In an encouraging sign for the U.S. banking industry, Wells Fargo & Co. said Thursday that it expects to report first quarter earnings of approximately US$3 billion.

The company will report its financial results on April 22. In Thursday’s pre-announcement, Wells Fargo said that it will earn US$3 billion on total revenue of US$20 billion, up about 16%.

The results include combined net charge-offs of US$3.3 billion, down from the prior quarter’s net charge-offs totaling US$6.1 billion; and provision expense of approximately US$4.6 billion, including US$1.3 billion credit reserve build, bringing the allowance for credit losses to US$23 billion. Profits before tax and provisions are approximately US$9.2 billion.

“Our business momentum is strong, and we expect our operating margins to remain at the top of our peer group,” said chief executive officer, John Stumpf.

“Business momentum in the quarter reflected strength in our traditional banking businesses, strong capital markets activities, and exceptionally strong mortgage banking results — US$100 billion in mortgage originations, with a 41% increase in the unclosed application pipeline to US$100 billion at quarter end, an indication of strong second quarter mortgage originations,” added chief financial officer, Howard Atkins.

The firm also said that its Wachovia acquisition is exceeding expectations. “Wachovia’s outstanding franchise has proven to be everything we thought it would be when we announced this acquisition, and the financial contribution from Wachovia exceeded our expectations in the first quarter,” said Stumpf.

IE