Wells Fargo & Co , the fourth-largest U.S. bank, reported lower second-quarter profit, but losses on commercial and consumer loans declined from the first quarter.

The bank said mortgage hedging results were down.

Minneapolis-based US Bancorp said profit soared as new lending boosted revenue.

U.S. banks, recovering from the financial crisis, are now grappling with a dip in consumer sentiment and worries about how their business will be affected by the financial reform bill due to be signed into law by U.S. President Barack Obama later on Wednesday.

A number of provisions within this legislation will impact our company by either lowering revenue, increasing expense and/or raising capital requirements, US Bancorp Chief Executive Richard Davis said in a statement.

The banks are also struggling as consumer sentiment remains low and U.S. unemployment hovers around 10 percent.


Bucking a trend among its larger rivals, US Bancorp said it made more new loans in the second quarter compared with a year earlier.

Its loan book grew 4 percent from the 2009 quarter to $191.2 billion as credit card issuance and residential mortgages increased. Quarterly revenue climbed almost 9 percent to $4.5 billion.

Loan losses increased slightly, to $1.11 billion from $929 million, but losses on commercial loans, home equity and residential mortgages broadly fell.

The bank put aside $1.13 billion against bad loans, down from $1.4 billion a year earlier.

We believe the company has reached the inflection point in credit quality and we expect net charge-offs and nonperforming assets to be lower in the third quarter than the current quarter, Davis said in a statement.

Bank of America Corp , JPMorgan Chase & Co and Citigroup Inc all reported earnings last week that were boosted by reserve releases after their credit costs eased.

Wells Fargo reported first quarter earnings of $3.06 billion, or 55 cents a share, compared with $3.17 billion, or 57 cents a share, a year earlier.

Analysts on average expected earnings of 48 cents a share, according to Thomson Reuters I/B/E/S. It could not immediately be determined if that figure compared directly to Wells Fargo's figure of 55 cents a share.

US Bancorp's second-quarter profit was $766 million, or 45 cents a share, compared with $471 million, or 12 cents a share, a year earlier.

Excluding one-items, it earned 40 cents a share, above analysts' average estimate of 38 cents, according to Thomson Reuters I/B/E/S.

A smaller regional bank, Dallas-based Comerica Inc , also beat Wall Street earnings estimates on Wednesday, helped by lower credit losses.

Comerica reported second-quarter net income attributable to common shares was $69 million, or 39 cents a share, compared with a loss of $16 million, or 11 cents a share, last year.

US Bancorp shares were up 2 percent to $23.62 in premarket trading.

(Reporting by Elinor Comlay; editing by John Wallace)