US Bancorp (USB) profit slips during first-quarter on loss reserves

Posted Apr 15th 2008 11:00AM by Eliza Popescu
Filed under: Earnings Reports

Shares of U.S. Bancorp (NYSE: USB) are slightly higher in early trading despite the fact that the company posted a decline for its first-quarter profit. As Trey Thoelcke discussed, analysts were waiting for the sixth-largest U.S. bank to show smaller profit, but the firm was able to beat by 1 penny analysts' predictions.

For the quarter, US Bancorp announced that its profit slipped 4% to $1.09 billion, compared with $1.13 billion, a year earlier. The drop was tied to impairment charges and higher credit losses provision. The bank posted quarterly earnings of 62 cents per share, slightly higher the 61cents per share that analysts expected.

Taking a look at the company's quarterly revenue, we see a growth of 14% to $1.8 billion. For this period, the Minneapolis-based company also saw an increase of 14% in expenses which rose up to $1.8 billion. Quarterly revenue exceeded analysts' predictions for sales of $3.66 billion, according to Reuters Estimates.

The company stated that its earnings figures include some items, such as a $492 million gain related to Visa Inc. (NYSE: V)'s initial public offering and impairment charges of $253 million related to structured investment. "Continuing stress in the residential real estate markets, including homebuilding and related supplier industries" also forced the bank to set aside $485 million for credit losses.

Looking ahead, Richard Davis, USB's Chief Executive, expects a further stress related to the challenging market conditions. However, Davis believes the company will be able in the near term to manage higher net charge-offs and non-performing assets to avoid problems associated with the subprime mortgage meltdown.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

Tags: credit losses, CreditLosses, earnings, forecast, US Bancorp, usb, UsBancorp, v, Visa