quarter by 28%, to $81 million, and achieved an ambitious cost-cutting target. To the delight of analysts, the $21.6 billion-asset U.S. Bancorp, the 35th-largest U.S. banking company, reached the goal it set last year of reducing its efficiency or overhead ratio below 59%. The ratio, which measures the percentage of revenues consumed by noninterest expenses, stood at 56.98%, down from 61.4% in the second quarter. "I'm really high on those guys - I think they're doing a great job," said James Marks, an analyst in San Francisco with Hancock Institutional Equity Services. Noninterest expenses of $208 million were 13% lower than last year. Net interest income rose $6.4 million, to $254 million. The net interest margin rose eight basis points in the quarter, to 5.57%. Return on average equity rose to 17.63%, the highest in 15 years. Return on average assets hit a record high of 1.52%. Idaho-based West One Bancorp, which is expected to complete its merger with U.S. Bancorp by yearend, also had a strong quarter, reporting a 21% increase in net income to $32.9 million. Average loans rose 12%, while net interest income rose by $7.2 million. The company had a return on average assets of 1.43%, a return on average equity of 18.04%, and an efficiency ratio of 58%. *** Three major Japanese-owned California banks joined in the West's earnings-improvement parade. The $19.2 billion-asset Union Bank of San Francisco, the fourth-largest bank in California, more than doubled its net income, to $57.8 million, as average loans increased 11.4% from last year and 2.8% from the second quarter. Los Angeles-based Sanwa Bank California, the state's fifth-largest, at $7.7 billion of assets, reported a 14% jump in net income to $14.8 million, excluding a one-time tax provision, as loans and leases increased by $500 million over last year, to $5.7 billion. Earnings more than quadrupled at San Francisco-based Sumitomo Bank of California, to $18.2 million. The $4.9 billion-asset bank, which ranks as the state's sixth largest, benefited from asset sales and a deposit insurance premium refund. *** Hawaii's dominant banks, $12.5 billion-asset Bancorp Hawaii and $7.4 billion-asset First Hawaiian Inc., both noted in their earnings reports that Hawaii appears to be recovering from its five-year economic slump. But only Bancorp Hawaii improved its earnings from a year ago. Its net income was up 3%, to $32.9 million, as net loans increased 3.4%. If a loan securitization in January is excluded from the figures, portfolio growth was 9%. Bancorp said its share of loan originations in Hawaii rose from 7% last year to 13% this year. It had a return on average assets of 0.97% and return on average equity of 11.82%. By contrast, First Hawaiian had a $106,000 decline in net income, to $19.7 million. The company had some positive developments, including an increase of $5.1 billion, or 0.8%, in deposits. First Hawaiian also received a $2.8 million refund of deposit insurance premiums. But total loans and leases declined 1% to $5.2 billion. Chairman Walter A. Dods Jr. said loan growth would have been 7.8% if the bank hadn't securitized $490 million of adjustable rate mortgages and put them in its investment portfolio in the second quarter. First Hawaiian increased its allowance for loan and lease losses to 1.26% of loans and leases outstanding, from 1.16% at the end of June. Nonperforming assets rose $18.5 million over last year, to $80.7 million. Most of the increase was attributed to one borrower with four different real estate loans totaling $10.1 million. First Hawaiian's return on average assets was 1.01% and its return on average equity was 11.98%. *** The biggest banks based in Salt Lake City - $12.7 billion-asset First Security Corp. and $5.7 billion-asset Zions Bancorp - were both up. Zions had the stronger quarter. Net income rose 26.2% to $22.3 million, while return on average equity was a strong 21.9%, and return on average assets was a healthy 1.48% Zions' chief executive officer, Harris H. Simmons, said revenue growth of 13.8% outpaced operating expense growth of 5.1%. And asset quality remained strong, with nonperforming assets amounting to only 0.44% of net loans, leases, and other real estate owned. First Security, by contrast, had a 6.7% increase in net income, to $39.3 million. A deposit insurance refund of $3.1 million accounted for much of the increase. First Security's acquisition last year of Crossland Mortgage helped boost the percentage of revenues received from fees, to 36.13% for the nine months from 28.96% last year. But the net interest margin declined nine basis points in the third quarter, to 4.46%. First Security attributed the decrease to higher deposit costs, as transaction and savings account balances declined and were replaced with certificates of deposit.

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