U.S. Bancorp in Minneapolis reported a double-digit increase in quarterly profits, as a mix of higher interest income and lower taxes offset lackluster growth in the company’s loan portfolio and fee income.

The $460.1 billion-asset company's first-quarter earnings rose 13% year over year to $1.7 billion. Earnings per share were 96 cents, beating an estimate of analysts polled by FactSet Research Systems by one penny.

Chairman and CEO Andy Cecere described the results as "solid."

“We continue to invest for the future, and I’m pleased with the progress we are making on initiatives aimed at advancing our digital offerings and expanding our treasury management and payment services capabilities," he said in a news release Wednesday.

Andy Cecere of U.S. Bancorp.
Opportunities ahead
U.S. Bancorp CEO Andy Cecere said the company is dedicated to improving its digital banking products, with a focus on payments and treasury management. Thomas Strand

The net interest margin rose 7 basis points to 3.13% thanks largely to the recent string of interest rate hikes. Net interest income climbed 6% to $3.2 billion. The provision for credit losses dipped 1% to $341 million.

Total loans rose 2% to $279.4 billion on stronger commercial lending and auto leasing. Those gains were offset slightly by an ongoing pullback in commercial real estate lending.

Noninterest income ticked up by just under 1% to $2.3 billion, as stronger fees from ATMs and card processing outweighed declines in commercial products and mortgage banking.

An increase in compensation, occupancy and technology costs, meanwhile, pushed up noninterest expenses 5% to $3.1 billion. The efficiency ratio remained flat from a year earlier, at 55.9%

The company's effective tax rate was 17.7%, compared with 27% a year earlier.

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