One quarter means little to Fools when ferreting out appealing investment opportunities, but in the case of bank icon Wells Fargo (NYSE:WFC), first-quarter results illustrate just why it is a well-respected financial institution.

Recent results weren't spectacular, but Wells was able to grow total revenue over 7% and earnings 10%. Return on equity fell slightly, but stood at a respectable 19.65%, as return on assets increased 17 basis points. But one metric jumped out at me: net interest margin (NIM). It didn't increase much -- only 10 basis points -- but the fact that it went up sets the company apart from its rivals. Below is a rundown of NIM results from banks that have recently reported results.

Q1 2007

Q1 2006


Wells Fargo




Citigroup (NYSE:C)




Wachovia (NYSE:WB)




Marshall & Ilsley (NYSE:MI)




Regions Financial (NYSE:RF)




KeyCorp (NYSE:KEY)




So far this earnings season, banks are blaming a flat/inverted yield curve for shrinking the spread they make from charging interest on loans and paying interest on deposits. Wells Fargo is subject to the same conditions, so why was it able to increase NIM? It specifically referenced core deposit growth and an "increase in average earnings assets."

NIM isn't the only metric that determines a bank's fortunes, but it is important and demonstrates that Wells Fargo has its act together and is able to exert its will on the market through "cross-selling" and an unfailing ability to grow in nearly any industry conditions. This straightforward sales strategy and emphasis on traditional banking services are key reasons Wells has been able to grow revenue and earnings at double-digit rates for more than two decades.

For an overview of competing operating strategies, mid-size banks such as Regions Financial and KeyCorp are exiting subprime businesses at what could turn out to be the peak of pessimism. Marshal & Ilsley is also spinning off an underperforming segment, and Wachovia and Citigroup are focusing on major acquisitions to keep growth chugging along, which may be backfiring at mighty Citi. Seems so complicated -- no wonder investors and consumers are attracted to Wells Fargo.        

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.