Earnings Preview: U.S. Bancorp (NYSE: USB) Third Quarter 2010
Tuesday, October 19, 2010 2:45 PM

U.S. Bancorp (NYSE: USB) is scheduled to release third-quarter earnings before the opening bell on Wednesday, October 20, 2010. Analysts, on average, expect the company to report earnings of 43 cents per share on revenue of $4.4 billion. In the year-ago quarter, the company reported earnings of 30 cents per share on revenue of $4.20 billion.
U.S. Bancorp, a financial bank holding company, provides various banking and financial services in the United States. It generates various deposit products, including checking accounts, savings accounts, money market savings, and time certificates of deposit accounts. The company operates 3,002 banking offices in 24 states and 5,309 ATMs and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions.

In the preceding second-quarter, the Minneapolis, Minnesota-based company's net income was $862 million, or 45 cents a share, compared to $221 million, or 12 cents, in the year-ago quarter. On a taxable-equivalent basis, total net revenue increased 8.7% to $4.52 billion from $4.16 billion. Analysts, on average, expected the company to report earnings of 38 cents per share on revenue of $4.35 billion.  The provision for possible losses on bad loans fell 18% to $1.14 billion from $1.4 billion. Nonperforming assets decreased 7.8 percent from first quarter of 2010. Total average deposits increased by $20.1 billion over the same quarter of last year and $800 million on a linked-quarter basis. Nonperforming assets, excluding covered assets decreased by $261 million or 7%.

The company's Tier 1 capital ratio was 10.1% and Tier 1 common ratio was 7.4 percent at June 30th, both above the ratios posted at the end of the first quarter of 9.9 percent and 7.1 percent, respectively.

At its last earnings call in July, the company said that legislative actions and pricing changes reduced revenue in the first half of 2010 by approximately $60 million, and will reduce revenue by an additional $170 million to $220 million in the second half of this year, bringing its total full year estimate between $230 million to $280 million. The company said that Card Act has impacted both its net interest income and fee income, with impact totaling approximately $50 million at the end of second quarter. Card Act is expected to reduce revenue further by approximately $120 million to $140 million in the second half of 2010. The total year impact will be in the range of $170 million to $190 million.

Among other developments, U.S. Bancorp recently announced that it will receive a 9.5 percent stake in Chicago-based Nuveen Investments and cash consideration in exchange for the long-term asset management business of FAF Advisors. FAF, an affiliate of U.S. Bancorp, is advisor to the First American Funds family of mutual funds.

In terms of stock performance, U.S. Bancorp shares have lost nearly 1% since the beginning of the year.

Disclosure: Author doesn't own any of the stocks discussed here.


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