US Bancorp 3Q Profit Slips 2 Percent

MINNEAPOLIS — U.S. Bancorp said Tuesday third-quarter earnings slipped 2 percent as operating expenses and credit provisions rose amid trouble on the mortgage and housing markets.

Net income fell to $1.18 billion, or 67 cents per share, in the three months ended Sept. 30 from $1.2 billion, or 66 cents per share, in the year-ago period.

Earnings per share rose because it had fewer shares outstanding in the latest period than a year ago.

Analysts expected a profit of 66 cents per share, according to Thomson Financial.

Noninterest expenses jumped 5.9 percent to $1.63 billion, and the company boosted its provision to cover bad loans by 50 percent to $199 million.

President and CEO Richard Davis said the bad loan charge-off rose because of stress in the home building and mortgage industries.

Net interest income edged up to $1.69 billion, while non-interest income, or earnings from fees and other services, rose 5.5 percent to $1.84 billion.

The company said nonperforming assets increased 13.5 percent to $76 million during the quarter. It blamed the increase on two mortgage banking customers that declared bankruptcy during the quarter, and stress in construction lending.

Davis said non-performing loans rose 13 percent to $641 million since June 30. He said the increase was expected.

"Given the current economic environment, we anticipate that our nonperforming assets will edge higher but that that increase will be modest," he said on a conference call with analysts.

U.S. Bancorp shares fell 10 cents to $32.41 in morning trading Tuesday.

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