Wells Fargo reported record net income of $5.2 billion for first quarter 2013, up from $4.2 billion for first quarter 2012, and up from $5.1 billion for fourth quarter 2012.

“Our company earned $5.2 billion in first quarter 2013, the highest quarterly profit in our history—another milestone demonstrating how Wells Fargo’s diversified business model continued to produce outstanding results,” said Chief Financial Officer Tim Sloan. “This is our 13th consecutive quarter of EPS growth and 8th consecutive quarter of record EPS. Average loans and deposits increased in the quarter, expenses were lower, and credit metrics improved with the net charge-off ratio down to the lowest level since second quarter 2006.”

Revenue was $21.3 billion in first quarter 2013, compared with $21.9 billion in fourth quarter 2012, and pre-tax pre-provision profit was $8.9 billion. “Revenue was down linked quarter largely due to the absence of the higher than average equity gains we recognized last quarter, the expected cyclicality in the mortgage business, and two fewer days in the quarter, which had a negative impact on both net interest income and noninterest income linked quarter trends,” said Sloan. “We continue to be pleased with the revenue growth in many of our core businesses, as evidenced by the strong year-over-year growth in brokerage advisory and commission fees, investment banking, card fees, and deposit service charges, all of which were up over 10 percent. That’s the benefit of our diversified business model and among the many drivers of our continued success.”

Loans

Total loans were $800.0 billion at March 31, 2013, up $392 million from December 31, 2012. Included in this growth was $3.4 billion of 1-4 family conforming first mortgage production retained on the balance sheet, and a decrease of $3.7 billion due to the continued runoff in the liquidating/non-strategic portfolio. Total average loans were $798.1 billion, up $10.9 billion from prior quarter. The asset-backed finance, commercial banking, corporate banking, credit card, government and institutional banking, mortgage, retail brokerage, real estate capital markets, and retail sales finance portfolios all experienced year-over-year, double-digit growth.

Credit Quality

“Credit quality continued to improve in the quarter, and in several of our portfolios the performance was particularly strong,” said Chief Risk Officer Mike Loughlin. “Credit losses were $1.4 billion in first quarter 2013, compared with $2.1 billion in fourth quarter 2012, an improvement of 32 percent. Additionally, the loss rate of 0.72 percent was the lowest level since second quarter 2006.3 Nonperforming assets declined by $1.6 billion, or 7 percent, from fourth quarter 2012. As a result of the continued positive improvement to credit performance, we released $200 million from the allowance for credit losses in the first quarter. We continue to expect future reserve releases in 2013 absent a significant deterioration in the economic environment,” said Loughlin.

Wholesale Banking

Wholesale Banking reported net income of $2.0 billion, up $13 million, or 1 percent, from fourth quarter 2012. Revenue of $6.1 billion increased $93 million, or 2 percent, from fourth quarter 2012 as strong growth across many businesses, including asset-backed finance, equity funds and sales and trading were partially offset by lower investment banking and PCI resolutions. Wholesale Banking average loan balances increased 2 percent to $285 billion in the first quarter. Noninterest expense increased $84 million, or 3 percent, from fourth quarter 2012 on seasonally higher personnel benefits expense and insurance commissions. The provision for credit losses was a net recovery of $58 million in the first quarter, compared with a provision of $60 million in the fourth quarter, primarily due to historically low net charge-offs.

Net income was up $177 million, or 9 percent, from first quarter 2012. Revenue increased $53 million, or 1 percent, from first quarter 2012 driven by broad-based business growth and strong loan and deposit growth. Partially offsetting this growth was a decline in PCI resolutions. Noninterest expense increased $37 million, or 1 percent, from first quarter 2012 due to higher personnel expenses related to revenue growth and higher non-personnel expenses related to growth initiatives and compliance and regulatory requirements. The provision for credit losses decreased $153 million from first quarter 2012 due to a $203 million reduction in credit losses which was partially offset by a lower level of reserve release. The first quarter 2013 provision included a $50 million reserve release, compared with a $100 million reserve release a year ago.

• Six percent year-over-year average loan and 6 percent average asset growth—the growth came from nearly all portfolios, including asset-backed finance, capital finance, commercial banking, commercial real estate, corporate banking and government and institutional banking

• Eleven consecutive quarters of average loan growth in Commercial Banking

• Investment banking revenue from Wholesale customers increased 14 percent from first quarter 2012, including revenue from commercial and corporate customers which was up 2 percent.

Read the full Wells Fargo Q1 2013 Earnings Press Release.