Wells Fargo & company reported net income of $5.8 billion, or $1.04 per diluted common share, for first quarter 2015.
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This compares 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.
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 our consumer and wholesale businesses.
Net interest income in first quarter 2015 declined $194 million on a linked-quarter basis to $11 billion primarily as a result of two fewer days relative to the fourth quarter of 2014. Additionally, interest income from variable sources, including purchased credit-impaired (PCI) loan resolutions and loan fees included in interest income, declined linked quarter.
These impacts were partially offset by growth in average commercial and consumer loan balances, a modest increase in the duration of the commercial loan portfolio, and lower deposit and long-term debt costs. Net interest margin was 2.95 percent, down 9 basis points from fourth quarter 2014.
Approximately 5 basis points of the decrease was from customer driven deposit growth, which had minimal impact to net interest income but was dilutive to net interest margin, and 3 basis points of the decline was due to lower income from variable sources. The net impact of all other growth and repricing was neutral in the first quarter.
Noninterest income was $10.3 billion, up $29 million from the prior quarter. Higher revenue from trading activities, debt security gains, mortgage origination gains and insurance was offset by lower other income (which included a $217 million gain on the sale of government guaranteed student loans in fourth quarter 2014), lower mortgage servicing income, and seasonally lower card fees and deposit service charges.
Trust and investment fees were $3.7 billion, down $28 million from the prior quarter. Higher retail brokerage asset-based fees and transaction revenue were offset by lower investment banking fees. Mortgage banking noninterest income was $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 percent, up from 1.80 percent in fourth quarter. Net mortgage servicing rights (MSRs) results were $108 million, compared with $235 million in fourth quarter 2014.
Noninterest expense declined $140 million from the prior quarter to $12.5 billion, as seasonally higher employee benefits and incentive compensation of $688 million were offset by costs that typically decline in the first quarter including outside professional services ($252 million lower), equipment costs ($87 million lower) and advertising and promotion ($77 million lower).
First quarter salary expense was $87 million lower than fourth quarter due to two fewer days in the quarter, and revenue-related compensation was $60 million lower, driven primarily by lower investment banking revenue.
The efficiency ratio was 58.8 percent in first quarter 2015, an improvement from 59 percent in fourth quarter 2014. The company expects to operate within its targeted efficiency ratio range of 55 to 59 percent for full year 2015. ■