Wells Fargo reported strong financials for the second quarter, driven in part by an uptick in mortgage lending and ongoing improvements in credit quality.
The megabank reported $5.7 billion in net income for the quarter, up 4 percent over $5.5 billion a year prior. For the year's first half, Wells Fargo took in $11.6 billion in net income, up nearly $1 billion compared to the same period in 2013.
"Our strong results in the second quarter reflected the benefit of our diversified business model and our long-term focus on meeting the financial needs of our customers," said John Stumpf, chairman and CEO of the bank. "Our results also reflected strong credit quality driven by an improved economy, especially the housing market, and our continued risk discipline."
Coming from the nation's biggest name in finance—and the first megabank to release Q2 results—Wells Fargo's report serves as the first sign of how consumer lending fared throughout the quarter. Next on the schedule is Citigroup on July 14, followed by JPMorgan Chase on July 15.
On the home lending side, Wells Fargo reported mortgage originations of $47 billion, up from $36 billion in the first quarter, with applications pulling up $12 billion to a total of $72 billion.
The bank's application pipeline also nudged up to $30 billion as of the end of June compared to $27 billion at the end of the first quarter.
Meanwhile, the bank reported another $500 million reserve release, reflecting improvements in credit quality as a result of the housing recovery. Charge-offs on bad loans also declined from the first quarter, falling to $717 million from $825 million before.
"Credit performance continued to improve in the second quarter as credit losses remained at historically low levels, nonperforming assets continued to decrease and we continued to originate high quality loans," said Mike Loughlin, chief risk officer.
Loughlin added that the bank continues to expect future reserve releases, though not as high "as the rate of credit improvement slows and the loan portfolio continues to grow."