U.S. Bancorp said Tuesday its first-quarter profit rose nearly 55 percent from a year ago, helped by higher revenue from its fee-based businesses and slowing consumer loan losses.
The bank also benefited from growth in traditional deposits, giving it a cheap source of money for loans.
But the Minneapolis bank still wrote off more bad loans during the quarter, and expects those write-offs to remain at a similar level this quarter as well, because of economic conditions.
Net loan charge-offs were $1.14 billion, up 2.3 percent from the fourth quarter 2009.
The increase was driven by economic factors affecting residential housing markets, the bank said, as well as credit costs associated with credit card and other consumer loans as the economy weakened. But it said the upward trends in charge-offs and bad loans "continued to moderate during the first quarter."
For the January-March period, U.S. Bancorp said its earnings attributable to common shareholders rose to $648 million, or 34 cents a share, up from $419 million, or 24 cents a share, a year ago. Revenue totaled $4.32 billion.
The profit met expectations of analysts surveyed by Thomson Reuters.
Nearly all banks have been hammered by rising defaults across all loan types — from mortgages to credit cards — over the past couple of years. Loan losses are especially vital to banks that don't have other big divisions like investment banking units to help offset some of the losses from loans.
U.S. Bancorp's loan portfolio has performed better than many competitors.
In the most recent quarter, total average desposits rose $22 billion, or 13.7 percent, to $182.5 billion, from a year ago. The lift was boosted by an increase in total average savings deposits, which rose 40.7 percent to $98.9 billion from $70.3 billion in the year-ago period.
U.S. Bancorp was one of the first to pay back bailout money it received from the government during the credit crisis. It repaid the $6.6 billion it received as part of the Troubled Asset Relief Program last June.
U.S. Bancorp shares rose 36 cents, or 1.3 percent, to $27.97 in morning trading. The stock has climbed 23 percent since the start of the year.
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