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US Bancorp net tops view,sees no credit Armageddon
April 15, 2008 / 12:25 PM / 9 years ago

US Bancorp net tops view,sees no credit Armageddon

NEW YORK (Reuters) - U.S. Bancorp (USB.N), the sixth-largest U.S. bank, said on Tuesday first-quarter profit fell 4 percent, but results topped forecasts as increases in credit card and mortgage banking revenue helped offset weaker credit quality tied to the housing crisis.

Net income for the Minneapolis-based company fell to $1.09 billion, or 62 cents per share, from $1.13 billion, or 63 cents, a year earlier.

Revenue rose 14 percent to $3.87 billion, while expenses also rose 14 percent to $1.8 billion. Fee income jumped 19 percent, helped by gains of 20 percent in credit and debit cards and 57 percent from mortgage banking.

Analysts on average expected profit of 61 cents per share on revenue of $3.66 billion, according to Reuters Estimates.

U.S. Bancorp said it set aside $485 million for credit losses, up from $177 million a year earlier, citing stress in residential real estate markets, including homebuilding and suppliers. Hard-hit regions include California, Arizona, Michigan, Nevada and Ohio, the bank said.

Net charge-offs rose to $293 million from $177 million, and nonperforming assets rose 45 percent to $845 million.

Chief Executive Richard Davis said annual net charge-offs may approach a “manageable” 1 percent of total loans, slightly higher than the bank had forecast and up from 0.76 percent in the first quarter.

“It’s not going to be Armageddon under any circumstances I can see,” Davis said on a conference call. “In the next 90 days, we’ll learn a great deal on the trajectory of the rest of year.”

U.S. Bancorp shares were down 23 cents, or 0.7 percent, at $31.44 in morning trading on the New York Stock Exchange.

Results included a $492 million gain related to Visa Inc’s (V.N) initial public offering, and $253 million of write-downs from buying complex debt from money market funds managed by an affiliate, the bank said.

Net interest margin, the difference between what the bank earns on loans and pays on deposits, rose to 3.55 percent from 3.51 percent.

U.S. Bancorp operates 2,522 branches in 24 U.S. states, largely in the western two-thirds of the country. It ended the quarter with $241.8 billion of assets.

Through Monday, U.S. Bancorp shares were little changed this year, compared with a 15 percent decline in the Philadelphia KBW Bank Index .BKX.

Editing by Dave Zimmerman;

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