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As interest rates fell this summer, U.S. Bancorp relied more heavily on fees and other noninterest income to produce a 5% jump in profit.

The Minneapolis-based company, which operates the nation's fifth-largest bank, beat investor expectations with solid increases in revenue and profit for the third quarter. Noninterest revenue grew more quickly than its overall revenue did, shaped by big jumps in its mortgage and commercial products businesses.

But the effect of the Federal Reserve's interest rate cuts in July and September showed up in U.S. Bank's performance data. Its net interest margin, the difference between what it pays to attract deposits and what it is paid for making loans, narrowed to 3.03% from 3.15% a year ago and 3.13% in the second quarter.

Executives last month told investors to expect a sharper decline in net interest margin than they had forecast in July. In a statement this morning, chief executive Andy Cecere noted the company posted record results "despite a challenging interest rate environment."

The company earned $1.91 billion, or $1.15 a diluted share, during the period ended Sept. 30. The per-share profit consensus forecast by analysts was $1.12. U.S. Bancorp earned $1.82 billion, or $1.06 a share, in the same period last year.

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Revenue was $5.9 billion, up 4% from $5.7 billion a year ago.

Interest income, which accounts for about two-thirds of revenue, rose less than 1%. The growth of earning assets, which amounted to 7%, was offset by declining interest rates.

Noninterest income jumped 8%. Trust and investment management fees, the biggest source of noninterest income, grew 2%. Mortgage banking, which had declined in recent years, roared back with a 56% jump in revenue as home sales remained strong in much of the country and refinancing took off as consumers embraced offers associated with lower interest rates.

In his statement, Cecere said the robust performance in mortgage banking was also influenced by "investments we have made in our retail platform over the past several years." U.S. Bank has spent heavily to improve its online and app-based banking services, including access to mortgages, as well as refine and update its physical branches.

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