Tuesday, July 15, 2008 - Page updated at 03:00 PM
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US Bancorp second-quarter profit falls 18 percent
U.S. Bancorp's second-quarter earnings fell 18 percent, missing analysts' expectations, as the company more than tripled its provision for credit losses but offered assurances that its credit problems would continue to be manageable. Shares fell nearly 3 percent.
AP Business Writer
U.S. Bancorp's second-quarter earnings fell 18 percent, missing analysts' expectations, as the company more than tripled its provision for credit losses but offered assurances that its credit problems would continue to be manageable. Shares fell nearly 3 percent.
Chief Executive Richard Davis said the Minneapolis-based bank expects to see net charge-offs from bad debt increase in the coming quarter and didn't expect to buy back stock for the rest of the year
However Davis also told analysts on a conference call that would continue to protect the company's dividend. "No bank will protect it harder and hang onto it more than this one," Davis said.
Davis said it was a "buyer's market" for acquisitions in the banking sector, though he added: "We are not shopping, but we're listening."
U.S. Bancorp's earned $950 million, or 53 cents per share, down from $1.16 billion, or 65 cents per share, during the same period last year. The latest results include 11 cents in net securities losses, reflecting write-downs of structured investment securities and the credit-loss provision.
Revenue climbed 7.5 percent to $3.8 billion from $3.54 billion.
Analysts surveyed by Thomson Financial had expected earnings of 59 cents per share on revenue of $3.78 billion.
The company's shares fell 63 cents, or 2.7 percent, to $22.70.
"Despite the miss, U.S. Bancorp posted a pretty decent quarter considering the environment," R. Scott Siefers, managing director at Sandler O'Neill & Partners LP, wrote in a note.
U.S. Bancorp more than tripled its loan-loss provision to $596 million, up from $191 million a year earlier, citing "continuing stress in the residential real estate markets, including homebuilding and related supplier industries."
Net charge-offs were $396 million, compared with $293 million in the first quarter and $191 million in the second quarter of 2007.
U.S. Bancorp, the nation's sixth-largest commercial bank, has avoided many of the mortgage and credit-related problems of some of its peers.
The company said it would consider a deal for a corporate payments business or small traditional branch activities, assuming it introduces "no new risk" to the company.
Copyright © 2008 The Seattle Times Company
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