US Bancorp Earnings Beat Estimates

Key's earnings report was received well by the market, although investors have grown more leery of results recently reported by major companies like Wells Fargo (WFC), Goldman Sachs (GS), Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C) and General Electric (GE), which all exceeded expectations. An easing of accounting standards that allowed companies to mark up depleted assets, combined with a generally favorable interest-rate environment, boosted the bottom line, although core banking operations still struggled under tough credit conditions.

Davis took time on the call to address criticism that banks have recently received for not deploying government funds into new loans for consumers and businesses. US Bancorp received $6.6 billion in TARP dollars in exchange for preferred stock, on which it is paying dividends.

Davis said on the call that banks have put a special priority on prudent lending amid the economic downturn, and that consumers and businesses have been less driven to take on new debt as well.

"We have not denied a single credit-worthy customer since the beginning of this downturn for any reasons of either capital or appetite," Davis said. "We have continued to be prudent with our underwriting...[and] I think there is a reason to believe that as the cycle matures, people are becoming a little more careful. But for those who are asking for loans, there is still plenty of money out there, and I think the banks are willing to make those loans."

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