Today Wells Fargo (WFC -0.26%) reported its net income stood at $5.9 billion in the first quarter of 2014 and its earnings per share rose to $1.05, each increasing 14% over the first quarter of 2013.
In total Wells Fargo saw its revenue decline 3% in the first quarter from $21.2 billion in 2013 to $20.6 billion in 2014. This was the result of a 46% decrease in its mortgage banking revenue, which fell from $2.8 billion to $1.5 billion. However this decline was partially offset by a nearly $750 million increase in its gains on equity investments.
Offsetting the declining revenue was a significant decline in provision for credit losses -- what Wells Fargo expects to lose on its loans -- which fell from $1.2 billion to $325 million, a decrease of nearly 75%. In addition, it decreased operating expenses and taxes, which fell from $12.4 billion to $12.0 billion, and $2.4 billion to $2.3 billion. These represented declines of 4% and 6%, respectively.
"We are very pleased with Wells Fargo's performance in the first quarter, particularly in some of the fundamental drivers of long term growth: loans, deposits, investments, capital and credit quality," noted the chief financial officer of Wells Fargo, Tim Sloan, in the press release. "Revenue remained relatively stable despite the impact of fewer days in the quarter, reflecting contributions from our diversified sources of fee revenue."
Wells Fargo also continued to improved profitability metrics as its return on average assets rose from 1.49% to 1.57%, and its return on equity jumped from 13.6% to 14.4%. The bank also reported its efficiency ratio -- which measures the cost of each dollar of revenue -- improved to 57.9%, ahead of 58.3% in the first quarter of last year.
"Our solid first quarter results again demonstrated the ability of our diversified business model to perform for shareholders," added the CEO and chairman of Wells Fargo, John Stumpf ,in the press release. Stumpf concluded by saying, "As we move forward in 2014, I am optimistic about the opportunities ahead and believe that we are well positioned for growth."
