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Commercial loans were positive for U.S. Bank in 4Q14

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U.S. Bank has six main loan segments

U.S. Bank (USB) is largely a pure play bank. Loans are U.S. Bank’s main source of interest revenue. Its loan portfolio can be categorized into five main segments. In the last part of this series, we discussed how loans have been performing.

Now, we’ll look at all of these five loan segments in more detail. We’ll see how the segments have been performing. This will give us a clearer picture of how U.S. Bank is positioned. We’ll start by looking at the commercial loan segment.

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Commercial loan segment

The commercial loan segment is U.S. Bank’s biggest loan segment. It mainly includes loans given to corporates for business-related purposes. Commercial loans accounts for nearly 30% of U.S. Bank’s total loan book. At the end of 4Q14, U.S. Bank’s commercial loans were $74,333 million. This was 16.7% growth—compared to 4Q13. Primarily, the growth has been driven by increased economic activity.

In this segment, the utilization of revolving loan lines also improved in 4Q14. The non-performing assets, net charge-offs, and delinquencies continued to remain at historically low levels for this loan segment.

In this loan segment, U.S. Bank faces stiff competition from big players. Many of these big banks are part of the Financial Select Sector SPDR (XLF).

Big banks—like JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC)—are all strong in the commercial loan segment. These big banks can also disburse loans with a large ticket size. As a result, U.S. Bank mainly focuses on small to medium ticket size loans in this loan segment.

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