Already Looking Forward to Second QuarterThe good news first -- management showed incredible fiscal awareness this quarter. Although expenses did rise slightly on a sequential basis, overall costs were down 2% year over year. Given the highly competitive nature within this sector, this is no small accomplishment. Unfortunately, though, cost-management was the extent of the positives that I could find in this report. Equally unfortunate was that the 4% sequential increase in expenses, while relatively small, also hurt profitability. Operating income, or what is known in the banking industry as pre-provision net revenue, advanced just 1% year over year and dropped 7% sequentially. This is likely due to the slight sequential uptick in expenses which resulted to earnings miss. Likewise, Well Fargo's net interest margin, which has seen some recent declines, arrived down 33 basis points year over year and 8 basis points from the fourth quarter. As a consequence, net interest income suffered a 3% decline year over year. Now, with these sort of numbers, it should come as no surprise that overall revenue was down 1% both year over year and sequentially. Non-interest income was also disappointing, growing just 2% year over year, while also arriving flat sequentially. I'm sure by now you're noticing a pattern.
Wells Fargo management had a hard time growing the bank's usually strong mortgage lending business, which posted much less favorable activity during the quarter to the extent that loan originations arrived down 13% sequentially. As a result, overall mortgage revenue shed 3% year over year and 9% sequentially.