Wells Fargo Profit Rises 5%

Wells Fargo & Co. reported a 5% increase in first-quarter profit Tuesday but fell slightly short of analyst estimates after accelerating its time frame for writing off bad loans.

The San Francisco-based banking company earned $1.86 billion, or $1.08 a share, for the period ended March 31. That compares with $1.77 billion, or $1.03 a share, a year ago. Revenue rose 13% to $8.09 billion.

Analysts had predicted that Wells would earn a penny more a share. Its shares fell 58 cents to $58.93 on the New York Stock Exchange.

Joe Morford, a financial services analyst with RBC Capital Markets, wasn’t disappointed in the earnings, saying that the company’s “balance sheet restructuring will put them in a better position going forward.”

Wells took pretax charges totaling $410 million during the quarter, including a $163-million charge related to its consumer finance business. Chief Financial Officer Howard Atkins said the charge resulted from changing the way Wells’ consumer finance business writes off delinquent assets.

In the past, Wells waited 180 days to recognize losses. Now, it’s writing off bad loans within 120 days, Atkins said, and that brings the subsidiary into conformity with the lending standards of other Wells operations.

The move was not mandated, he noted, but “we thought it was the prudent thing to do.”

The remainder of the charges were related to accounting changes and losses on the sale of old, low-yielding loans, he said.

“If they hadn’t done those things, they could have significantly exceeded their earnings expectations, but then they would not have been as well positioned for the future,” said Chris Blum, an analyst at Edward Jones & Co. in St. Louis. “We want to identify high-quality companies that you can own for the long term. Wells Fargo is one of those companies.”

The company’s top line -- revenue -- was up in virtually every category, analysts said.

Also Tuesday:

* Seattle-based Washington Mutual Inc. reported a 14% decline in quarterly earnings, posting net income of $902 million, or $1.01 a share, versus $1.05 billion, or $1.18 a share, a year earlier. The year-earlier numbers were boosted by the sale of a subsidiary for $399 million. Without that sale in 2004, Washington Mutual’s first-quarter profit this year would have soared 38%. Washington Mutual shares rose 81 cents to $39.02 on the NYSE.

* Minneapolis-based U.S. Bancorp said first-quarter net income rose 6% to $1.07 billion, or 57 cents a share, versus $1.01 billion, or 52 cents a share, a year earlier. Earnings matched analyst estimates. U.S. Bancorp shares fell 35 cents to $27.92 on the NYSE.

Times wire services were used in compiling this report.