entities, is entitled to
the residual returns and provides credit, liquidity and
remarketing arrangements to the program. As a result, the
Company has consolidated the program’s entities. At
December 31, 2013, $4.6 billion of available-for-sale
securities and $4.6 billion of short-term borrowings on the
Consolidated Balance Sheet were related to the tender
option bond program, compared with $5.3 billion of
available-for-sale securities and $5.0 billion of short-term
borrowings at December 31, 2012.
The Company is not required to consolidate VIEs in
which it has concluded it does not have a controlling
financial interest, and thus is not the primary beneficiary. In
such cases, the Company does not have both the power to
direct the entities’ most significant activities and the
obligation to absorb losses or the right to receive benefits
that could potentially be significant to the VIEs. The
Company’s investments in these unconsolidated VIEs
generally are carried in other assets on the Consolidated
Balance Sheet. The Company’s investments in
unconsolidated VIEs at December 31, 2013 ranged from less
than $1 million to $37 million, with an aggregate amount of
$2.6 billion, net of $1.7 billion of liabilities recorded primarily
for unfunded capital commitments of the Company to
specific project sponsors. The Company’s investments in
unconsolidated VIEs at December 31, 2012, ranged from
less than $1 million to $58 million, with an aggregate amount
of $1.9 billion, net of liabilities of $1.3 billion recorded
primarily for unfunded capital commitments. While the
Company believes potential losses from these investments
are remote, the Company’s maximum exposure to loss from
these unconsolidated VIEs was $7.4 billion at December 31,
2013 and $5.2 billion at December 31, 2012. The maximum
exposure to loss was primarily related to community
development tax-advantaged investments and included $2.5
billion at December 31, 2013 and $1.8 billion at
December 31, 2012, on the Company’s Consolidated
Balance Sheet, and $4.9 billion at December 31, 2013 and
$3.3 billion at December 31, 2012, of previously recorded tax
credits which remain subject to recapture by taxing
authorities based on compliance features required to be met
at the project level. The remaining amounts related to
investments in private investment funds and partnerships for
which the maximum exposure to loss included amounts
recorded on the Consolidated Balance Sheet and any
unfunded commitments. The maximum exposure was
determined by assuming a scenario where the separate
investments within the individual private funds become
worthless, and the community-based business and housing
projects and related tax credits completely fail and do not
meet certain government compliance requirements.
NOTE 8 Premises and Equipment
Premises and equipment at December 31 consisted of the following:
(Dollars in Millions) 2013 2012
Land .................................................................................................................... $ 529 $ 534
Buildings and improvements ............................................................................................ 3,256 3,222
Furniture, fixtures and equipment ....................................................................................... 2,593 2,543
Capitalized building and equipment leases ............................................................................. 103 97
Construction in progress ................................................................................................ 24 42
6,505 6,438
Less accumulated depreciation and amortization ...................................................................... (3,899) (3,768)
Total .................................................................................................................. $ 2,606 $ 2,670
NOTE 9 Mortgage Servicing Rights
The Company serviced $226.8 billion of residential mortgage
loans for others at December 31, 2013, and $215.6 billion at
December 31, 2012. The net impact included in mortgage
banking revenue of fair value changes of MSRs due to
changes in valuation assumptions and derivatives used to
economically hedge MSRs were net gains of $192 million,
$102 million and $183 million for the years ended
December 31, 2013, 2012 and 2011, respectively. Loan
servicing fees, not including valuation changes, included in
mortgage banking revenue, were $754 million, $720 million
and $651 million for the years ended December 31, 2013,
2012 and 2011, respectively.
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