US Bank 2014 Annual Report Download - page 111

The following table provides a summary of investments in
community development and tax-advantaged VIEs that the
Company has not consolidated:
At December 31 (Dollars in Millions) 2014 2013
Investment carrying amount................. $4,259 $4,178
Unfunded capital and other commitments... 1,743 1,661
Maximum exposure to loss .................. 8,393 7,390
The Company also has noncontrolling financial
investments in private investment funds and partnerships
considered to be VIEs, which are not consolidated. The
Company’s recorded investment in these entities, carried in
other assets on the Consolidated Balance Sheet, was
approximately $94 million at December 31, 2014, compared
with $98 million at December 31, 2013. The maximum
exposure to loss related to these VIEs was $105 million at
December 31, 2014 and $107 million at December 31, 2013,
representing the Company’s investment balance and its
unfunded commitments to invest additional amounts.
The Company’s individual net investments in
unconsolidated VIEs, which exclude any unfunded capital
commitments, ranged from less than $1 million to $53
million at December 31, 2014, compared with less than $1
million to $37 million at December 31, 2013.
The Company is required to consolidate VIEs in which it
has concluded it has a controlling financial interest. The
Company sponsors entities to which it transfers its interests
in tax-advantaged investments to third parties. At
December 31, 2014, approximately $2.7 billion of the
Company’s assets and $2.0 billion of its liabilities included on
the Consolidated Balance Sheet were related to community
development and tax-advantaged investment VIEs which the
Company has consolidated, primarily related to these
transfers. These amounts compared to $2.5 billion and
$1.8 billion, respectively, at December 31, 2013. The majority
of the assets of these consolidated VIEs are reported in other
assets, and the liabilities are reported in long-term debt and
other liabilities. The assets of a particular VIE are the primary
source of funds to settle its obligations. The creditors of the
VIEs do not have recourse to the general credit of the
Company. The Company’s exposure to the consolidated VIEs
is generally limited to the carrying value of its variable
interestsplusanyrelatedtaxcreditspreviouslyrecognized
or transferred to others with a guarantee.
The Company also sponsors a conduit to which it
previously transferred high-grade investment securities. The
Company consolidates the conduit because of its ability to
manage the activities of the conduit. At December 31, 2014,
$35 million of the held-to-maturity investment securities on
the Company’s Consolidated Balance Sheet were related to
the conduit, compared with $116 million at December 31,
2013.
In addition, the Company 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, 2014, $2.9 billion of available-for-sale
investment securities and $2.7 billion of short-term
borrowings on the Consolidated Balance Sheet were related
to the tender option bond program, compared with $4.6
billion of available-for-sale investment securities and
$4.6 billion of short-term borrowings at December 31, 2013.
NOTE 9 PREMISES AND EQUIPMENT
Premises and equipment at December 31 consisted of the following:
(Dollars in Millions) 2014 2013
Land .................................................................................................................. $ 534 $ 529
Buildings and improvements .......................................................................................... 3,323 3,256
Furniture, fixtures and equipment .................................................................................... 2,719 2,593
Capitalized building and equipment leases ............................................................................ 126 103
Construction in progress .............................................................................................. 26 24
6,728 6,505
Less accumulated depreciation and amortization ..................................................................... (4,110) (3,899)
Total ............................................................................................................... $ 2,618 $ 2,606
NOTE 10 MORTGAGE SERVICING RIGHTS
The Company serviced $225.0 billion of residential mortgage
loans for others at December 31, 2014, and $226.8 billion at
December 31, 2013, which include subserviced mortgages
with no corresponding MSRs asset. 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
$241 million (of which $44 million related to excess servicing
U.S. BANCORP The power of potential
109