US Bancorp reports 65 percent drop in Q4 profit - San Francisco Business Times:

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The bank, long viewed as among the nation’z strongest, saw its stoc dive on the news before rebounding by the end of tradin g inNew York. The bank’s shares gained 50 cents, or 3 to close at $15.84. Minneapolis-based U.S. Bancorlp (NYSE: USB) reported net income of $330 or 15 cents per share, in fourthn quarter 2008, compared with $942 million or 53 centzs per share in the fourth quarterof 2007. The a major player in Bay Area banking, blamed the drop in profitz on challenging market conditions in the fourtb quarterof 2008, when it recorded $253 million in securitiesw losses and boosted loan-loss provisions.
The long known for its conservative lending experienced a sharp increasde introubled loans, signaling more trouble aheads for other banks as unemployment rises. U.S. bank increased its loan-losa provision more than five-fold from a year ago, to $1.27 billion. The provision rose 69 percenf from theprior quarter. The bank’s net charge-offs jumped to 1.42 percent of average loansz from 0.59 percent a year ago and 1.19% in the prior quarter. Nonperforming assets, which are troublecd loans at an earlier stage inthe charge-ofvf cycle, rose to 1.14 percent of loands from 0.88 percent in the prior quarter.
Highlightxs from the quarter included average loan growth of 17 compared to the fourth quarterof 2007. Depositd grew at the bank by 14.2 percent compared to the same quartef ayear ago. “Once again, the company’s results for the quartedr reflected both the strength of our bankinh franchise andbusiness mix, and the challenges facin g our industry today, including rising credit costsx and market valuation risk,” said CEO Richard Davis in a “The results were marked by outstandingg growth in loans and deposits and an expandecd net interest margin, but tempered by the unfavorablde impact of higher credit losses and securitiezs impairments.
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