USB US Bancorp

By Lisa Beilfuss and Rachel Louise Ensign 

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 higher than anticipated.

The Minneapolis-based 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 U.S. Bancorp 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.

U.S. Bank shares were up about 1.1% in the early afternoon.

Like other regional banks, U.S. Bank has been pinched by low interest rates. While this quarter's results indicate the pressure from low rates may not get any worse, the bank is still eager for rate increases from the Federal Reserve.

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. Chief Financial Officer Kathy Rogers said it is a "good sign" that metric is stabilizing. 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.

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.

Now the persistently low rates have led U.S. Bank to start new cost-cutting initiatives, which were explained in more detail on Thursday. Mr. Davis said the bank's new measures to cut spending include using airfare and hotel discounts and eliminating most discretionary travel.

The bank's bottom line was helped by increases in both interest and noninterest income. Revenue from credit and debit cards in particular rose 7.2%, while income from merchant processing services was up 3.4% due in part to merchants buying equipment to fulfill new chip card technology requirements.

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.

Mr. Davis on the earnings call reiterated his stance against buying other banks in the near-term, but said he could see U.S. Bank start to look at traditional bank deals in 2017.

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 14:48 ET (18:48 GMT)

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