U.S. Bancorp (USB) said fourth-quarter profit rose 5.2 percent, meeting analysts' estimates, on lower loan-loss provisions.

Net income climbed to $1.42 billion, or 72 cents a share, from $1.35 billion, or 69 cents, a year earlier, the Minneapolis-based bank said today in a statement. Excluding costs tied to a mortgage-foreclosure settlement, earnings were 75 cents per share, matching the average estimate of 29 analysts surveyed by Bloomberg. Full-year profit increased 16 percent to a record $5.65 billion, or $2.84, from 2011.

U.S. Bancorp could benefit from a pickup in consumer and commercial spending as payments represent about one-fifth of revenue, analysts led by Matt O'Connor at Deutsche Bank AG said in a Jan. 4 note. The company also could continue to gain market share in mortgages, the analysts wrote. U.S. Bancorp set aside $443 million for loan losses, an 11 percent decrease from the fourth quarter of 2011.

"We added more customers and grew market share," Chief Executive Officer Richard Davis, 54, said on a conference call following results. "We maintained strong and growing capital and liquidity positions."

U.S. Bancorp has been focusing on expanding market share in mortgage banking, a business that's been a "real positive" for the company, Davis said in September.

Moody's Investors Service downgraded U.S. Bancorp's debt in December, saying increases in mortgage banking could expose the lender to "incremental volatility" and "weaker earnings over time." Record-low interest rates, increased competition in lending and regulatory costs also could pressure revenue and profit, Moody's said in a statement at the time.

U.S. Bancorp fell 0.5 percent to $33.13 at 10:09 a.m. in New York. The shares gained 15 percent in the past year through yesterday, compared with a 23 percent increase in the 24-company KBW Bank Index. (BKX)

Net revenue increased 0.2 percent to $5.11 billion from a year earlier as a 4.1 percent gain in net interest income to $2.78 billion offset a 4.2 percent decline in non-interest income to $2.33 billion.

That decline was driven by automated teller machines processing-services income, which fell 25 percent in the fourth quarter to $83 million from a year earlier. Mortgage banking revenue surged 57 percent to $476 million.

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Net revenue for the year was $20.3 billion, a 6.2 percent increase from 2011.

U.S. Bancorp's net interest margin, the difference between what a bank pays in deposits and what it charges for loans, narrowed to 3.55 percent in the fourth quarter from 3.6 percent a year earlier.

Average total loans rose 6.4 percent to $220.3 billion as U.S. Bancorp booked increases in residential mortgages and total commercial loans. Loan growth should continue at a 4 percent to 6 percent annualized rate, Davis said on the call.

Net write-offs fell 25 percent to $468 million in the fourth quarter from a year earlier. That figure is expected to be "stable to modestly down" in the first quarter, Davis said.

U.S. Bancorp said it plans to return 60 percent to 80 percent of earnings to shareholders through dividends and buybacks, the company said in the statement. The bank said it anticipates receiving permission to increase the dividend in 2013.

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