US Bancorp’s latest quarter showed continued growth in card balances, resilience in what it has called its “differentiated business model” and credit quality metrics that were in line with expectations.

CEO Andrew Cecere said on the conference call with analysts that the company was “experiencing good momentum on various business initiatives around benefits,” adding that net charge-off rates and delinquency rates “were all relatively stable compared with the levels in the second quarter.”

Digging a little deeper, the CEO said, US Bancorp posted “good year-over-year growth” in payments services. The earnings material shows that revenue growth from commercial products was 12.1% and revenue from payment services was 3.1%.

Investors bid the shares up 4.9% at the open on Wednesday (October 16).

Earnings additions showed that revenue from business payment products in the most recent third quarter was $203 million. Revenue from merchant processing services was $440 million, while that segment contributed $427 million in the third quarter last year.

CFO John Stern said on the call that within the retail segment, higher credit card loan balances and improved revolver rates “provided a more favorable credit mix and margins.” Average full-quarter balances on its card loans were up 2.3% year-over-year in the third quarter to just under $29 billion, while the company projects a net charge-off rate for the fourth quarter that should remain “relatively stable” compared with the third quarter. Card-related credit metrics indicated that the net charge-off rate fell to 4.1% in the latest quarter, down from 4.5% in the second quarter, but above last year’s 3.3%. The number of delinquencies reflected “normal seasonal patterns,” company materials show.

Cecere said in further comments on the call that “recent industry headwinds” are increasingly becoming “tailwinds” and that we are (realizing) the benefits of our now run-rate capital expenditures on leading digital capabilities, integrated payment solutions and continued technology modernization. ,” and the CFO said in the Q&A that the company will see growth in its payments business in the fourth quarter as operating expenses increase.

Organic growth thanks to mergers and acquisitions

When asked about M&A opportunities during the call, management indicated that M&A deals with major banks are not a priority for the company, which will instead focus on organic growth.

“In this role,” Cecere said, “what you do is prioritize the opportunities that you have in front of you, and our organic growth opportunities are much more important and much more tangible for us right now… the M&A environment is just like that Because it uncertain at the moment, that would not be a good place to focus our efforts.”

Industry as a growth engine

Speaking on the call, Gunjan Kedia, president, said the growth efforts are also “anchored around the industry,” as the physical environment and the digital capabilities within that environment help drive brand recognition.

“Our strategic focus is to create density in the highest growth areas within our current footprint, rather than using branches to expand beyond our footprint,” she said.