Howlingwolf
07-15-2008, 01:12 PM
http://www.reuters.com/article/ousiv/idUSWNAB069220080715
U.S. Bancorp profit misses view as loan losses mount
Tue Jul 15, 2008
NEW YORK (Reuters) - U.S. Bancorp (USB.N: Quote, Profile, Research, Stock Buzz) posted a larger-than-expected 18 percent decline in quarterly profit on Tuesday after housing-related losses caused it to triple the amount it set aside for bad loans.
"Given the continued stress in the economy, we believe this action is prudent," Chief Executive Richard Davis said in a statement. He said bad loans will continue to rise, and that the sixth-largest U.S. bank doesn't expect to buy back stock for the rest of the year.
The results, from a bank that has avoided the massive credit losses afflicting many rivals, augur poorly for the rest of the nation's banks, many of which are expected to report dismal quarterly results this week and next. U.S. Bancorp is first of the nation's 10 largest banks to report results.
Its shares fell as much as 10.9 percent, before recovering along with much of the sector. In early afternoon trading, the shares were down 29 cents at $23.04.
Second-quarter net income for the Minneapolis-based bank fell to $950 million, or 53 cents per share, from $1.16 billion, or 65 cents, a year earlier.
Analysts on average forecast a profit of 59 cents per share, according to Reuters Estimates. Revenue increased 7 percent to $3.8 billion, matching the average forecast, while expenses rose 10 percent to $1.84 billion.
The bank's shares fell as much as 10.9 percent, before recovering along with much of the sector. In early afternoon trading, the shares were down 29 cents at $23.04.
U.S. Bancorp set aside $596 million for credit losses, triple the year-earlier level, citing the impact of falling housing prices on homeowners, homebuilders and suppliers, as well as on commercial and consumer lending.
Net charge-offs, or loans the bank doesn't expect to be repaid, doubled to $396 million, and nonperforming assets doubled to $1.14 billion. The latter increased 34 percent from $845 million as of March 31.
U.S. Bancorp said the increase in reserves, together with $63 million of securities losses including from structured investments, reduced profit by 11 cents per share. The bank was unavailable for further comment.
Financial shares are under pressure as investors worry about liquidity and capital.
Regulators seized the mortgage lender IndyMac Bancorp Inc (IMB.N: Quote, Profile, Research, Stock Buzz) last week, and shares of such lenders as Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) and Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) have lost well over half of their value.
M&T Bank Corp (MTB.N: Quote, Profile, Research, Stock Buzz), a large mid-Atlantic regional bank, on Monday reported an unexpected increase in credit losses, leading to a 15.6 percent decline that day in its shares.
U.S. Bancorp's lending income increased 16 percent to $1.91 billion, as net interest margin rose to 3.61 percent from 3.44 percent. Non-interest income was little changed at $1.89 billion.
Davis said the bank's Tier-1 capital ratio, which measures the ability to cover losses, was 8.5 percent as of June 30, down from 8.6 percent in March but "on target."
U.S. Bancorp operates 2,542 branches in 24 U.S. states, largely in the western two-thirds of the country. It ended the quarter with $246.5 billion of assets.
Through Monday, U.S. Bancorp shares had fallen 26 percent this year, compared with a 44 percent decline in the KBW Bank Index .BKX.
U.S. Bancorp profit misses view as loan losses mount
Tue Jul 15, 2008
NEW YORK (Reuters) - U.S. Bancorp (USB.N: Quote, Profile, Research, Stock Buzz) posted a larger-than-expected 18 percent decline in quarterly profit on Tuesday after housing-related losses caused it to triple the amount it set aside for bad loans.
"Given the continued stress in the economy, we believe this action is prudent," Chief Executive Richard Davis said in a statement. He said bad loans will continue to rise, and that the sixth-largest U.S. bank doesn't expect to buy back stock for the rest of the year.
The results, from a bank that has avoided the massive credit losses afflicting many rivals, augur poorly for the rest of the nation's banks, many of which are expected to report dismal quarterly results this week and next. U.S. Bancorp is first of the nation's 10 largest banks to report results.
Its shares fell as much as 10.9 percent, before recovering along with much of the sector. In early afternoon trading, the shares were down 29 cents at $23.04.
Second-quarter net income for the Minneapolis-based bank fell to $950 million, or 53 cents per share, from $1.16 billion, or 65 cents, a year earlier.
Analysts on average forecast a profit of 59 cents per share, according to Reuters Estimates. Revenue increased 7 percent to $3.8 billion, matching the average forecast, while expenses rose 10 percent to $1.84 billion.
The bank's shares fell as much as 10.9 percent, before recovering along with much of the sector. In early afternoon trading, the shares were down 29 cents at $23.04.
U.S. Bancorp set aside $596 million for credit losses, triple the year-earlier level, citing the impact of falling housing prices on homeowners, homebuilders and suppliers, as well as on commercial and consumer lending.
Net charge-offs, or loans the bank doesn't expect to be repaid, doubled to $396 million, and nonperforming assets doubled to $1.14 billion. The latter increased 34 percent from $845 million as of March 31.
U.S. Bancorp said the increase in reserves, together with $63 million of securities losses including from structured investments, reduced profit by 11 cents per share. The bank was unavailable for further comment.
Financial shares are under pressure as investors worry about liquidity and capital.
Regulators seized the mortgage lender IndyMac Bancorp Inc (IMB.N: Quote, Profile, Research, Stock Buzz) last week, and shares of such lenders as Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) and Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) have lost well over half of their value.
M&T Bank Corp (MTB.N: Quote, Profile, Research, Stock Buzz), a large mid-Atlantic regional bank, on Monday reported an unexpected increase in credit losses, leading to a 15.6 percent decline that day in its shares.
U.S. Bancorp's lending income increased 16 percent to $1.91 billion, as net interest margin rose to 3.61 percent from 3.44 percent. Non-interest income was little changed at $1.89 billion.
Davis said the bank's Tier-1 capital ratio, which measures the ability to cover losses, was 8.5 percent as of June 30, down from 8.6 percent in March but "on target."
U.S. Bancorp operates 2,542 branches in 24 U.S. states, largely in the western two-thirds of the country. It ended the quarter with $246.5 billion of assets.
Through Monday, U.S. Bancorp shares had fallen 26 percent this year, compared with a 44 percent decline in the KBW Bank Index .BKX.