U.S. Bancorp profit sinks as loan losses loom

U.S. Bancorp more than doubled its provision for credit losses in the first quarter, dragging its profit down by 52 percent.

The Minneapolis-based holding company on Tuesday reported net income of $529 million for the quarter, down from $1.09 billion in first-quarter 2008. Earnings per share were 24 cents, compared to 62 cents per share in first-quarter 2008.

The bank's provision for credit losses totaled $1.31 billion, up from $485 million in the same period a year ago. The provision exceeded net charge-offs by $530 million; total net charge-offs were 24.7 percent higher than in the prior quarter, while nonperforming assets increased 30 percent.

"Credit costs continued to rise this quarter - an expected consequence of the weak economy and the primary contributor to the reduction in net income year-over-year," U.S. Bancorp Chairman, President and CEO Richard K. Davis said in the earnings release. "Stress in residential housing-related industry sectors continued to have an impact on our consumer and commercial customers, and the increases in net charge-offs and the level of nonperforming assets are a direct result of that stress."

Shares (NYSE: USB) closed Tuesday at $19.27, compared to a 52-week range of $8.06 to $42.23.