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U.S. Bancorp Profit Little Changed on Bad-Loan Provision

Oct. 16 (Bloomberg) -- U.S. Bancorp, the nation’s biggest regional lender, said third-quarter profit was little changed as revenue fell and the bank set aside less money for bad loans.

Net income dropped 0.4 percent to $1.468 billion, or 76 cents a share, from $1.474 billion, or 74 cents, a year earlier, the Minneapolis-based bank said today in a statement. The average estimate of 34 analysts surveyed by Bloomberg was for earnings of 76 cents.

Chief Executive Officer Richard Davis told investors at a conference last month that the company was having a “very good quarter” amid loan growth from the previous three-month period. The company is also focusing on bolstering fees from businesses including wealth management and trust. U.S. Bancorp reported loan-loss provisions of $298 million in the third quarter, down 39 percent from a year earlier.

“We’re quite the quality bank, so even when there’s any question in the economy about what might be otherwise negative, we tend to get the benefits that accrue to that on the lending side as well as on the deposit-gathering side,” Davis, 55, said today on a conference call. Loan growth will be about 1 percent to 1.5 percent in the fourth quarter, he said.

U.S. Bancorp rose 1.8 percent to $37.56 at 10:02 a.m. in New York, roughly matching the gain in the KBW Bank Index. The share have climbed 18 percent this year, compared with the 26 percent advance of the 24-company index.

Share Repurchases

Total revenue declined 5.6 percent from a year earlier to $4.89 billion, led by a 37 percent drop in mortgage banking revenue, which fell to $328 million. Net interest margin, the difference between what a bank pays for deposits and charges for loans, narrowed to 3.43 percent from 3.59 percent a year earlier.

During the third quarter, the company repurchased $659 million of common shares, according to the statement.

A jump in the 10-year Treasury yield in the period prompted a decline in mortgage revenues at the biggest U.S. banks as fewer borrowers refinanced loans. JPMorgan Chase & Co., the largest U.S. lender, said last week that mortgage fees and related revenue plunged 65 percent to $839 million in the third quarter. Mortgage banking revenue at Wells Fargo & Co. declined 43 percent to $1.61 billion, the San Francisco-based lender said.

U.S. Bancorp Chief Financial Officer Andrew Cecere said last month mortgage applications would fall 40 percent in the third quarter, mortgage production would decline 20 percent and mortgage revenue would drop 20 percent.

To contact the reporter on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net.

To contact the editor responsible for this story: Christine Harper at charper@bloomberg.net; David Scheer at dscheer@bloomberg.net

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