Earnings are mixed for Wells Fargo competitors

Wednesday, Jan. 16, 2002 | 11:12 a.m.

SUN STAFF AND WIRE REPORTS

Three Nevada bank and thrift operators reported mixed quarterly results Tuesday.

Seattle-based thrift Washington Mutual earned $842 million, or 97 cents per share in the three months ended Dec. 31 -- up 56 percent from the year-ago fourth quarter.

Washington Mutual entered the Southern Nevada market in April 2000 and now operates 20 branches in the area.

"(The improved earnings) demonstrates the strength of our business strategy and our ability to profitably expand our franchise through a combination of internal growth and acquisitions,' said Chairman and Chief Executive Kerry Killinger.

Washington Mutual reported record checking account growth of 190,000 accounts for the fourth quarter, and more than 1 million accounts for the year. It also improved its loan volume to $59.1 billion for the fourth quarter, and $174 billion for the year, which includes record volume in single-family residential and non-SFR categories.

Separately, U.S. Bancorp, the eighth-largest U.S. bank, said its fourth-quarter profit fell 9.5 percent as costs rose and bad loans increased.

Fourth-quarter net income was $695.4 million, or 36 cents a share, compared with $768.7 million, or 40 cents, a year earlier. In Nevada, U.S. Bancorp operates 41 traditional and in-store bank sites under the brand U.S. Bank. The bank said it holds deposits of $1.6 billion within the state.

The Minneapolis-based company's expenses rose 15 percent to $1.64 billion. U.S. Bancorp wrote off $265.8 million of bad loans, up 16 percent from a year earlier, as the weakening economy made it harder for its customers to pay back loans.

"They had overestimated consistently their ability to cut costs, and they have been paying the price ever since," said Michael Stead, chief investment officer of the SIFE Trust Fund, which held 1.4 million U.S. Bancorp shares at the end of June. "It's clear they overpaid for their big acquisitions."

Buying rivals' branches and a credit-card transaction processing company helped raise the company's costs by $100 million in the quarter. The company also wrote off part of its mortgage servicing business, which was hurt because customers paid their mortgages off ahead of time as interest rates fell.

Falling interest rates also helped boost the bank's profit, with revenue rising 6.4 percent to $3.01 billion as it became cheaper for the bank to raise funds it used to make loans. The Federal Reserve lowered interest rates 11 times last year to their lowest levels in four decades.

In Southern Nevada, the parent company of Silver State Bank reported a fourth-quarter profit of $307,000 or 24 cents per share -- down 50 percent from the year-ago quarter.

Chairman and CEO Tod Little said the decline in earnings was primarily caused by cuts in interest rates and expansion within the company. The bank increased its number of branches to seven with the opening of two new bank sites last year.

Silver State increased its assets total to $309 million at years' end -- up from $249 million one year earlier.

Sun reporter Chris Jones and Bloomberg News contributed to this report.