U.S. Bancorp said Wednesday that its third-quarter profit edged upward to $1.47 billion, roughly in line with investors' expectations, as lending growth helped the company overcome the challenge of low interest rates.

"Having low interest rates isn't great for income but it's pretty good for lending," said Richard Davis, the company's CEO and chairman.

Minneapolis-based U.S. Bank, the nation's largest regional lender, said its commercial loan activity grew 13.6 percent, well above the 6.3 percent growth of its lending in general.

Profit amounted to 78 cents a share in the July-to-September quarter, up from 76 cents a share in the same period a year ago.

Revenue was $4.99 billion. Net interest margin was 3.16 percent, lower than 3.43 percent a year ago and 3.27 percent in the April-to-June period this year.

Davis told analysts on Wednesday to expect loan growth to continue at the same pace in the fourth quarter, driven in part by strength in commercial real estate lending on the coasts and in the southern U.S., but also steady demand for auto loans, credit cards and small and medium business lending.

Davis

"We're seeing good consistent growth across the board," said Andrew Cecere, U.S. Bank's chief financial officer.

U.S. Bank, which employs about 10,000 people in the Twin Cities, has been able to keep revenue outpacing expenses, after reckoning in February that the Federal Reserve would keep rates low and economic growth would remain moderate.

The task of increasing revenue will become less difficult as interest rates start to rise and the bank's existing investments earn more interest, Davis and Cecere said.

"If rates go up a couple hundred basis points, then we make $300 million more on an annual basis," Cecere said.

The bank has been holding down costs in divisions across the business, except in those parts of the bank with clear opportunities to increase revenue, Cecere said.

The company said its return on average assets was 1.51 percent and return on average common equity was 14.5 percent during the period, among the best in the banking industry nationwide. That return on equity is 40 to 50 percent better than the average for banks in the same peer group as U.S. Bank, Cecere said.

Boosted by this year's acquisition of Charter One, a bank based in Chicago, U.S. Bank's deposits grew 3.3 percent compared with the second quarter and 7.4 percent year over year.

The company's shares fell 38 cents Wednesday to $39.89.

Adam Belz • 612-673-4405 Twitter: @adambelz

Evan Ramstad • 612-673-4241