U.S. Bancorp's reputation has been largely unscathed by the financial crisis and Chairman and Chief Executive Richard Davis is determined to keep it that way.

The city of Los Angeles filed a lawsuit against U.S. Bancorp (USB) earlier this week claiming that is blighting neighborhoods by allowing foreclosed properties to fall into disrepair.

The Minneapolis company had already issued statements saying that the suit is baseless because it is trustee for the loans, not the servicer, but Davis is not content to leave it at that.

"It is a classic case of misinformation and the confusions created by the role of a trustee," Davis said when asked about the suit during an earnings conference call with analysts. "We don't have any rights to go in and touch the properties. And while that doesn't pass the test in the public jury it is accurate and it is the way the trustees were built."

He later hinted that the city might be motivated by money.

"The weak economy caused the City of L.A. to have a city attorney looking for places to raise up revenue," he said.

The comments added a splash of drama to an otherwise business-as-usual earnings call for the $353 billion-asset U.S. Bancorp. The company reported earnings of $1.4 billion for the quarter, up 18% from a year earlier, as commercial loans rose nearly 20% year over year and total loans jumped almost 8%. Its earnings per share of 71 cents beat consensus estimates by a penny, according to Thomson Reuters.

"The quarter itself was awesome. They had strong earnings, the margin came in better than I expected, so did loan growth and fee income. Expenses were well controlled and credit improved," said R. Scott Siefers, an analyst with Sandler O'Neill. "It was a by the playbook quarter for them and just strong all around."

Analysts said the company's results were perhaps the reason Davis was willing to be aggressive in responding to questions about the lawsuit. When it comes to litigation, management teams are often guarded in their comments, but in U.S. Bancorp's case, the analysts said Davis is willing to fight back because he has a lot to fight for.

"He doesn't want to lose his reputation off of something trivial," said Marty Mosby, an analyst with Guggenheim Securities. "The company has enjoyed the benefit of being that beacon and they'll defend that position vehemently. It is why he can produce 20% commercial loan growth in a market that is not growing."

In an interview after the call, Andrew Cecere, the company's chief financial officer, agreed about the importance of the preserving U.S. Bancorp's image.

"Reputation is very important and one of our key tenets is to do the right thing," Cecere said. "We are just trying to get the facts out there. Accusations can be made, but they aren't supported by facts. We are a large player in corporate trust and we do a good job, even if it is not well understood."

Reputation has played a role in the company's ability to boost loan volume, but Cecere said it is hardly the only factor.

"We are seeing that loan growth because of the investments we made in the downturn. We invested in offices, people and capabilities," Cecere said. "We did not shrink, we did not shut businesses. We were in investment mode."

The company's revenue is split nearly evenly between net interest income and fee income. At June 30, total revenue was $5.1 billion, up 8% from a year earlier, despite hits it took from new caps on interchange fees.

Davis said during the call the company is diversified enough in fee-based businesses to offset reduced loan yields stemming from low interest rates.

"We care only the half as much about what (Federal Reserve Board chief Ben) Bernanke is thinking about interest rates as somebody else because, while they are all affected by the economy, you and I both know we have these other cylinders that provide us with this fee business, which is less consistent but also has a whole lot of less variability," Davis said.

The company recently acquired trust operations from two rival banks and Cecere said during the call the company intends to maintain growth in fee income with more acquisitions of corporate trust and payment businesses.

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