U.S. Bancorp in Minneapolis on Wednesday reported lower profits, thanks to higher costs and further deterioration in the company’s energy portfolio.

The $429 billion-asset company earned $1.4 billion in the first quarter, or 3% less than a year earlier. Diluted earnings per share were 76 cents, in line with the estimate of analysts polled by Bloomberg.

Noninterest expenses edged up 3%, to $2.7 billion. The company attributed the rise to higher compensation, as well as professional services for “compliance-related matters.”

Credit costs also weighed on profits. The provision for loan losses rose 25%, to $330 million, reflecting additional downgrades in the company’s oil and gas portfolio. As of March 31, the reserve on outstanding energy loan balances was 9.1%.

Meanwhile, net interest income rose 5%, to $2.9 billion, while total loans grew 6%, to $262.3 billion. The net interest margin shrank 2 basis points, to 3.06%.

Fee-based revenue was flat at $2.1 billion, as declines in mortgage banking offset higher credit and debit card revenue.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.