Wells Fargo (WFC) reported net income of $5.8 billion in the first quarter, a slight drop from $5.9 billion in the first quarter of 2014.

While Wells Fargo’s net income did drop slightly year-over-year, the bank’s net income rose over the fourth quarter of 2014, when the bank reported net income of $5.7 billion.

“Our solid first quarter results again reflected the benefit of our diversified business model and the continued focus of our 266,000 team members on serving the needs of consumer and business customers," said Wells Fargo Chairman and CEO John Stumpf.

“We continued to strengthen our customer relationships in the quarter, as reflected in strong growth in deposits and primary checking customers,” Stumpf continued. “In addition, our mortgage business was able to serve more customers by refinancing their mortgage loans with lower rates. Capital levels remained strong, and we were pleased to receive a non-objection to our 2015 Capital Plan, which included a proposed increase in our dividend rate to $0.375 per common share in second quarter 2015, subject to Board approval.”

On a per share basis, Wells Fargo reported net income of $1.04 per diluted common share for first quarter 2015, compared with $5.9 billion, or $1.05 per share, for first quarter 2014, and up from $5.7 billion, or $1.02 per share, for fourth quarter 2014.

Wells Fargo’s revenue was $21.3 billion in the first quarter, compared with $21.4 billion in fourth quarter 2014, as higher noninterest income was more than offset by the decline in net interest income primarily due to two fewer days in the quarter. Revenue sources remained balanced between spread and fee income and the sources of fee income were diversified among its consumer and wholesale businesses, the bank said.

In mortgages, Wells Fargo reported noninterest income of $1.5 billion, up $32 million from fourth quarter. During the first quarter, residential mortgage originations were $49 billion, up $5 billion linked quarter, while the gain on sale ratio was 2.06% , up from 1.80% in fourth quarter. Net mortgage servicing rights results were $108 million, compared with $235 million in fourth quarter 2014.

“Wells Fargo earned $5.8 billion in first quarter 2015, an increase of $95 million from the prior quarter, including the benefit from lower income tax expense in the first quarter,” Wells Fargo Chief Financial Officer John Shrewsberry said. “Credit quality remained strong, as net charge-offs continued to decline. Expenses also decreased from the prior quarter and our efficiency ratio improved. We remained within our targeted ranges for ROA, ROE, efficiency ratio and net payout ratio, while maintaining record liquidity and capital levels."

Wells Fargo also reported its loans 90 days or more past due and still accruing (excluding government insured/guaranteed) totaled $841 million at March 31, 2015, down from $920 million at December 31, 2014. Loans 90 days or more past due and still accruing with repayments insured by the Federal Housing Administration or predominantly guaranteed by the Department of Veterans Affairs for mortgages and the U.S. Department of Education for student loans under the Federal Family Education Loan Program were $15.5 billion at March 31, 2015, down from $16.9 billion at December 31, 2014.

Additionally, Wells Fargo reported:

Strong growth in average loans and deposits:

  • Total average loans of $863.3 billion, up $39.5 billion, or 5%, from first quarter 2014
  • Quarter-end loans of $861.2 billion, up $34.8 billion, or 4%
  • Quarter-end core loans of $802.7 billion, up $54.2 billion, or 7%
  • Total average deposits of $1.2 trillion, up $97.5 billion, or 9%

Continued strength in credit quality:

  • Net charge-offs of $708 million, down $117 million from first quarter 2014
  • Net charge-off rate of 0.33% (annualized), down from 0.41%
  • Nonaccrual loans down $2.1 billion, or 15%
  • $100 million reserve release

Maintained strong capital levels and continued share repurchases:

  • Common Equity Tier 1 ratio under Basel III (Advanced Approach, fully phased-in) of 10.53%
  • Period-end common shares outstanding down 7.4 million from fourth quarter 2014
  • No objection from the Federal Reserve to our 2015 Capital Plan, which included a proposed dividend rate of $0.375 per share for second quarter 2015, subject to Board approval, up from $0.35 per share in the first quarter
  • Approval to use Advanced Approaches for capital requirements granted from the Federal Reserve and the Office of the Comptroller of the Currency starting in second quarter 2015

“Credit losses were $708 million in first quarter 2015, compared with $735 million in fourth quarter 2014, a 4% improvement," said Chief Risk Officer Mike Loughlin. "The quarterly loss rate (annualized) was 0.33% with commercial losses of 0.04 percent and consumer losses of 0.60%. Nonperforming assets declined by $618 million, or 16% (annualized), from the prior quarter, and early stage delinquencies dropped. We released $100 million from the allowance for credit losses in the first quarter, reflecting continued credit quality improvement. Future allowance levels may increase or decrease based on a variety of factors, including loan growth, portfolio performance and general economic conditions."