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Another strong quarter for WFC

Wells Fargo & Co. (WFC) said it expects to earn about $3 billion in the first quarter, or 55 cents a share, sending another bold signal that the banking industry is regaining traction and sparking a stock rally throughout all sectors.

If Wells Fargo’s claim sticks, it’d be a 50% increase from the $2 billion income in the first quarter a year earlier. The second-largest U.S. home lender also projects $20 billion in total revenue and $372 million in dividends paid.

Net income was a record $3.05 billion, or 56 cents per diluted share, up from $2 billion, or 60 cents a share, a year earlier.

Wells Fargo’s revenue nearly doubled to $21 billion, a figure helped greatly by more than $100 billion originated in mortgages in the quarter.

With the December acquisition of Wachovia Corp., Wells Fargo upped its exposure to serving about one out of every three U.S. households. But it also brought a truckload of risky adjustable-rate home loans.

“In this terrible environment, to exceed on the upside is going to raise the bar pretty high,” Matt McCormick, portfolio manager and banking analyst at Bahl & Gaynor Investment Counsel, told Reuters. “Wells Fargo is clearly a dominant bank, one of the best operators out there.”

Wells Fargo’s peers Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) have also spoken optimistically about the financial industry and cited improved earnings from 2008.

Improving performance and optimistic forecasts lean heavily on an improving mortgage market. Record-low interest rates are fueling new home loans and mortgage refinancing.

Wells Fargo Chief Financial Officer Howard Atkins expects to pocket $100 billion in mortgage originations, and worked with 450,000 homeowners to either purchase a home or refinance their loan. The bank posted its strongest mortgage revenue in March, and Atkins believes the momentum will carrying into the company’s second quarter results.

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