NEW YORK - U.S. Bancorp will post fourth-quarter net charge-offs of $600 million to $650 million and add a roughly equal amount to its loan-loss reserves, Chief Executive Richard Davis said Thursday.
As a result, the Minneapolis-based bank is likely to post about $1.2 billion in credit costs for this year's fourth quarter, a sharp rise from its third-quarter credit costs of $748 million.
Davis made the comments during a presentation to analysts at the Goldman Sachs Financial Services Conference.
The news disappointed investors, who have widely seen U.S. Bank as one of the strongest survivors of the widening banking crisis.
"This was not expected by investors, and it is quite a different view of the company than what one has been led to believe," said Dick Bove, an analyst at Ladenburg Thalmann & Co. Inc., in a note to investors. "It is disappointing that the company ... presented the information in a limited setting and did not make a press release on what could be a billion-dollar-plus hit to earnings."
Davis emphasized Thursday that the bank continues to perform better than most of its competitors.
Shares in U.S. Bancorp fell 10.2 percent Thursday, to close at $24.85.
The bank expects to add substantial capital to its loan-loss reserves, or funds that the bank sets aside to offset future forecasted losses from souring loans. The bank added $250 million to its reserves in this year's third quarter, and is likely to add more than double that amount to its reserves in the fourth quarter.
