Wells Fargo (WFC -0.56%) reported a profit of just $0.01 per share in the first quarter, well below expectations after the coronavirus pandemic forced the bank to set aside a much larger amount of cash to cover potential loan losses.

The main reason for the subdued profit, according to CFO John Shrewsberry, is a $3.1 billion addition to the company's reserves for loan losses and a $950 million impairment of securities "driven by economic and market conditions."

Wells Fargo

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The results are a significant drop from the fourth quarter of 2019, when Wells Fargo reported earnings of $0.60 per share, and an even bigger drop from last year's first quarter, when the bank reported $1.20 per share.

"We have taken comprehensive steps to help customers, employees and communities," CEO Charlie Scharf said in a statement. He added, "We will continue to evaluate this fluid situation and take additional actions as necessary."

Wells Fargo's total quarterly provision for credit losses, an expense that banks use to add to their total reserves to cover loan and other losses, came in at just over $4 billion. That's up from $644 million in the linked quarter and $845 million a year ago.

Net charge-offs, debt on loans unlikely to be recovered, grew 6 basis points (or six-hundredths of a percentage point) over the fourth quarter of 2019 to settle at 0.38%. 

Nonaccrual loans (loans 90 days past due) increased by $810 million, or 15%, from the fourth quarter, reaching $6.2 billion. That increase was primarily driven by commercial nonaccrual loans, which increased $621 million.

The bank adopted the new current expected credit loss accounting method -- which was expected to increase reserves at many banks -- and actually saw a $1.3 billion reduction in its provision for credit losses.

Unlike JPMorgan Chase, which reported record trading revenue this quarter, Wells Fargo reported that its trading-related revenue was down 15% over the linked quarter and 27% year over year.

In line with past quarters, the company paid a quarterly common stock dividend of $0.51 per share.