US Bancorp’s most recent quarter showed continued card balance growth, the resiliency of its so-called “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 had seen “good momentum across several fee-based business initiatives,” adding that net charge-off rates and late-stage delinquency metrics were “all relatively stable compared to second-quarter levels.” “be.

More specifically, the CEO said US Bancorp has seen “good year-over-year growth” in payments services. The earnings filing noted that commercial product revenue growth was 12.1% and payment services revenue increased 3.1%.

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

Earnings updates show that revenue from enterprise payment products was $203 million in the most recent third quarter. Merchant Processing Services revenue was $440 million, while this segment contributed $427 million in the third quarter last year.

Chief Financial Officer John Stern said on the call that in its retail segment, higher credit card loan balances and improving revolver rates “led to a more favorable loan mix and margins.” Average full-quarter card loan balances were 2.3% higher year-over-year to just under $29 billion in the third quarter, while the company expects a net charge-off rate for the fourth quarter to remain “relatively stable” compared to the third Quarter. Card-related credit metrics suggest that the net charge-off rate fell to 4.1% last quarter from 4.5% in the second quarter, but was higher than last year’s 3.3%. According to company filings, default rates reflect “normal seasonal patterns.”

Cecere said in further remarks to the call that “recent industry headwinds” are becoming “tailwinds” and we are seeing the benefits of our now high levels of capital expenditure on industry-leading digital capabilities, integrated payment solutions and continued technology modernization,” and the CFO said in Q&A session said the company will see growth in its payments business in the fourth quarter as corporate spending increases.

Organic growth through M&A

When asked about the potential for mergers and acquisitions, management responded that mergers and acquisitions of large banks are not a priority for the company and will instead focus on organic growth.

“In this role,” Cecere said, “what you do is prioritize the opportunities that come your way, and our organic growth opportunities are much more important and much more tangible for us right now… the M&A environment is easy so. “Since we are currently uncertain, this would not be a good place to focus our efforts.”

Industry as a growth engine

Gunjan Kedia, president, said on the call that the growth efforts are also “rooted in the industry” as the brick-and-mortar locations and digital capabilities within those locations help increase brand awareness.

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