Flat Fourth for US Bancorp as Charge Offs Rise

US Bancorp reported a blah fourth quarter, as income dropped, its revenues rose a bit, and delinquency rates and loan losses grew incrementally worse.

The bank reported net income of $942 million down from $1.2 billion in the fourth quarter of 2006, as net revenues rose slightly to $3.5 billion from $3.4 billion. Part of the income drop was due to a charge of $215 million the bank took as its share of the settlement of the payment from Visa to American Express to settle an antitrust lawsuit.

US Bancorp set aside $225 million as a provision for credit losses in the quarter, up $56 million from the same period a year ago.

The credit card, debit card and payments division was a solid performer. Average credit card receivables totaled $10.6 billion, up more than 7 percent from $8.2 billion a year ago. The division generated $281 million in revenues, up nearly 20 percent, due to growth in cardholders and greater transaction volume. The bank reported it also favorable renegotiated a processing contract with a card association but didn’t provide details. Merchant processing revenues rose $35 million, or more than 14 percent.

The banks allowance for credit losses remained at $2.3 billion through the quarter. Net charge offs for all loans in the quarter was $225 million, up 33 percent from $169 million a year ago. The net charge off ratio was .59 percent compared with .47 percent. The ratio of the allowance for net charge offs was 1.47 percent at the end of the year, down from 1.57 percent a year ago.

The bank reported gross charge offs totaled $287 million and gross recoveries were $62 million.

Net charge offs in the credit card portfolio rose nearly 30 percent to $88 million. The net charge off ratio for the credit cared portfolio was 3.29 percent, compared with 3.27 percent a year ago.

Impact on the bank by the subprime mortgage debacle appeared mixed. Residential mortgage loans grew to$22.7 billion from $21.2 billion. Mortgage revenues in the fourth quarter were $48 million, nearly double from a year ago, but down from $76 million in the third quarter. The allowance for loan losses for residential mortgages increased nearly 42 percent to $17 million from $12 million.

Non performing residential mortgage loans rose to $54 million, from $36 million. The 90 days or more past due residential mortgages, excluding nonperforming loans, more than doubled to .86 percent from .42 percent a year ago.