first_imgNEW YORK – A deluge of banks earnings on Tuesday took the pulse of the industry at a time growing mortgage and credit woes were forcing banks to charge off more loans or raise reserves against future defaults. Rising core deposits and loans boosted first-quarter income at Wells Fargo & Co. 11 percent, despite growing problems in its subprime mortgage portfolio. Washington Mutual Inc. reported a 20 percent drop in earnings and the second consecutive quarterly loss in its housing division on subprime mortgage write-downs. The earnings still beat analysts’ estimates, however. Wells Fargo, the nation’s fifth largest bank, said that deterioration in subprime mortgages forced it to slash revenues by some $90 million as it wrote down those loans and set aside money for defaults. Subprime mortgages are loans to borrowers with blemished credit or low credit scores. Wells Fargo posted first-quarter profit of $2.24 billion, or 66 cents per share, up from $2.02 billion, or 60 cents per share, a year earlier. Revenue at the San Francisco-headquartered bank was $9.44 billion in the quarter, up more than 10 percent from $8.56 billion a year earlier. Borrowers’ problems showed up in the bank’s report that credit losses totaled $715 million in the first quarter, up from $533 million a year earlier. Washington Mutual Inc., the nation’s largest thrift, said its net income was $784 million, or 86 cents a share, in the first quarter, down from $985 million, or 98 cents per share, a year earlier. Revenue in the January-March period, including net interest income and noninterest income, was $3.62 billion. Kerry Killinger, Washington Mutual’s chairman and chief executive, the home loan market – particularly the subprime segment for consumers with high-risk credit histories – remained a serious challenge. The Seattle-based institution said its home loan group lost $113 million in the first quarter, slightly less than the $122 million loss registered in the fourth quarter, mainly on write-downs of subprime mortgage loans. It also said that subprime mortgage production was 51 percent lower in the first quarter than a year ago. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img read more