The Minneapolis-based lender posted a net income of $1.39bn for the March quarter compared to $1.43bn in the corresponding period a year earlier. However, its revenue increased by 2.7% to $5.04 bn.
The bank increased its provisions for bad loans by 25% to $330m in the quarter compared to $264m in the same quarter last year.
"The increase in provision was driven by deterioration in the company’s energy-related commercial loan portfolio, reflected by an increase in the company’s criticized and nonperforming loans. Credit quality, excluding the energy-related loan portfolio, was relatively stable," the bank said in a statement.
The bank’s average total loans grew 5.8 percent to $14.3bn in the January-March quarter, mainly driven by an increase in commercial loans, credit card loans, residential mortgages and other retail loans.
While total deposits rose 6.3% to $17.4bn in the quarter, noninterest-bearing deposits increased 5.4% to $4.1bn on year-over-year basis.
US Bancorp chairman and chief executive officer Richard K. Davis said: "US Bancorp is off to a solid start in 2016 as we once again delivered industry-leading performance metrics against a backdrop of global concerns driving long-term interest rates lower and continuing pressure in the energy sector.
"We continued to produce strong loan and deposit growth which combined with a stable net interest margin, resulted in growth in net interest income."
Non-performing assets of the bank rose climbed to $1,719m in the first three months this year compared to $1,696m in the same period in 2015.
Commercial loans to customers in energy- related businesses stood at $3.4bn, representing 1.3% of the bank’s total outstanding loans.
The bank’s total non-interest expenses rose 3.2% to $2.7bn in the quarter, mainly due to an increasing in spending for compensation, professional services, and technology and communications.
Image: US Bank tower in Denver, Colorado. Photo courtesy of David Shankbone/ Wikipedia
