Wells Fargo & Co., the most valuable U.S. bank, said low interest rates pushed first-quarter lending margins below 3 percent for the first time since the 1990s.

Net income fell 1.5 percent to $5.8 billion, or $1.04 a share, from $5.89 billion, or $1.05, a year earlier, the San Francisco-based company said Tuesday in a statement, the first year-over-year quarterly profit decline since 2008. The average estimate of 24 analysts surveyed by Bloomberg was for per-share profit of 98 cents.

"The interest-rate environment hasn't improved and we are still seeing a generally sluggish economic scenario," Jennifer Thompson, an analyst at Portales Partners LLC in New York, said in an interview before the results were released. "Margins will be under pressure."

Chief Executive Officer John Stumpf is searching for more revenue while seeking to cap expenses as he waits for the Federal Reserve to boost interest rates, which most economists expect to occur later this year. The bank's efficiency ratio, a measure of how much it costs to bring in a dollar of revenue, was 58.8 percent in the first quarter, at the top end of management's forecasted range.

Net interest margin, the difference between what Wells Fargo makes on lending and what it pays for funding, fell to 2.95 percent and has dropped more than 1 percentage point from the end of 2010. That was below the lowest estimate of five analysts surveyed by Bloomberg.

Wells Fargo slid 1.1 percent to $53.97 at 9:41 a.m. in New York. The shares have declined 1.5 percent this year through Monday, compared with the 1.3 percent drop of the 24-company KBW Bank Index. The stock rose 21 percent in 2014, bringing the firm's market value at year-end to $284 billion.

Revenue rose 3.2 percent to $21.3 billion from a year earlier, on net interest income of $11 billion and fee income of $10.3 billion. Total deposits climbed $28 billion from the fourth quarter to $1.2 trillion at March 31.

"We continued to strengthen our customer relationships in the quarter, as reflected in strong growth in deposits and primary checking customers," Stumpf said in the statement.

Chief Financial Officer John Shrewsberry has highlighted one area of strength -- the U.S. mortgage market. On Feb. 10, he said that volume at the nation's largest home lender would be similar to the fourth quarter, when it made $44 billion in loans "despite the fact that the first quarter usually reflects a slower purchase market."

Mortgage banking revenue rose 2.5 percent from a year earlier to $1.55 billion on originations of $49 billion, the most since the fourth quarter of 2013. An additional $44 billion in mortgages were in the process of being completed when the quarter ended, according to the statement.

Average rates for 30-year residential mortgages fell 0.20 percentage point in the first quarter to 3.79 percent, spurring an uptick in refinancings. The industry originated $288 billion in home loans in the first quarter, 17 percent more than the first three months of 2014, according to a March 20 forecast from the Mortgage Bankers Association, a Washington-based trade group. Fifty-two percent of those replaced existing loans, the group estimates.

Wells Fargo pays commissions to loan officers based on the number of loans they complete, and Stumpf has said the bank is willing to pay employees more in return for additional revenue. Investment bankers and financial advisers also receive incentive pay, which can add to costs.

Investors are focused on expenses as the banking industry struggles to show it can increase revenue amid low interest rates. Expenses at Wells Fargo rose 4.7 percent from a year earlier to $12.5 billion on higher commissions and incentive pay.

Investment-banking fees rose 36 percent from a year earlier to $445 million, while brokerage revenue advanced 6 percent to $2.38 billion. Trust and investment-management fees gained less than 1 percent to $852 million.

Stumpf has taken action to add loans, including purchasing portfolios from competitors. Last week, the bank agreed to buy performing mortgages on commercial real estate valued at $9 billion in the U.S., U.K. and Canada from General Electric Co. as that firm decided to largely exit the business.

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