U.S. Bancorp, the nation’s third largest lender of residential mortgages, is forecasting a slowdown in lending as it approaches a cliff—the fiscal cliff.
The Minneapolis company anticipates loans to expand at an annual rate of 4% to 6% in the fourth quarter, compared with the 6% to 7% it has been producing, chief executive Richard Davis said during a conference call Wednesday.
Customers are "feeling less comfortable," and that's understandable given question marks in Washington and elsewhere, Davis said when asked whether borrower caution had dampened lending expectations.
"You've got the near-term election uncertainty, you've got the fiscal cliff uncertainty, you've got the European recession, you've got the economy…So I am going to be pleased with 4% to 6% annualized. We'll take anything we can get above that."
But the bank’s chief credit officer, Bill Parker, said he’s hopeful the nation’s elected officials will come to “some kind of resolution.” Parker added, “The fiscal cliff was designed in such a way that it is so severe I think it is unlikely that there won't be some political solution that cuts the middle ground and mitigates that risk."
According to figures compiled by National Mortgage News and the Quarterly Data Report, U.S. Bank funded $29 billion of home mortgages in 3Q, posting an impressive 142% growth rate during the period.
U.S. Bancorp reported that its third-quarter profit climbed 16% to a record, beating analysts’ estimates as mortgage-banking revenue more than doubled.
Net income rose to $1.47 billion, from $1.27 billion a year earlier.
