U.S. Bancorp ( USB) missed Wall Street's third-quarter estimates Tuesday, as sliding profits were hit by an increased loan-loss cushion and losses tied to securities. U.S. Bancorp reported third-quarter net income of $576 million, or 32 cents per diluted common share, missing the Thomson Reuters consensus estimate of 47 cents per share. The $247 billion Minneapolis-based holding company reported net income of $950 million last quarter and $1.1 billion in the third quarter of 2007. Profits were impacted by $411 million in securities losses and an increase in the quarterly provision for loan loss reserves, to $748 million, from $596 million last quarter and $199 million in September 2008. U.S. Bancorp shares were relatively flat Tuesday after the financial report, trading down fractionally to $31.14. During its earnings conference call CFO Andrew Cecere said U.S. Bancorp lost $97 million on preferred shares in Fannie Mae ( FNM) and Freddie Mac ( FRE). Last week, federal bank regulators announced an important accounting change regarding losses tied to the government takeover of the mortgage giants. Securities losses also included $42 million in impairment charges on other mortgage-backed securities held for sale, as well as $25 million on securities tied to the failed Washington Mutual (whose deposits were acquired by JPMorgan Chase ( JPM)) and $20 million from the bankruptcy of Lehman Brothers. More positive aspects of the company's earnings performance included an increase in net interest income of 3.1% from the second quarter and 16.7% year over year, as the company expanded its loan portfolio 14% and improved its net interest margin.