U.S. Bancorp record earnings beat estimates on mortgage fees

U.S. Bancorp, the nation’s biggest regional lender, said third-quarter profit climbed 16 percent to a record, beating analysts’ estimates as mortgage-banking revenue more than doubled.

Net income rose to $1.47 billion, or 74 cents a share, from $1.27 billion, or 64 cents, a year earlier, the Minneapolis- based company said today in a statement. The average estimate of 31 analysts surveyed by Bloomberg was per-share profit of 73 cents.

U.S. Bancorp is focusing on taking market share in mortgage banking, a business that has been a “real positive” for the company, Chief Executive Officer Richard Davis, 54, told investors at a conference last month. Historically low interest rates and government incentive programs are fueling demand for home loans.

“Earnings included continued strong mortgage-banking activity, which contributed to our growth in fee income, residential real estate loans and loans held for sale,” Davis, who has never posted a loss since taking over at U.S. Bancorp in 2006, said in the statement.

U.S. Bancorp rose 0.2 percent to $33.68 in New York trading at 9:38 a.m. The shares gained 24 percent this year through yesterday, compared with a 28 percent advance in the 24-company KBW Bank Index.

Mortgage Revenue

Revenue from mortgage banking in the third quarter was $519 million, compared with $245 million in the same period last year. That helped drive a 10 percent increase in non-interest income, which rose to $2.4 billion.

JPMorgan Chase & Co., the biggest U.S. bank by assets, reported a third-quarter profit increase last week that included a 72 percent surge in mortgage revenue. CEO Jamie Dimon said at the time that the housing market has “turned the corner.” Bank of America Corp. Chief Financial Officer Bruce Thompson said today that housing prices are “no question” moving in the right direction.

“This is the best housing has felt in a long time,” Thompson said today on a conference call with journalists. The second-largest U.S. bank reported an 18 percent increase in mortgage originations, though third-quarter profit tumbled 95 percent on litigation expenses and an accounting charge tied to the firm’s debt.

U.S. Bancorp’s net interest income increased 6.1 percent to $2.78 billion, and total revenue rose 8 percent to a record $5.18 billion.

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