, the nation's fifth largest bank, reported a 9% gain in first-quarter profits, as rising interest income helped lift overall revenue.
In the quarter, Wells Fargo earned $2 billion, or $1.19 a share, up from $1.86 billion, or $1.08 a share, in the year-ago period. Revenue in the quarter rose 6% to $8.56 billion.
The bank said its first-quarter earnings were reduced by $52 million, or 2 cents a share, by the cost of expensing stock options for its employees.
The Thomson First Call consensus forecast had the bank earning $1.20 a share in the quarter and revenue of $8.62 billion.
In premarket trading, shares of Wells Fargo were slightly higher, rising 9 cents to $64.55.
Wells Fargo, one of the nation's largest mortgage lenders, felt the impact of the slowdown in the housing market in the quarter. The bank said home mortgage revenue declined 43% to $853 million.
Bank officials, however, tried to accentuate the positive by noting that all other revenues rose 17% to $7.7 billion in the quarter.
"We had solid, broad-based, and, in many businesses, accelerating revenue growth, with revenue in businesses other than Home Mortgage up a combined 17% from a year ago,'' said Chief Financial Officer Howard Atkins, in a press release.
In recent years, some have questioned whether Wells Fargo's earnings would hold up in light of the slowdown in the real estate market.
The bank also benefited in the quarter from a continuing improvement in the credit quality of its loan portfolio, which allowed it to set aside less money in the quarter for losses. The bank's provision for loan losses was $433 million, a 26% decline from a year ago.
The bank said total dollar value of loans issued rose 8% in the quarter to $311 billion. Excluding the fickle real estate market, Wells Fargo reported a 17% rise in loans in the quarter, compared to a year ago. It said business loans rose 11% in the quarter.
Net interest income, the money a bank generates from its lending and deposit operations, rose 9% to $4.87 billion. The bank said its net interest margin remained stable in the quarter despite the narrowing of the spread between short- and long-term interest rates.
The net interest margin is a measurement of the profitability of a bank's lending and deposit businesses. For the past few years, many banks have seen their net interest margins squeezed by the narrowing spread between short- and long-term rates. This phenomenon, called the flattening yield curve, has made it more difficult for many banks to earn money from reinvesting customer deposits into higher-yielding investments.