USB US Bancorp

By Austen Hufford 

U.S. Bancorp said profit and revenue increased in its third quarter on increased mortgage refinancing.

The bank posted earnings of $1.5 billion, up from $1.49 billion in the prior-year period. On a per-share basis, earnings rose to 84 cents from 81 cents.

Revenue, a combination of net interest income and fee-based income, rose 4.7% to $5.39 billion. Analysts had expected 83 cents a share in earnings and $5.35 billion in revenue, according to Thomson Reuters.

At the Minneapolis-based bank average total loans grew 7.6% from last year as average total deposits grew 10%.

Mortgage banking revenue increased 40% from last year on increased refinancing activities driven by lower longer-term interest rates.

Still, net interest margin, an important measure of lending profitability, continued to fall, hitting 2.98% from 3.02% in the second quarter and from 3.04% last year on higher average cash balances.

Like other regional banks, U.S. Bank has remained under pressure from low interest rates and a pressured economic recovery.

"The banking industry continues to face steady headwinds, including persistently low interest rates, a flat yield curve, and a slow economic recovery that caused some commercial customers to pause investments in their businesses during the quarter," Chief Executive Richard Davis said.

Fee-based income rose 4.5% due to higher mortgage banking revenue, trust and investment management fees and card revenue.

Expenses rose 5.6% due to increased compensation and increased hiring to support business growth and compliance, increased technology and communications expense and a special FDIC surcharge.

Shares, which have increased 2.5% in the last three months, were inactive in premarket trading.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

October 19, 2016 07:57 ET (11:57 GMT)

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