U.S. Bancorp Tops Estimates Despite Loan Losses

U.S. Bancorp said Tuesday morning its Q3 net income fell 2.2% to $1.18 billion ($0.67/share), from $1.2 billion ($0.66/share) in Q3 2006, hurt by higher loan losses stemming from difficulties in the mortgage banking and home-building sectors, but still topped analyst forecasts. Revenue was up 3.2% to $3.53 billion. Analysts forecast EPS of $0.66 on revenue of $3.54 billion, according to a Reuters poll. "Despite the very challenging economic environment, our Company's earnings remained solid, reflecting our core financial strength," CEO Richard K. Davis said (full earnings transcript later today). USB, which is the holding company for U.S. Bank and provides commercial banking and financial services, set aside $199 million for credit charge-offs, up 47% from $135 million a year ago, due primarily to an increase in credit cards charge-offs and mildly higher commercial loan net charge-offs, adding it anticipates higher delinquencies over the next several quarters. "Looking ahead, we would expect that the continuing pressures felt by both businesses and consumers related to the residential mortgage and homebuilding industries will lead to somewhat higher net charge-offs and nonperforming assets. These increases should, however, be very manageable for our company," it said. Shares are down 10.2% YTD.

Sources: Press release, MarketWatch
Commentary: U.S. Bancorp Gains Momentum • U.S. Bancorp Has Nice Dividend Growth Despite Declining Fundamentals
Stocks to watch: USB. Competitors: BAC, JPM, WFC. ETFs: IAT, RKH

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