Wells Fargo & Co. said Wednesday its first-quarter earnings fell 1 percent to $2.37 billion as the bank dealt with continuing losses on consumer loans.
However, the bank said it believes it has "turned the corner" with its credit problems.
The results have surpassed expectations and provided further evidence that the banking industry and the economy are recovering. However, Wells Fargo stock was down 2 percent at $33.01 in pre-opening trading.
San Francisco-based Wells Fargo joined other big banks in the most recent quarter in reporting improvement in their consumer loan businesses.
Wells Fargo set aside $5.3 billion to cover soured loans during the quarter, down 9.9 percent from $5.9 billion in the previous quarter. A year earlier, it had set aside $4.6 billion. Many analysts predict loan losses should peak some time in the first half of 2010.
"We believe quarterly provision expenses and quarterly total credit losses have peaked," Wells Fargo Chief Credit and Risk Officer Mike Loughlin said in a statement.
Wells Fargo earned 45 cents per share after payment of dividends on preferred stock, versus $2.38 billion, or 56 cents per share, a year ago. Analysts expected profit of 42 cents per share in the most recent quarter, according to Thomson Reuters.
Revenue rose 2 percent to $21.4 billion.
As one of the biggest banks in the country, Wells Fargo's performance provides insight into the current financial state of consumers. With the acquisition of Charlotte, N.C.'s Wachovia Corp. in late 2008, its operations now stretch across the country.
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