USB US Bancorp

U.S. Bancorp said its profit rose in the third quarter, as loan growth and higher credit- and debit-card fees offset increased expenses.

Per-share earnings matched Wall Street expectations while revenue edged in higher than anticipated.

The bank posted earnings of $1.49 billion, up from $1.47 billion in the prior-year period. On a per-share basis, earnings rose to 81 cents from 78 cents.

Revenue at the Minneapolis-based bank—among the biggest U.S. lenders by assets—grew 3.1% to $5.15 billion. Analysts had expected 81 cents in per-share profit and $5.12 billion in revenue, according to Thomson Reuters.

Like other regional banks, U.S. Bank has been crimped by low interest rates and is eagerly awaiting rate increases from the Federal Reserve.

Chief Executive Richard Davis earlier this year compared the bank's situation of waiting for interest rates to rise to the last few grueling moments of a gym-class test, hanging on a bar for 90 seconds.

Net interest margin, a key gauge of lending profitability that is tied to interest rates, inched up to 3.04% from 3.03% in the prior quarter, though the metric slid from 3.16% a year earlier. Net interest margin measures how much a bank earns from the difference between what it pays out on deposits and what it receives on loans and investments. In July, the lender predicted the measure would stabilize in the third quarter.

In the face of still-low rates, many banks have cut costs in efforts to lift profits. Mr. Davis last month said the bank is taking a closer look at expenses now that interest rates remain low. "Should we look at whether or not we're having too many large meetings?" he said. "Should we take more time to get rid of the paper in the company?"

But in the third-quarter, U.S. Bancorp's noninterest expenses rose 6.2% to $2.78 billion and its efficiency ratio, which measures costs as a percentage of revenue and where lower is better, rose to 53.9% from 53.2% in the previous quarter and 52.4% a year earlier.

Meanwhile, noninterest income rose 3.7% to $2.33 billion. Many lenders have moved to amp up fee-based businesses to help counter the effect of low rates. A 7.2% increase in revenue from credit and debit cards, along with higher revenue from segments including trust and investment management and commercial products, helped drive the third-quarter revenue increase.

Average total loans increased 3.8% from a year earlier, fueled by a 15% jump in construction and development lending and a 10% increase in commercial loans.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com and Rachel Louise Ensign at rachel.ensign@wsj.com

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(END) Dow Jones Newswires

October 15, 2015 08:45 ET (12:45 GMT)

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