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US Bancorp Feels Some Heat from Housing Woes: The provision for credit losses rose 33%, with construction and homebuilding credits weaking near the end of 2007.
Minneapolis -- U.S. Bancorp here reported a drop in net income of more than 20% in the fourth quarter of 2007 as compared to the same period the year before. The company cited the challenging economic environment facing the financial services industry as a factor in its performance.
Net income in the fourth quarter was $942 million, 21% less than the $1.19 billion reported for the fourth quarter of 2006. Diluted earnings per common share of $0.53 in the fourth quarter were lower than the same period of 2006 by 19.7%, or $0.13 per diluted common share. Return on average assets and return on average common equity were 1.63% and 18.3%, respectively, for the fourth quarter of 2007, compared with returns of 2.18% and 23.2%, respectively, for the same period 12 months earlier.
Several significant items impacted the company's quarterly results, including pretax charges of $215 million for the company's proportionate share of a contingent obligation to indemnify Visa Inc. for certain litigation matters and $107 million for valuation losses related to securities purchased from certain money market funds managed by an affiliate. The cumulative impact of these charges in the fourth quarter of 2007 was $0.13 per diluted common share. U.S. Bancorp's results for the third quarter of 2007 included a $115 million charge for the company's proportionate share of Visa's settlement with American Express, while the fourth quarter of 2006 included a $52 million gain related to the sale of a 401(k) recordkeeping business, a $22 million debt prepayment charge and a reduction in tax liabilities related to the resolution of various income tax examinations.
Average loans for the fourth quarter were $7.8 billion, 5.4% higher than the fourth quarter of 2006, driven by a 7.5% rise in average total ...
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Source: HighBeam Research, US Bancorp Feels Some Heat from Housing Woes: The provision for...