U.S. Bancorp (USB) revealed a stronger-than-expected 56% improvement in first-quarter profit, led primarily by lower net charge-offs that built on a gradually improving economy and increased deposits.

The Minneapolis-based financial holding company posted net income of $1.05 billion, or 52 cents a share, compared with $669 million, or 34 cents a share, in the same quarter last year, ahead of average analyst estimates polled by Thomson Reuters of 49 cents.

Revenue was $4.52 billion, down about 4.3% from $4.72 billion a year ago, just missing the Street’s view of $4.56 billion. Net interest income ticked slightly higher to $2.51 billion from $2.5 billion, with deposits up about 12% to $21.8 billion.

“Our results for the first quarter of 2011 reflected our proven business model during a recovering, yet still uncertain, economic environment,” U.S. Bancorp CEO Richard Davis said in a statement.

The company’s adherence to prudent underwriting coupled with the improving economy helped the bank significantly lower credit costs during the quarter, Davis said, with net charge-offs down during the period, leading to a reserve release of $50 million compared with a reserve build of $175 million.

Net charge-offs in the first quarter were $805 million, with provision for credit losses of $755 million. The company said it expects net charge-offs and nonperforming assets to decline again in the current quarter.

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