US Bank 2013 Annual Report Download - page 46

Short-term Modifications The Company makes short-
term modifications that it does not consider to be TDRs, in
limited circumstances, to assist borrowers experiencing
temporary hardships. Consumer lending programs include
payment reductions, deferrals of up to three past due
payments, and the ability to return to current status if the
borrower makes required payments. The Company may also
make short-term modifications to commercial lending loans,
with the most common modification being an extension of
the maturity date of three months or less. Such extensions
generally are used when the maturity date is imminent and
the borrower is experiencing some level of financial stress,
but the Company believes the borrower will pay all
contractual amounts owed. Short-term modifications were
not material at December 31, 2013.
Nonperforming Assets The level of nonperforming assets
represents another indicator of the potential for future credit
losses. Nonperforming assets include nonaccrual loans,
restructured loans not performing in accordance with
modified terms and not accruing interest, restructured loans
that have not met the performance period required to return
to accrual status, other real estate owned and other
nonperforming assets owned by the Company.
Nonperforming assets are generally either originated by the
Company or acquired under FDIC loss sharing agreements
that substantially reduce the risk of credit losses to the
Company. Interest payments collected from assets on
nonaccrual status are generally applied against the principal
balance and not recorded as income. However, interest
income may be recognized for interest payments if the
remaining carrying amount of the loan is believed to be
collectible.
At December 31, 2013, total nonperforming assets were
$2.0 billion, compared with $2.7 billion at December 31,
2012 and $3.8 billion at December 31, 2011. Excluding
covered assets, nonperforming assets were $1.8 billion at
December 31, 2013, compared with $2.1 billion at
December 31, 2012 and $2.6 billion at December 31, 2011.
The $275 million (13.2 percent) decrease in nonperforming
assets, excluding covered assets, from December 31, 2012
to December 31, 2013, was primarily driven by reductions in
the commercial mortgage and construction and
development portfolios, as well as credit card loans.
Nonperforming covered assets at December 31, 2013 were
$224 million, compared with $583 million at December 31,
2012 and $1.2 billion at December 31, 2011. These assets
are covered by loss sharing agreements with the FDIC that
substantially reduce the risk of credit losses to the Company.
The ratio of total nonperforming assets to total loans and
other real estate was .86 percent (.80 percent excluding
covered assets) at December 31, 2013, compared with
1.19 percent (.98 percent excluding covered assets) at
December 31, 2012 and 1.79 percent (1.32 percent
excluding covered assets) at December 31, 2011.
Other real estate owned, excluding covered assets, was
$327 million at December 31, 2013, compared with
$381 million at December 31, 2012 and $404 million at
December 31, 2011, and was related to foreclosed
properties that previously secured loan balances. These
balances exclude foreclosed GNMA loans whose
repayments are primarily insured by the Federal Housing
Administration or guaranteed by the Department of Veterans
Affairs.
The following table provides an analysis of other real estate
owned, excluding covered assets, as a percent of their
related loan balances, including geographical location
detail for residential (residential mortgage, home equity and
second mortgage) and commercial (commercial and
commercial real estate) loan balances:
At December 31
(Dollars in Millions)
Amount
As a Percent of Ending
Loan Balances
2013 2012 2013 2012
Residential
Florida ..................... $ 17 $ 14 1.03% 1.55%
Ohio ....................... 17 13 .52 .51
Washington ............... 16 14 .40 .38
California .................. 15 16 .13 .18
Minnesota ................. 15 20 .24 .34
All other states ............ 186 191 .47 .49
Total residential......... 266 268 .40 .44
Commercial
California .................. 14 8 .08 .05
Missouri ................... 14 17 .30 .37
Tennessee ................ 5 7 .25 .41
Oregon .................... 3 5 .07 .13
Wisconsin ................. 3 3 .06 .06
All other states ............ 22 73 .03 .10
Total commercial ....... 61 113 .06 .11
Total ................. $327 $381 .14% .18%
44 U.S. BANCORP