Wells Fargo first-quarter profit falls slightly as revenue climbs

Associated Press

Wells Fargo & Co. said Tuesday that its first-quarter earnings fell slightly from the same period a year earlier. The bank got a boost from increased mortgage lending, but a key measure of its profitability declined in the quarter.

Net income after dividends to preferred shareholders fell to $5.5 billion for the January-to-March period, or $1.04 a share, compared with $5.6 billion, or $1.05, a year earlier.

Revenue climbed to $21.3 billion from $20.6 billion a year earlier.

Gains from trading and mortgage originations were offset by lower income from other parts of its business, such as seasonally lower card fees and deposit service charges. The bank also benefited from lower tax expenses.

The bank's net interest margin, a closely watched measure of the bank's profitability, fell to 2.95% from 3.04% in the previous quarter.

Wells Fargo Chief Executive John Stumpf said on a conference call that he believed the economic recovery in the U.S. remained "on track," bolstered by low interest rates, improving consumer and business confidence and improving employment prospects.

"We have over 90 different businesses that are benefiting from the continued strength in the U.S. economy," Stumpf said.

The earnings beat analysts' expectations of 98 cents a share. Revenue was in line with estimates of $21.3 billion.

Wells Fargo said Friday that it would acquire a $9-billion portfolio of commercial real estate loans from GE Capital, which is getting out of the lending business to focus on its core manufacturing industry. Wells Fargo will also lend Blackstone, a private-equity company, $4 billion to purchase some of GE's real estate holdings.

Wells Fargo shares fell 40 cents, or 0.7%, to $54.19.

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