U.S. Bancorp's third-quarter profit rose 1.2 percent to a record level, the company said Thursday, meeting expectations and continuing a string of solid results even while interest rates remain at all-time lows.

Deposits and loans grew and the Minneapolis-based company continued to produce some of the best operating measures in American banking.

But it also continued to see operating expenses grow faster than revenue, something executives said they should be able to fix next year unless the Federal Reserve takes no action on rates.

Richard Davis, the company's chief executive, said it could use "one or two" increases in interest rates to see revenue growth outpace expense increases.

"But we don't need much more than that," Davis said in a conference call with analysts. "We don't need them all right now, and they don't need to be big."

For much of the year, economists and analysts expected the Fed's policymaking committee in September to begin lifting rates, which were cut to nearly zero in the wake of the 2008 global downturn. But the committee held off, in part because of recent signs of new economic sputtering elsewhere around the world.

Richard Davis

Fed leaders since then have given mixed signals about when rates will start to rise, leaving banks stretching to get by without the fuel to expand and do new things. Davis earlier this year compared the industry's situation to the feeling that a child gets while trying to hold to a chin-up bar for a few extra seconds during a strength test.

U.S. Bancorp has been trying to hold the line on expenses for more than a year. It stopped adding staff last year, though it continued to fill jobs that were vacated. Lately, Davis said, it has been stretching out the time it takes to fill a vacancy. Now, in the last three months of 2015, cutbacks on travel and other discretionary expenses will save about $10 million to $15 million for the company.

Even so, the rising cost of compliance with regulations and the need to invest in new technology has lifted expenses overall. In the third quarter, U.S. Bancorp's noninterest expenses grew 6.2 percent, twice its 3.1 percent increase in revenue.

Its net profit of $1.49 billion was up from $1.47 billion a year ago. The latest profit amounted to 81 cents a diluted share, which was the consensus target of investment analysts. Revenue was $5.15 billion.

The company's shares rose 51 cents, or 1.3 percent, to $41.01 Thursday as its report reinforced strong numbers earlier in the week from several of its larger rivals, including Bank of America Corp., which has taken longer than other banks to recover from the 2008 downturn.

U.S. Bancorp's net interest margin was 3.04 percent, down from 3.16 percent a year ago but up from 3.03 percent in the second quarter.

Kathy Rogers, the company's chief financial officer, said executives believe net interest margin — a key measure of lending profitability — has stabilized after dropping for several quarters. She attributed that to a quickening in consumer loans above the pace of wholesale loans, which tend to have lower margins. "Wholesale is still very strong, but the mix of growth is turning a little bit now," Rogers said.

When an analyst said Davis was one of the last major bank CEOs to say the economy was getting better, Davis said he's not sure he actually did. "I don't remember being that strong," he said, before laying out a lefthanded portrayal of the economy that underscored the difficulty Fed policymakers face on when to raise rates.

"I would say it's not getting worse," Davis said. "I know I said that before. Undeniably, it's not getting worse. I mean, things aren't going backward. People aren't going in the direction of not investing. People aren't afraid to buy cars. People aren't afraid to use their credit line."

Evan Ramstad • 612-673-4241