By Saabira Chaudhuri And Emily Glazer 

Wells Fargo & Co. posted a 1.8% rise in fourth-quarter net income as the bank saw stronger loan growth, overshadowing an increase in expenses.

Although per-share earnings met analyst estimates, shares fell 1.6% as a key measure of lending profitability continued to tick down and U.S. stocks across the board declined.

Wells Fargo reported net income of $5.71 billion, compared with year-earlier income of $5.61 billion. Per-share earnings, reflecting the payment of preferred dividends, were $1.02 versus $1 a year earlier.

Revenue increased 3.8% to $21.44 billion. Analysts polled by Thomson Reuters expected per-share earnings of $1.02 on revenue of $21.23 billion.

Wells Fargo, run by Chairman and Chief Executive John Stumpf, has been a stock-market favorite among big banks in recent years. The most valuable U.S. bank by market value, Wells Fargo has ridden the recovery in the U.S. economy to 18 straight quarters of year-over-year profit growth through 2014, according to FactSet.

Still, analysts focused on the bank's exposure to oil-price volatility, expenses driven higher in part by compliance costs and changes in the mortgage business.

Much of the bank's earnings call was dominated by the impact from oil volatility. Chief Financial Officer John Shrewsberry said the bank's exposure is about 2% of its total loan portfolio. He said the bank is examining loans on a "name by name basis" and their risk ratings. The bank's long-tenured energy team is examining customers' leverage, hedging, assets and management capability. He added that customers' risk-rating changes could lead to adjustments in the bank's reserves.

Mr. Shrewsberry on Wednesday also pointed to the bank's strong net interest income, helped by loan growth, while adding that fee income remained solid. Net interest income rose 3.5% to $11.18 billion, and fee income climbed 4.1% to $10.26 billion driven by a jump in card fees.

Lending growth remained a bright spot for Wells Fargo. Total loans grew 4.9% from a year ago to $862.55 billion. Auto loans, an increasingly important business for Wells Fargo in recent years, jumped 9.7% from a year earlier to $55.74 billion.

Wells Fargo reported its home lending originations amounted to $44 billion, compared with $50 billion a year earlier and $48 billion in the prior quarter. Mortgage banking revenue totaled $1.52 billion, down 3.5% from a year earlier.

Wells Fargo's mortgage banking results are closely watched, since as the largest U.S. mortgage lender, the bank is viewed as a bellwether for the U.S. housing market. A slump in refinancing in recent quarters has outweighed any gains in new purchases, although analysts at Jefferies have noted that refinancing activity has spiked, while so-called gain-on-sale margins--or the revenue a bank books divided by the value of mortgages originated--have climbed.

Mr. Stumpf said the bank has no intention of returning to joint ventures with its mortgage business and likes the mix of business it currently has. He added that there have been improvements with regulators, the mortgage industry and customers on mortgage loans since it was "too restrictive" earlier.

The fourth biggest U.S. bank by assets, Wells Fargo is viewed by many analysts as a conservative institution that didn't get swept up with as many excesses of the previous bubble era and the regulatory scrutiny that has plagued banks with significant investment banking and trading businesses, although it's still on the hook for mortgage litigation.

During the quarter, Wells Fargo saw expenses move higher even as it has repeatedly worked to lower those costs. Noninterest expense rose 4.7% from a year earlier to $12.65 billion.

Mr. Shrewsberry said the bank's expenses have grown in part due to risk management and compliance-related issues, along with cybersecurity. Mr. Stumpf added the bank has hired more consultants and that it hopes to eventually transition that work back to its own employees. He didn't detail what those consultants are working on.

The San Francisco bank's net interest margin--a key profitability figure that measures the difference between what a bank makes on lending and what it pays depositors--narrowed to 3.04%, compared with 3.27% a year earlier and 3.06% in the prior quarter. Wells Fargo has seen the margin squeezed for several quarters, as deposit growth outstrips its loan growth.

Wells Fargo lost much of the tailwind it had previously seen from improving credit quality on its loan books. Reserve releases fell to $250 million from $600 million a year earlier and $300 million in the prior quarter. Banks generally release reserves as credit conditions improve and they perceive less need to hold reserves against potential loan losses.

Wells Fargo's credit-loss provisions ticked up to $485 million, compared with $363 million a year earlier and $368 million in the prior quarter.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and Emily Glazer at emily.glazer@wsj.com

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