Wells Fargo & Co. said first-quarter profit fell 5.9% as the firm set aside more money for soured energy loans and expenses increased.
Net income slid to $5.46 billion, or $0.99 a share, from $5.8 billion, or $1.04, a year earlier, the San Francisco-based lender said Thursday in a statement. That beat the $0.97 average estimate of 29 analysts surveyed by Bloomberg.
Chief Executive Officer John Stumpf has sought to keep expenses in check, while increasing deposits and expanding the bank's loan portfolio with strategic acquisitions. Wells Fargo shares fell 11% in the first three months of the year, the worst quarterly performance since 2011, as interest rates remained near record lows.
"While challenges in the energy industry and persistent low rates impacted our bottom line, our diversified business model was again beneficial to our results," Chief Financial Officer John Shrewsberry said in the statement.
Wells Fargo shares fell 1.1% to $48.48 at 8:32 a.m. in early trading in New York.
Profit in Wells Fargo's community-banking division, which houses the branch-based business as well as mortgage and credit card lending, declined 7.1% from a year earlier to $3.3 billion. Net income in wholesale banking, which includes the commercial real estate business and securities unit, fell 2.7% to $1.92 billion. Wealth and investment-management posted profit of $512 million, a 3.2% drop.
The bank's efficiency ratio, a measure of how much it costs to generate a dollar of revenue, fell to 58.7%, near the upper end of the firm's target range.
Revenue from the business of making the loans and servicing them rose 3.3% in the quarter to $1.59 billion on $44 billion in originations. Wells Fargo, the biggest U.S. home lender, agreed in February to pay $1.2 billion to resolve U.S. government claims related to its Federal Housing Administration mortgage practices. The agreement covered loans made under the program from 2001 to 2010.
Earlier Thursday, Bank of America Corp. said first-quarter net income fell 13% on a drop in trading and underwriting revenue, while PNC Financial Services Group Inc., the second-largest U.S. regional bank, reported profit that missed analysts' estimates as provisions for bad loans almost tripled from a year earlier. JPMorgan Chase & Co., the largest U.S. bank, on Wednesday posted profit that beat Wall Street estimates on cost cuts and a smaller decline in trading revenue than most analysts predicted. Citigroup Inc. is scheduled to report on Friday, with Morgan Stanley and Goldman Sachs Group Inc. releasing results next week.
