Wells Fargo profit tops $2 bln despite mortgages

NEW YORK (Reuters) - Wells Fargo & Co. <WFC.N> on Tuesday said first-quarter profit rose 9 percent, topping $2 billion for the first time, as growth in deposits and fewer loan losses offset weaker results from mortgage banking.

Net income for San Francisco-based Wells Fargo, the No. 5 U.S. bank, rose to $2.02 billion, or $1.19 per share, from $1.86 billion, or $1.08, a year earlier.

Revenue rose 6 percent to $8.56 billion, despite a 43 percent decline in home mortgage revenue to $853 million, while expenses rose 8 percent to $5.07 billion.

Analysts polled by Reuters Estimates on average forecast profit of $1.20 per share on revenue of $8.62 billion.

Results were reduced by $52 million, or 2 cents per share, to expense stock options, and a $184 million charge from the valuation of mortgage servicing rights. The bank also took a $127 million pre-tax gain to sell some Puerto Rico operations.

"We had solid, broad-based and, in many businesses, accelerating revenue growth, with revenue in businesses other than home mortgage up a combined 17 percent from a year ago," Chief Financial Officer Howard Atkins said in a statement.

Retail banking profit fell 11 percent to $1.21 billion. Profit from wholesale banking for businesses rose 17 percent to $528 million, and Wells Fargo Financial profit more than quintupled to $280 million.

Wells Fargo has won a supporter in billionaire investor Warren Buffett, whose Berkshire Hathaway Inc. <BRKa.N> <BRKb.N> insurance and investment company at year end owned 5.7 percent of the bank's shares.

Wells Fargo shares closed Monday at $64.46 on the New York Stock Exchange. The shares have risen 3 percent this year, the same as the Philadelphia KBW Bank Index <.BKX>.

MORTGAGE LENDING GROWS

Wells Fargo, the largest U.S. mortgage lender other than Countrywide Financial Corp. <CFC.N>, said home mortgage originations rose 40 percent from a year earlier to $91 billion. Pending applications as of March 31 were unchanged at $59 million.

The bank set aside $433 million for bad loans, down 26 percent, and net chargeoffs also fell 26 percent to $433 million. Nonperforming assets rose 31 percent to $1.85 billion.

Net interest margin, the difference between what the bank earns on loans and pays on deposits, fell to 4.85 percent from 4.87 percent.

Net loans rose 6 percent to $302.8 billion, deposits rose 13 percent to $308.3 billion, and assets rose 13 percent to $492.4 billion.