U.S. Bancorp (USB 0.21%) posted mostly solid results in its third-quarter earnings report, but a decline in earnings on increased expenses and credit losses seemed to weigh on the stock as did the broader market sell-off today. 

As a result, shares of the regional bank stock finished Wednesday down 4.5%.

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A modest earnings beat isn't enough

U.S. Bancorp delivered solid results in Q3 as revenue jumped 11.2% to $7.03 billion, driven in part by its acquisition of MUFG Union Bank. That result essentially matched revenue estimates at $7.02 billion.

Net-interest income was up 10.7% to $4.24 billion, though noninterest expense jumped 18.1% to $4.25 billion, and its provision for credit losses increased 42.3% to $515 million. As a result, earnings per share (EPS) adjusted for merger and integration-related costs fell from $1.18 to $1.05, though that was also slightly ahead of the analyst consensus at $1.02.

U.S. Bancorp's common equity tier 1 ratio rose 60 basis points from Q2 to 9.7% as the company prioritizes building capital.

CEO Andy Cecere acknowledged, "The challenging interest rate environment continues to impact net interest income growth for us and the industry," but the company saw strong year-over-year growth in loans and deposits with both categories up 12%, which was helped by the MUFG Union Bank acquisition.

Yesterday, the stock soared on news that the Federal Reserve relieved it from Category II commitments, which apply to banks with more than $700 billion in assets, but the stock gave back some of those gains today as any benefit likely won't materialize for years.

Is U.S Bancorp a buy after the change in capital requirements?

The change to Category III allows U.S. Bancorp to phase in accumulated other comprehensive income (AOCI), which is typically unrealized gains and losses, into regulatory capital over a three-year period starting in 2025.

That's a positive step, but investors should keep an eye on the MUFG Union Bank integration, as the sequential and year-over-year decline in adjusted earnings isn't ideal.

Management sees net-interest margin hitting a trough in Q4, so investors should expect another decline in profits in the current quarter, but its 5.8% dividend yield offers an incentive to be patient.

Even with the capital requirements change, U.S. Bancorp is unlikely to deliver any fireworks for investors until the economy is on more solid ground, but the bank stock looks like a safe option for dividend investors.