Wells Fargo (WFC) earned $3.8 billion, or 67 cents per share, in the first quarter, up 48% from one year ago. Revenue for the bank totaled $20.3 billion, a 5% dip from one year ago. Wells was able to release $1 billion of loan loss reserve from its balance sheet on improved portfolio performance. While other sectors of the bank such as wealth management, fixed income and equity sales improved, income from the mortgage department dropped. Mortgage banking income fell 27% from the previous quarter on falling mortgage originations. Nearly every major bank reported a drop in new mortgages from the fourth quarter. Wells reported $84 billion in originations, down 34% from the previous quarter. Wells set aside $249 million for potential losses from representation and warranties claims on defaulted loans, however, this provision did drop from $464 million in the previous quarter. Not all segments of the mortgage banking department experienced drops. Commercial mortgage servicing was up, as was the bank’s net residential mortgage servicing rights. The merger with Wachovia, one of the largest bank failures in U.S. history, is still on track, Wells said. Retail banking stores converted in Connecticut, Delaware, New Jersey and New York in the first quarter. Wells completed Pennsylvania conversions in April. Florida branches are expected to convert in June and July, while the rest of the Eastern markets should finish converting by the end of the year. Write to Jon Prior. Follow him on Twitter @JonAPrior.

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