And there was much rejoicing…

From MarketWatch:

NEW YORK (MarketWatch) — Wells Fargo & Co. said Thursday that first-quarter earnings will surge to a record $3 billion, well ahead of analyst forecasts, as loan losses and provisions dropped from the previous difficult quarter and its mortgage business thrived.

Wells shares jumped 22% as the bank also noted its Wachovia acquisition is exceeding expectations and reported another quarter of double-digit revenue growth.

Wells said first-quarter net income will be roughly $3 billion, or 55 cents a share, after paying dividends on preferred securities, including $372 million to the Treasury Department. Analysts surveyed by FactSet Research expected profits of 31 cents a share on average.

And, according to Credit Writedowns, there could be some money to be made here…

I see financial services companies shedding troubled assets, not marking other assets to market and having an enormous margin spread due to ridiculously low interest rates. To me, this is a huge buy signal. Last week, I thought a small position in out-of-the-money calls on BofA or Wells was a good idea before Wells gapped up this morning (I still think Citi is dead money). This is now less of a good risk-reward opportunity. But, don’t think Wells is alone in expecting a monster quarter here. Could we see the same at JPM or BAC? BAC has a huge tax dodge from its Countrywide acquisition so unless they haven’t finished with monster surprise writedowns, I expect a good number there as well and that looks like the best play in the space right now (despite a 20% rally today).

Still, while profits are all well and good, we still need these banks to start lending again.

Business Wells Fargo Reports Record $3B Profit