NEW YORK (AP) — Wells Fargo, the third-biggest U.S. bank by assets, 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.
EARNINGS: 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 share.
Revenue climbed to $21.3 billion from $20.6 billion a year earlier.
HOW IT HAPPENED: 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 percent from 3.04 percent in the previous quarter.
THE QUOTE: Wells Fargo CEO 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," said Stumpf said on a conference call. "I'm optimistic that the improving U.S. economy will continue to provide Wells Fargo with many opportunities."
WHAT THE ANALYSTS EXPECTED: The earnings beat analysts' expectations of 98 cents a share. Revenue was in line with estimates of $21.3 billion.
OF NOTE: 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's chief financial officer John Shrewsberry said he expected the deals to be finalized in the second and third quarters.
HOW THE STOCK REACTED: Shares in Wells Fargo fell 94 cents, or 1.2 percent, to $53.96. Wells Fargo's stock has dropped 1.8 percent this year. That's in line with the performance of the financial sector in the Standard & Poor's 500 index, which has dropped 1.9 percent since the start of the year.