U.S. Bancorp Earnings Fall, Credit Losses Rise

U.S. Bancorp, the sixth-largest U.S. bank, said on Tuesday first-quarter profit fell about 3.5 percent, on higher provision for credit losses, but managed to beat earnings estimates by a penny.

The Minneapolis-based bank says it earned $1.09 billion, or 62 cents per share down from $1.13 billion, or 63 cents per share, during the same period a year earlier.

U.S. Bancorp shares rose modestly in early morning trading on Tuesday. Recently, the stock was rising 23 cents to $31.90.

Revenue rose 14 percent to $3.87 billion, while expenses also rose 14 percent to $1.8 billion. Analysts polled by Thomson Financial, on average, expected earnings of 61 cents per share.

U.S. Bancorp, along with other banks, enjoyed a boost from a sale of Visa shares in the electronic payment processor's initial public offering in March. The bank booked a $492 million gain related to the initial public offering.

The bank said it set aside $485 million for credit losses, up from $177 million a year earlier, citing continuing stress in the residential real estate markets, including homebuilding and related supplier industries.

Our company's first-quarter results reflected the disciplined approach we have taken toward managing credit and operating risk, while prudently investing for growth, Chairman and Chief Executive Richard K. Davis said in a statement.

I am confident that our company will continue to perform and prosper, despite the current economic environment, he added.

The company said net interest income rose 10 percent from a year earlier to $1.83 billion. Noninterest income increased 19 percent to $2.04 billion.

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

Declining home prices in many of our markets, in addition to stress in the residential home building and mortgage-related industries, are expected to continue through the balance of the year. Given our company's overall credit risk profile, however, we anticipate that expected increases in net charge-offs and nonperforming assets in the near term will continue to be manageable. Davis noted.

Looking ahead this week, California-based Wells Fargo & Co. is due to release first quarter results on Wednesday, April 16. Analysts estimate earnings of $0.57 per share, on revenues of $10.41 billion.

Bank of America Corp. is scheduled to release first-quarter results on Monday, April 21 and analysts estimate earnings of $0.41 per share in the quarter, on revenues of $16.46 billion.