U.S. Bancorp posts 72 percent drop in earnings for late 2008

   U.S. Bancorp posted a 72-percent drop in earnings in the final three months of last year -- its eighth straight quarterly profit decline -- as credit costs and securities losses climbed, the Associated Press reported on Wednesday.

   For the fourth quarter of 2008, the Minneapolis-based bank, which recently acquired Downey Savings & Loan and PFF Bank & Trust, reported net income applicable to common shareholders of $260 million, down from $927 million a year earlier. The company set aside $1.27 billion during the quarter to cover bad loans.  This compares with a loan loss provision of just $225 million in the fourth quarter of 2007 and $748 million in the third quarter of last year.

   U.S. Bancorp received $6.6 billion from the Treasury Department last fall as part of the government's capital purchase program.  As part of the transactions, U.S. Bancorp agreed to assume the first $1.5 billion of expected losses on Downey's assets and the first $100 million of expected losses on PFF's assets. Any losses above that will be absorbed under a loss-sharing agreement with the FDIC.