NEW YORK, N.Y. - Wells Fargo, the nation's biggest mortgage lender, said its first-quarter profit surged 23 per cent after it cut expenses.
The bank's expenses fell nearly five per cent in the quarter, helped by lower borrowing costs and a wrongful foreclosure settlement that ended fees to consultants. The lower costs offset a slight decline in revenue as mortgage lending slowed.
Net income rose to $4.93 billion from $4.02 billion a year earlier. On a per-share basis, earnings were 92 cents, beating the 89 cents forecast by Wall Street. Revenue fell 2 per cent to $21.3 billion and missed expectations.
The bank's expenses fell $593 million to $12.4 billion. Wells says expenses will fall further from first quarter levels in the coming three months.
Wells Fargo and nine other banks reached with the government in January to end charges that they had wrongfully foreclosed on some homeowners. The lender said that the costs associated with reviewing its foreclosure policies had amounted to about $125 million a quarter.
Wells Fargo said it would pay $766 million and set aside an extra $1.2 billion for "foreclosure prevention actions," such as modifying mortgages for struggling homeowners.
Wells Fargo was little known outside the Western U.S. before scooping up a teetering Wachovia in the depths of the financial crisis in 2008. The bank has turned a profit every quarter since 2009, the year it wrapped up its acquisition of Wachovia.
The Federal Reserve said last month that Wells Fargo passed its annual checkup, a "stress test" to measure how a bank would fare in a severe recession. The Fed cleared the bank to raise its quarterly dividend by a nickel to 30 cents per share.
Investors weren't blown away by the results. The bank's stock fell 74 cents, or 1.6 per cent, to $36.72, paring this year's advance to 7.5 per cent.