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Wells Fargo (NYSE:WFC) reported higher first-quarter profits on Friday, but shares tumbled in a broad sell-off spurred by somewhat disappointing earnings from JPMorgan (NYSE:JPM), the nation’s largest bank and the the first to report this earnings season.
Wells Fargo, the nation’s fourth-largest bank, reported net income of $4.25 billion, or 75 cents a share, compared with $3.76 billion, or 67 cents a share, in the same period a year earlier. The average estimate from analysts was 73 cents per share, according to Thomson Reuters I/B/E/S.
Though profits were higher, the bank’s expenses increased as well, from $12.5 billion in the fourth quarter to $13 billion in the first, partly due to higher personnel costs but also expenses related to higher legal reserves.
Mortgage banking income rose from $2 billion a year ago to $2.8 billion in the most recent quarter. The bulk of the bank’s mortgage applications were for refinancings. The lender’s loan-loss provision declined, from $2.2 billion in the 2011 first quarter to $2 billion in the first three months of 2012. The bank boosted results by reversing reserves it had previously booked for bad loans for the eight straight quarter.
“Wells Fargo delivered outstanding first quarter results driven by strong revenue growth,” CEO John Stumpf said in a statement. “Our continued performance for shareholders through a variety of economic environments is a testament to our diversified business model.”
Still, the company seems to have fallen short of investors’ expectations. Shares were down 1.82 percent in mid-morning trading to $33.40.
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