Wells Fargo saw an increase of 13% in profits for the first quarter. The company reported earnings of $4.2 billion, or $0.75 a share. The results were higher than the $0.73 a share forecasted by analysts. Revenue increased to $21.64 billion, from $20.33 billion. It was the highest quarterly revenue reported by the bank in over two years and the seventh-straight rise in quarterly net income for Wells Fargo.
Strong results were expected from Wells Fargo after the bank moved its earnings announcement up by several days. The bank’s chief executive, John G. Stumpf, said in a statement, “Wells Fargo delivered outstanding first-quarter results driven by strong revenue growth. Our continued performance for shareholders through a variety of economic environments is a testament to our diversified business model.” Wells Fargo is one of the nation’s largest consumer lenders.
Wells Fargo has had plenty of good news lately. The company’s loan portfolio continued to improve. Mortgage originations were up and the bank saw improvements in the lending business. Jim Sinegal, a Morningstar analyst, said in a recent report, “Wells Fargo stands out from its peers not only due to its long history of superb management, but also because of its relatively simple business model, making it our favorite of the big four American banks.”
Profit in the community banking division increased 8% to $2.3 billion. Greater mortgage banking income and deposit growth helped the unit’s revenue jump to $764 million. Home mortgage originations amounted to $129 billion, up from $84 billion for the same quarter a year earlier. The wholesale banking unit reported a $1.9 billion profit, up 14% from the first quarter of 2011. Improved earnings were also reported at the unit that caters to corporations.
The bank received high marks from the Federal Reserve’s latest round of stress tests, which resulted in the bank raising its dividend from $0.12 to $0.22 per share. The latest earnings report detailed an allowance for credit losses that amounted to $19.1 billion, down from $22.4 billion in the same quarter a year earlier. The bank’s reserve for bad loans decreased to $18.9 billion, $3.1 billion lower than in the first quarter of 2011.