U.S. Bancorp said fourth-quarter earnings rose 4.5%, as a growth in fees offset rising expenses.
The Minneapolis-based bank said net income rose to $1.19 billion, or 66 cents a share, from $1.14 billion, or 62 cents a share, a year ago.
According to Thomson Financial, analysts were estimating earnings of 67 cents a share.
Net revenue rose 3% to $3.42 billion, as a 12% increase in fee income more than offset a 5 percent drop in lending income. Analysts on average forecast revenue of $3.45 billion.
Expenses rose 10% to $1.61 billion. The bank's ratio of costs to revenue, long among the lowest in its peer group, rose to 47.2% from 43.3%.
Fees were bolstered by 26% increases in merchant processing services and 24% in trust and investment management fees. This helped offset a 77% drop in mortgage banking revenue.
Full-year profit rose 8% to $2.61 a share, below the bank's long-term target for 10% annualized growth.
Results are the first to be reported by Chief Executive Richard Davis, who was promoted from chief operating officer last month to replace Jerry Grundhofer, who remains chairman.
Davis said earnings growth was lower than in the past few years, but said fee growth and solid credit quality "significantly lessened the impact of a disadvantageous yield curve and heightened competition and excess liquidity that the market offered."
U.S. Bancorp set aside $169 million for bad loans, down 18%, and net chargeoffs fell 21% to $169 million. Nonperforming assets fell 9% to $587 million.
Net interest margin, the difference between what the bank earns on loans and pays on deposits, fell to 3.56% from 3.88%, but held steady from the third quarter.
Loans rose 5% to $143.6 billion, deposits were little changed at $124.9 billion, and assets rose 5% to $219.2 billion.
Through Friday, U.S. Bancorp shares had risen 18% in the last year, compared with a 12% gain in the Philadelphia KBW Bank Index.
U.S. Bancorp will host a conference call at 2 pm New York time to discuss the results. It will be available over the phone and at the company's website.