Wells Fargo, the 4th largest U.S. bank, saw a slight decline in profit for the first quarter but said it “turned the corner” on credit losses with net charge-offs down $83 million and expense provisions down $583 million – both compared to the prior quarter.
It reported earnings of $2.37 billion, or 45 cents a share, for the first quarter, a dip of 2 percent from $2.38 billion, or 56 cents a share, a year ago. Its revenue of $21.4 billion was up 2 percent from first quarter 2009.
But Wells Fargo saw a sharp 25 percent drop in mortgage originations “largely due to a decline in refinance activity.”
“Based on results for the last few quarters and current loss projections, we believe that credit at Wells Fargo has turned the corner with provision expenses already having peaked in third quarter 2009 and net charge-offs having peaked in fourth quarter 2009,” said Chief Financial Officer Howard Atkins.
Provision expense was down $583 million from the prior quarter and” currently expected to continue to decline over the course of 2010,” Wells Fargo said.
Net charge-offs declined $83 million to $5.3 billion. First quarter charge-offs included $123 million related to consolidated loans as part of new accounting rules.
Wells Fargo said provision for credit losses equaled net charge-offs in the first quarter.
Fee income was up 7 percent year over year, led by 20 percent growth in trust and investment fees, 7 percent growth in insurance revenue and 14 percent growth in processing and other fees, Wells Fargo said.
