U.S. Bancorp to add to mortgage buy-back reserve in Q4: CEO
(Reuters) - U.S. Bancorp (USB.N), the fifth-largest commercial bank in the United States, said Tuesday it would add to its mortgage repurchase reserve in the fourth quarter, as government-backed mortgage financier Freddie Mac steps up buy-back requests.
Freddie Mac (FMCC.OB) and its larger peer, Fannie Mae (FNMA.OB), have been pressing U.S. banks to buy back soured home loans made between 2005 and 2008.
The loans had been bundled into mortgage-backed securities and bought by outside investors, who allege they do not meet guarantees made by the banks when they were sold.
Freddie Mac informed lenders on Friday that it would begin making repurchase demands on mortgages written in 2004 as well, U.S. Bancorp Chief Executive Richard Davis said at an investor conference in New York.
The addition to the reserve will hurt profit by one or two cents per share in the quarter, Davis said.
Analysts on average expect the bank to earn 75 cents per share, excluding special items, according to Thomson Reuters I/B/E/S.
The Minneapolis-based bank's shares were down 1.6 percent at $31.53 on Tuesday on the New York Stock Exchange.
(Reporting by Jochelle Mendonca in New York; Editing by Dan Grebler)