US Bank 2003 Annual Report Download - page 32

continued to be soft through year-end given the liquidity of $7.9 billion at December 31, 2002. The Company also
commercial customers. Average commercial loans in 2003 finances the operations of real estate developers and other
decreased by $2.5 billion (5.7 percent). The decline in entities with operations related to real estate. These loans
average commercial loans for 2003 was primarily due to the are not secured directly by real estate and are subject to
run-off of corporate loans and continued softness in loan terms and conditions similar to commercial loans. These
demand, partially offset by the consolidation of loans from loans were included in the commercial loan category and
the Stellar commercial loan conduit in mid-2003. Despite totaled $364 million at December 31, 2003.
recent economic growth, the Company anticipates soft Residential Mortgages Residential mortgages held in the loan
commercial loan demand will continue in early 2004 while portfolio were $13.5 billion at December 31, 2003, an
business customers utilize liquidity to fund business increase of $3.7 billion (38.1 percent) from December 31,
activities. 2002. The increase in residential mortgages was primarily the
Table 7 provides a summary of commercial loans by result of an increase in consumer finance originations and
industry and geographical locations. branch originated home equity loans with first liens driven by
Commercial Real Estate The Company’s portfolio of refinancing activities in 2003. The increase in residential
commercial real estate loans, which includes commercial mortgages also reflects the Company’s asset/liability
mortgages and construction loans, was $27.2 billion at management decisions to retain adjustable-rate mortgage loan
December 31, 2003, compared with $26.9 billion at production. This growth was partially offset by approximately
December 31, 2002, a slight increase of $375 million $1.0 billion in residential loan sales during 2003 primarily
(1.4 percent). Specifically, commercial mortgages representing fixed-rate mortgage loans. Average residential
outstanding and real estate construction and development mortgages increased $3.3 billion (39.0 percent) to
loans increased modestly by $299 million (1.5 percent) and $11.7 billion in 2003, primarily due to the increases in first
$76 million (1.2 percent), respectively, as business owners lien home equity loans and adjustable-rate mortgages.
and real estate investors continued to take advantage of the Retail Total retail loans outstanding, which include credit
current interest rate environment. Average commercial real card, retail leasing, home equity and second mortgages and
estate loans increased by $1.4 billion (5.5 percent) in 2003, other retail loans, were $39.0 billion at December 31, 2003,
compared with 2002, primarily driven by increased compared with $37.7 billion at December 31, 2002. The
commercial mortgage activity. Table 9 provides a summary increase of $1.3 billion (3.5 percent) was driven by an
of commercial real estate by property type and geographical increase in automobile loans, retail leasing, credit card
locations. lending and student loans, which increased $822 million,
The Company maintains the real estate construction $349 million, $268 million and $227 million, respectively,
designation until the completion of the construction phase during 2003. This growth was partially offset by declines in
and, if retained, the loan is reclassified to the commercial home equity and second mortgage loans as consumers
mortgage category. Approximately $1.4 billion of refinanced with first lien home equity products classified as
construction loans were permanently financed and residential mortgages. Average retail loans increased
transferred to the commercial mortgage loan category in $1.7 billion (4.6 percent) to $38.2 billion in 2003, reflecting
2003. At year-end 2003, $205 million of tax-exempt growth in retail leasing, installment loans and home equity
industrial development loans were secured by real estate. lines. Growth in these retail products was offset somewhat
The Company’s commercial real estate mortgages and by a 1.9 percent decline in average credit card balances
construction loans had unfunded commitments of primarily due to portfolio sales in late 2002 and lower
$7.3 billion at December 31, 2003, compared with
Selected Loan Maturity Distribution
Over One
One Year Through Over Five
December 31, 2003 (Dollars in Millions) or Less Five Years Years Total
Commercial *********************************************************** $19,028 $17,008 $ 2,490 $ 38,526
Commercial real estate************************************************* 7,162 13,699 6,381 27,242
Residential mortgages ************************************************* 914 2,382 10,161 13,457
Retail **************************************************************** 11,977 17,373 9,660 39,010
Total loans********************************************************* $39,081 $50,462 $28,692 $118,235
Total of loans due after one year with
Predetermined interest rates ***************************************** $ 40,339
Floating interest rates *********************************************** $ 38,815
30 U.S. Bancorp
Table 8