USB Sees Higher HE Charge-Offs
Minneapolis-U.S. Bancorp's residential and commercial mortgage portfolios grew at a strong clip in 2008, as the company expanded its presence in the mortgage space through acquisitions of troubled banks.
The company, which acquired Downey Savings and Loan as well as PFF Bank and Trust late last year from the FDIC, earned net income of $330 million in the fourth quarter of 2008, down 65% from $942 million in the fourth quarter of 2007.
CEO Richard Davis stressed that USB remains "open for business" despite the troubled economy.
The company's portfolio included $23.4 billion of residential mortgages at the end of the year, up 3.4% from one year earlier.
It also saw its commercial mortgage portfolio grow 16% year-over-year to $22.9 billion, fueled in part by the acquisitions.
Home-equity products totaled $18.7 billion, up 14% year-over-year. The 4Q08 provision for credit losses was $1.3 billion, about double the bank's net charge-offs for the quarter.
USB blamed declining home values for the steep increase in loss provisioning and charged off $84 million of residential, mostly subprime mortgages in the fourth quarter of 2008.
The company had $2.6 billion of nonperforming assets at the end of 2008, which included $643 million of mostly residential mortgage loans that are subject to a loss-sharing agreement with the FDIC as part of the acquisition agreement.