Wells Fargo (WFC), the largest mortgage lender in the U.S., reported record earnings in the first quarter.
The San Francisco-based bank earned $4.2 billion, or 75 cents per share, a 10% increase from the $3.8 billion profit one year prior.
Revenue jumped to $21.6 billion in the first quarter from $20.6 billion last year. It's the highest quarterly revenue in more than two years, the bank said.
Wells still held nearly $2 billion in provision for credit losses at the end of the first quarter. It did release $400 million from its loan loss reserve, compared to a $600 million release in the previous three months.
Wells Chief Financial Officer Tim Sloan said he expects expenses to drop by as much as $700 million in the second quarter. Roughly $100 million in expenses during the first quarter came from consent orders signed with federal regulators last spring to settle mortgage servicing issues.
Mortgage originations totaled $129 billion in the first three months of 2012, up significantly from $84 billion in the same period last year and up from $120 billion in the last quarter of 2011.
The bank did say 15% of the originations during the first quarter were workouts under the Home Affordable Refinancing Program.
Demand is also increasing at Wells. The bank reported $188 billion in mortgage applications as of the end of the quarter, up 20% from the previous three months.