Wells Fargo & Co., the largest U.S. mortgage lender, reported a second consecutive decrease in its quarterly profit today as expenses rose and it set aside more money to cover bad loans, Reuters reported.

Net income applicable to Wells Fargo’s common shareholders fell to $5.36 billion from $5.42 billion. However, profit rose slightly on a per-share basis to $1.03 from $1.01 as outstanding diluted shares declined 2 percent after the bank bought back shares. Analysts on average had expected a profit of $1.03 per share, according to Thomson Reuters I/B/E/S.

Wells Fargo’s fundamentals remain strong, Chairman and CEO John Stumpfsaid in a release.

“Wells Fargo’s second-quarter results reflected continued strength in the fundamental drivers of long-term growth,” Stumpf said. “Compared with a year ago, we grew loans, deposits and capital, and our balance sheet remained strong. Credit results also improved, and we continued to adhere to our disciplined approach to risk management.”

Wells Fargo made $62 billion of home loans in the quarter ended June 30, up from $47 billion a year earlier and $49 billion in the first quarter.

However, low interest rates have prevented Wells Fargo and its regional rivals from capitalizing on their growing deposit base, according to Reuters.

Wells Fargo set aside $300 million to cover credit losses in the second quarter, up 38.2 percent from a year earlier.

The bank’s non-interest expenses rose 2.3 percent to $12.47 billion, accounting for about 58.5 percent of its revenue. Wells Fargo has been targeting expenses of 55 to 59 percent of revenue.

Mortgage lending revenue, which accounts for 17 percent of the bank’s non-interest income, fell 1 percent to $1.71 billion.