U.S. Bancorp in Minneapolis on Wednesday reported flat quarterly profits as higher compensation and compliance costs offset loan growth.

The $446 billion-asset company earned $1.5 billion for the period ending Dec. 31, virtually unchanged from a year earlier. Earnings per share were 82 cents, beating an estimate of analysts polled by Bloomberg by one penny.

The lackluster growth in profits comes as Richard Davis prepares to step down as CEO. The company announced Tuesday that President Andy Cecere will take over as CEO on April 18. Davis will remain executive chairman.

The quarterly results were weighed down by higher costs. Noninterest expenses climbed 7% to $3 billion on merit-pay increases and compliance-related spending. The efficiency ratio was 55.3%, compared with 53.9% a year earlier.

Net interest income increased 5% to $2.9 billion. Total loans grew 6%, to $272.7 billion, mostly due to higher commercial and credit card portfolios. The provision for credit losses jumped 12%, to $342 million, which the company attributed to overall loan growth.

The net interest margin narrowed 8 basis points, to 2.98%.

Fee-based income rose 4%, to $2.4 billion, on higher revenue from cards and mortgage banking.

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