NEW YORK (Reuters) - Wells Fargo & Co posted a record first-quarter profit of $3.05 billion as a surge in mortgage banking helped it displace Bank of America Corp as the nation's largest home lender.
Net income for Wells Fargo, excluding payment of preferred stock dividends, rose 19 percent to $2.38 billion from $2 billion a year earlier, the bank reported on Wednesday.
Per-share earnings fell to 56 cents from 60 cents because of an increase in shares outstanding. The fourth-largest U.S. bank by assets acquired Wachovia Corp in a $12.5 billion all-stock acquisition.
Excluding one-time items, profit for San Francisco-based Wells Fargo was 59 cents per share, 4 cents more that analysts on average had expected, Reuters Estimates said.
Revenue totaled $21.02 billion, topping the average $19.91 billion forecast.
Wells Fargo shares fell 5.2 percent to $17.84 in premarket trading.
Wells Fargo returned to profit after losing money in the 2008 fourth quarter, its first loss in seven years. The bank's largest shareholder is Warren Buffett's Berkshire Hathaway Inc
Profit and revenue were slightly higher than Wells Fargo had projected on April 9, an announcement that sent the bank's shares up 32 percent that day.
Net chargeoffs totaled $3.26 billion, down from about $6.1 billion in the fourth quarter from Wells Fargo and Wachovia combined. Wells Fargo set aside $4.56 billion for credit losses and ended the first quarter with a $22.85 billion allowance. Total nonperforming assets were $12.61 billion.
Wells Fargo made $101 billion of mortgage and home equity loans in the quarter, twice as much as in the fourth quarter and above the $89.3 billion that Bank of America made. Wells Fargo also said it ended the quarter with $100 billion of unclosed mortgages, suggesting a strong start to the second quarter.
Lenders have benefited from a surge of refinancings as the benchmark rate for 30-year mortgages fell below 5 percent.
Though Bank of America in 2008 bought Countrywide Financial Corp, which had been the largest U.S. mortgage lender, it has slashed Countrywide's subprime and adjustable-rate mortgage operations to limit lending risk.
Wachovia itself had been felled by mortgage losses at the former Golden West Financial Corp, which it bought in 2006.
Wells Fargo has already written down much of Wachovia's bad loans, and Chief Financial Officer Howard Atkins said "as long as there is no additional deterioration, future losses have been eliminated" on that portfolio.
Shares of Wells Fargo closed Tuesday at $18.81 on the New York Stock Exchange. Through Tuesday, the shares had fallen 36 percent this year, compared with a 23 percent decline in the KBW Bank Index <.BKX>.
(Reporting by Jonathan Stempel; editing by John Wallace)
