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U.S. Bancorp gets hit with bad loans

by Morgan on July 15, 2008

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U.S. Bancorp, Minnesota’s biggest bank, is facing a similar fate of the other super-regional banks such as Downey Savings, National City, Bank United and others as loan losses continue to mount for the lender.  Loan delinquencies have risen in the Northern part of the country and U.S. Bancorp is feeling the pinch.

As we looked at the other day, more banks are going to be in trouble in the near future.  Unfortunately it will be these super-regionals who lent a ton of money when money was cheap but do not have the balance sheet or the means to raise new capital to protect against these losses.

More from Bloomberg:

U.S. Bancorp, Minnesota’s biggest bank, said second-quarter earnings slumped 18 percent as more customers fell behind on loans. The shares fell as much as 12 percent in New York trading.

The bank more than tripled its provision for credit losses to $596 million from $191 million second-quarter 2007. Assets for which U.S. Bancorp no longer received interest rose 34 percent to $1.14 billion from last year as more homebuilders and homeowners fell behind on their payments.

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  • Fielding Mellish
    US Bank's losses are numbered in the millions (with an "M"), while other large banks' losses are numbered in the billions (with a "B"). US Bank never waded deep into Alt A and completely steered clear of Option ARMs and subprime. Their only exposure is 2nd mortgages, but they're nowhere near as upside-down as other banks like Wells, who, having a large California footprint, routinely went into 2nd position behind neg am Option ARMs. US Bank is the most secure large American bank there is. I am not an employee or stockholder. US Bank will come out of this smelling like a rose.

    Wells' first mortgage business (also run out of MN) is like unto US Bank's: they never got into Option ARMs or Alt A enough to be at risk with most of their first mortgage portfolio. Wells' second mortgage business, however, was run out of the bank in California, and as such, was susceptible to the belief that trees grow to the sky...they routinely went into second position behind other companies' neg am first mortgages - the kind that Wells' own first mortgage division was too wise to originate. The fact that most all of Wells' losses will be seen to have been originated by their California bank branches will prove for the 194th time that the entire California home finance industry is and always has been utter shit from top to bottom.
  • Matt
    Holy cow...what a negative spin on a pretty good quarter in my opinion. You forgot to add that they MADE 950 Million dollars in 2Q and management said they would recommend raising the dividend. Poorly written and very slanted post in my opinion.
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