US Bank 2014 Annual Report Download - page 88

Notes to Consolidated Financial Statements
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
U.S. Bancorp is a multi-state financial services holding
company headquartered in Minneapolis, Minnesota.
U.S. Bancorp and its subsidiaries (the “Company”) provide a
full range of financial services, including lending and
depository services through banking offices principally in the
Midwest and West regions of the United States. The Company
also engages in credit card, merchant, and ATM processing,
mortgage banking, insurance, trust and investment
management, brokerage, and leasing activities, principally in
domestic markets.
Basis of Presentation The consolidated financial statements
include the accounts of the Company and its subsidiaries and
all variable interest entities (“VIEs”) for which the Company
has both the power to direct the activities of the VIE that most
significantly impact the VIE’s economic performance, and the
obligation to absorb losses or right to receive benefits of the
VIE that could potentially be significant to the VIE.
Consolidation eliminates all significant intercompany
accounts and transactions. Certain items in prior periods
have been reclassified to conform to the current
presentation.
Uses of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that affect the amounts reported in the financial statements
and accompanying notes. Actual experience could differ from
those estimates.
BUSINESS SEGMENTS
Within the Company, financial performance is measured by
major lines of business based on the products and services
provided to customers through its distribution channels. The
Company has five reportable operating segments:
Wholesale Banking and Commercial Real Estate
Wholesale Banking and Commercial Real Estate offers
lending, equipment finance and small-ticket leasing,
depository services, treasury management, capital markets,
international trade services and other financial services to
middle market, large corporate, commercial real estate,
financial institution, non-profit and public sector clients.
Consumer and Small Business Banking Consumer and
Small Business Banking delivers products and services
through banking offices, telephone servicing and sales, on-
line services, direct mail, ATM processing and mobile
devices, such as mobile phones and tablet computers. It
encompasses community banking, metropolitan banking,
in-store banking, small business banking, consumer lending,
workplace banking, student banking and 24-hour banking
(collectively, the retail banking division), as well as mortgage
banking.
Wealth Management and Securities Services Wealth
Management and Securities Services provides private
banking, financial advisory services, investment
management, retail brokerage services, insurance, trust,
custody and fund servicing through five businesses: Wealth
Management, Corporate Trust Services, U.S. Bancorp Asset
Management, Institutional Trust & Custody and
Fund Services.
Payment Services Payment Services includes consumer and
business credit cards, stored-value cards, debit cards,
corporate, government and purchasing card services,
consumer lines of credit and merchant processing.
Treasury and Corporate Support Treasury and Corporate
Support includes the Company’s investment portfolios, most
covered commercial and commercial real estate loans and
related other real estate owned (“OREO”), funding, capital
management, interest rate risk management, the net effect
of transfer pricing related to average balances, income taxes
not allocated to business lines, including most investments
in tax-advantaged projects, and the residual aggregate of
those expenses associated with corporate activities that are
managed on a consolidated basis.
Segment Results Accounting policies for the lines of
business are the same as those used in preparation of the
consolidated financial statements with respect to activities
specifically attributable to each business line. However, the
preparation of business line results requires management to
allocate funding costs and benefits, expenses and other
financial elements to each line of business. For details of
these methodologies and segment results, see “Basis for
Financial Presentation” and Table 24 “Line of Business
Financial Performance” included in Management’s
Discussion and Analysis which is incorporated by reference
into these Notes to Consolidated Financial Statements.
SECURITIES
Realized gains or losses on securities are determined on a
trade date basis based on the specific amortized cost of the
investments sold.
Trading Securities Debt and equity securities held for resale
are classified as trading securities and are included in other
assets and reported at fair value. Changes in fair value and
realized gains or losses are reported in noninterest income.
86