US Bank 2014 Annual Report Download - page 64

TABLE 21 CONTRACTUAL OBLIGATIONS
Payments Due By Period
At December 31, 2014 (Dollars in Millions)
One Year
or Less
Over One
Through
Three Years
Over Three
Through
Five Years
Over Five
Years Total
Contractual Obligations(a)
Long-term debt(b) .............................................. $ 4,754 $13,478 $ 7,012 $7,016 $32,260
Operating leases .............................................. 265 444 300 503 1,512
Purchase obligations .......................................... 269 287 98 18 672
Benefit obligations(c) ........................................... 21 43 46 150 260
Time deposits ................................................. 30,417 5,803 2,338 9 38,567
Contractual interest payments(d) ............................... 868 1,061 693 821 3,443
Equity investment commitments .............................. 1,331 396 19 21 1,767
Total ........................................................ $37,925 $21,512 $10,506 $8,538 $78,481
(a) Unrecognized tax positions of $267 million at December 31, 2014, are excluded as the Company cannot make a reasonably reliable estimate of the period of cash settlement with the respective
taxing authority.
(b) Includes obligations under capital leases.
(c) Amounts only include obligations related to the unfunded non-qualified pension plans.
(d) Includes accrued interest and future contractual interest obligations.
Dividend payments to the Company by its subsidiary
bank are subject to regulatory review and statutory
limitations and, in some instances, regulatory approval. In
general, dividends to the parent company from its banking
subsidiary are limited by rules which compare dividends to
net income for regulatorily-defined periods. For further
information, see Note 24 of the Notes to Consolidated
Financial Statements.
In 2010, the Basel Committee on Banking Supervision
issued Basel III, a global regulatory framework proposed to
enhance international capital and liquidity standards. During
2014, U.S. banking regulators approved a final regulatory
Liquidity Coverage Ratio (“LCR”), similar to the measure
proposed by the Basel Committee as part of Basel III,
requiring banks to maintain an adequate level of
unencumbered high quality liquid assets to meet estimated
liquidity needs over a 30-day stressed period. The LCR
requirement is effective for the Company beginning January 1,
2015, subject to certain transition provisions over the next two
years to full implementation by January 1, 2017. The Company
currently exceeds the fully implemented LCR requirement
based on its interpretation of the U.S. final LCR rule.
European Exposures Certain European countries have
experienced severe credit deterioration. The Company does
not hold sovereign debt of any European country, but may
have indirect exposure to sovereign debt through its
investments in, and transactions with, European banks. At
December 31, 2014, the Company had investments in
perpetual preferred stock issued by European banks with an
amortized cost totaling $66 million and unrealized losses
totaling $2 million, compared with an amortized cost totaling
$70 million and unrealized losses totaling $7 million, at
December 31, 2013. The Company also transacts with various
European banks as counterparties to interest rate,
mortgage-related and foreign currency derivatives for its
hedging and customer-related activities; however, none of
these banks are domiciled in the countries experiencing the
most significant credit deterioration. These derivatives are
subject to master netting arrangements. In addition, interest
rate and foreign currency derivative transactions are subject
to collateral arrangements which significantly limit the
Company’s exposure to loss as they generally require daily
posting of collateral. At December 31, 2014, the Company
was in a net receivable position with three banks in the
United Kingdom, one bank in Germany, one bank in France,
and one bank in Switzerland, totaling $30 million. The
Company was in a net payable position to each of the other
European banks.
The Company has not bought or sold credit protection
on the debt of any European country or any company
domiciled in Europe, nor does it provide retail lending
services in Europe. While the Company does not offer
commercial lending services in Europe, it does provide
financing to domestic multinational corporations that
generate revenue from customers in European countries and
provides a limited number of corporate credit cards to their
European subsidiaries. While an economic downturn in
Europe could have a negative impact on these customers’
revenues, it is unlikely that any effect on the overall credit
worthiness of these multinational corporations would be
material to the Company.
The Company provides merchant processing and
corporate trust services in Europe either directly or through
banking affiliations in Europe. Operating cash for these
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