Michael P. Santomassimo
Senior Executive Vice President and Chief Financial Officer at Wells Fargo & Company
Thank you, Charlie, and good morning, everyone. Net income for the quarter was $3.7 billion or $0.88 per common share, and our results included a $1.1 billion decrease in the allowance for credit losses, predominantly due to reduced uncertainty around the economic impact of COVID on our loan portfolios. Our effective income tax rate in the first quarter was approximately 16%, which included net discrete income tax benefits due to stock-based compensation. We expect our effective income tax rate for the full-year to be approximately 18%, excluding any additional discrete items. Our CET1 ratio declined to 10.5%, still well above our regulatory minimum of 9.1%.
We highlight capital on Slide 3. The decrease in our CET1 ratio from the fourth quarter reflected a $5.1 billion reduction in cumulative other comprehensive income, driven by high interest rate -- higher interest rates and wider agency MBS spreads, which reduced the ratio by approximately 40 basis points. Higher risk-weighted assets driven by growth in loan balances and commitments, we adopted the standardized approach for counterparty credit risk, which had a minimal impact on total risk-weighted assets and we continued with our strong capital returns. We repurchased $6 billion of common stock in the first quarter, bringing our total repurchases since the third quarter of 2021 to $18.3 billion, which is in line with our 2021 capital plan.
While we have flexibility under the stress capital buffer framework to exceed the share repurchases contemplated in our capital plan, we will be disciplined in our approach, given the current rate volatility and currently expect to have significantly lower levels of share buybacks in the second quarter. Finally, we've submitted our 2022 capital plan, and as I've called out before, it's possible that our stress capital buffer could increase when the Federal Reserve publishes our official stress capital buffer in the third quarter, while our G-SIB surcharge of 1.5% will remain the same for 2023.
Turning to credit quality on Slide 5. Our net loan charge-off ratio declined to 14 basis points in the first quarter. Commercial credit performance was strong again with $29 million of net recoveries in the first quarter driven by recoveries in Energy, Asset-Based Lending and Middle Market. Consumer credit performance was also strong. Credit losses were down $59 million from the fourth quarter, which included $152 million of net charge-offs related to a change in practice to fully charge off certain delinquent legacy residential mortgage loans.
The first quarter included higher auto losses and seasonally higher credit card losses. Non-performing assets decreased $323 million or 4% from the fourth quarter. Commercial non-accruals were down $423 million, declining again this quarter and are now below pre-pandemic levels. Consumer non-accruals increased $82 million driven by an increase in residential mortgage non-accruals and primarily resulting from certain customers exiting COVID-related accommodation programs. Overall, early performance of loans that have exited forbearance have exceeded our expectations. Our allowance for credit losses at the end of the first quarter reflected continued strong credit performance, less uncertainty around the economic impact of COVID, the economic recovery thus far and an outlook that reflects the increasing risks from high inflation in the Russian-Ukraine conflict.
On Slide 6, we highlight loans and deposits. Average loans grew 3% from a year ago in the fourth quarter. Period-end loans grew for the third consecutive quarter and were up 6% from a year ago, with growth in both our commercial and consumer portfolios. I'll highlight the specific growth drivers when discussing business segment results. Average deposits increased $70.6 billion or 5% from a year ago, with growth in our consumer businesses and Commercial Banking, partially offset by continued declines in Corporate and Investment Banking and Corporate Treasury reflecting targeted actions to manage under the asset cap.
Turning to net interest income on Slide 7. First quarter net interest income increased $413 million or 5% from a year ago and declined $41 million from the fourth quarter. The decline from the fourth quarter was driven by $178 million of lower income from EPBO and Paycheck Protection Program loans, as well as two fewer days in the quarter, which offset the impact of higher earning asset yields and higher securities and loan balances. Last quarter, we highlighted that net interest income for full-year 2022 could potentially increase by approximately 8% driven by loan growth and other balance sheet mix changes, as well as the benefit from rising rates, which was based on the forward curve at that time.
Obviously, a lot has changed over the past three months. Loan growth has been solid and average loan balances were up 3% versus the fourth quarter and 2% at period end. If we continue to see increased demand, it's possible that average loan balances will be up in the mid single-digits from the fourth quarter 2021 to fourth quarter 2022, up from our prior outlook earlier this year of low to mid single-digits. The rate increase is currently included in the forward rate curve would also drive stronger net interest income growth than we anticipated earlier in the year.
However, it's important to note that the benefit from rising rates is not linear, and we would expect deposit betas to accelerate after the initial rate hikes and customer migration from lower-yielding to higher-yielding deposit products would also likely increase. Higher rates will also have a negative impact on mortgage volumes and potentially on market-related fees in Corporate and Investment Banking, private equity and venture capital businesses and in wealth management. Given our current expectations for higher loan growth and recent forward rate curves, net interest income for full-year 2022 could be up mid-teens on a percentage basis from 2021. That said, net interest income growth will ultimately be driven by a variety of factors, including the magnitude and timing of Fed rate increases, deposit betas and loan growth.
Now turning to expenses on Slide 8. Non-interest expense declined 1% from a year ago. We continue to make progress on our efficiency initiatives and expenses also declined due to divestitures last year. First quarter -- the first quarter included approximately $600 million of seasonally higher personnel expenses, including payroll taxes, restricted stock expense for retirement eligible employees and 401(k) matching contributions. We also had $673 million of operating losses, which were primarily driven by higher customer remediation expense predominantly for a variety of historical matters. Our full-year 2022 expenses are still expected to be approximately $51.5 billion. However, as we experienced this quarter, operating losses can be episodic and hard to predict, and we will continue to update you on our expense expectations throughout the year.
Turning to our operating segments, starting with Consumer Banking and Lending on Slide 9. Consumer and Small Business Banking revenue increased 11% from a year ago, primarily due to higher deposit balances, higher deposit-related fees, primarily reflecting lower fee waivers and an increase in debit card transactions. We continue to reduce the underlying cost to run the business and serve customers. Customers have continued to migrate to digital channels and correspondingly teller transactions are down 45% from pre-pandemic levels. Over the same period, we've decreased our number of branches by 12% and branch staffing by approximately 30%, and we have more opportunities to improve our efficiency while we continue to make enhancements to better serve customers.
Earlier this year, we announced changes we are making to help our customers avoid overdraft fees. We began to implement some of these new policies and we'll be rolling out the rest of the changes this year. We eliminated fees for non-sufficient funds and overdraft protection transactions in early March. So these changes didn't have a meaningful impact on the first quarter results, we still expect the annual decline in these fees to be approximately $700 million. However, as we highlighted last quarter, this is an annualized estimate and the reduction may be partially offset by higher levels of activity, and we will observe how our customers respond to the new features that will be introduced in the latter part of the year.
Home Lending revenue declined 33% from a year ago and 19% from the fourth quarter, driven by lower mortgage originations and press [Phonetic] margins, given the higher rate environment and competitive pricing in response to excess capacity in the industry. Mortgage rates increased 156 basis points in the first quarter and are above rate levels observed for the most of the last -- for most of the last decade. Reflecting this environment, we expect second quarter originations and margins to remain under pressure and mortgage banking revenue to continue to decline. We've started to reduce expenses in response to the decline in volume and expect expenses will continue to decline throughout the year as excess capacity is removed and aligned to lower business activity. Credit card revenue was up 6% from a year ago, driven by higher loan balances and point-of-sale volumes. Auto revenue increased 10% and Personal Lending was up 2% from a year ago, primarily due to higher loan balances.
Turning to some key business drivers on Slide 10. Our mortgage originations declined 21% from the fourth quarter. We believe the mortgage market experienced its largest quarterly decline since 2003, primarily due to lower refinance activity in response to higher mortgage rates. Home Lending loan balances grew modestly from the fourth quarter, driven by the third consecutive quarter of growth in our non-conforming portfolio, which more than offset declines in loans purchased from securitization pools or EPBOs.
Turning to Auto. Origination volume increased 4% from a year ago, but was down 22% from fourth quarter due to credit tightening in higher risk segments and increased price competition as interest rates rose and we targeted solid returns for new originations. Turning to debit card. Transactions declined 7% from the fourth quarter due to seasonality and were up 3% from a year ago with double-digit growth in travel and entertainment. Credit card point-of-sale purchase volume continued to be strong, was up 33% from a year ago, but down 5% from the fourth quarter due to seasonality. While payment rates remain elevated, balances grew 14% from a year ago due to strong purchase volume and launch of -- and the launch of new products. New credit card accounts increased over 80% from a year ago, and we continue to be pleased by the quality of the accounts we're attracting.
Turning to Commercial Banking results on Slide 11. Middle Market Banking revenue increased 8% from a year ago, driven by higher deposit and loan balances, as well as the impact of higher interest rates. Asset-Based Lending and Leasing revenue increased 17% from a year ago, driven by higher loan balances, stronger net gains from equity securities and higher revenue from renewable energy investments. Non-interest expense declined 6% from a year ago, primarily driven by lower personnel and occupancy expense due to efficiency initiatives and lower lease expense.
After declining during the first half of last year, average loan balances have grown for three consecutive quarters and were up 6% from a year ago. Revolver utilization rates have increased, but are still well below historical levels. Loan demand has been driven by larger clients who are increasing borrowing due to the impact of inflation on material and transportation costs, as well as to support inventory growth. We're also seeing new demand from some clients who are catching up from underinvestment in projects and capital expenditures over the past couple of years.
Turning to Corporate and Investment Banking on Slide 12. Banking revenue increased 4% from a year ago, primarily driven by higher loan balances and improved treasury management results. Average loan balances were up 18% from a year ago with increased demand across most industries driven primarily by capital expenditures and growing working capital needs. Commercial Real Estate revenue grew 9% from a year ago, driven by the higher loan balances and higher revenue in our low-income housing business. Average loan balances were up 17% from a year ago, and originations in the first quarter outpaced volumes from a year ago and loan pipelines continue to be strong. Market revenues -- Markets revenue was down 18% from a year ago, primarily due to lower trading activity in residential mortgage-backed securities and high-yield products. Average deposits in Corporate Investment Banking were down $25.3 billion or 13% from a year ago, driven by continued actions to manage into the asset cap.
On Slide 13, Wealth and Investment Management revenue grew 6% from a year ago, driven by higher asset-based fees on higher market valuations and higher net interest income from the impact of higher interest rates, as well as higher deposit and loan balances. As a reminder, the majority of WIM Advisory Assets are priced at the beginning of the quarter. So first quarter results reflected market valuations as of Jan 1st, and second quarter results will reflect the lower market valuations as of April 1st. The 5% increase in expenses from a year ago was primarily driven by higher revenue-related compensation, which was more than offset by higher revenue. Average deposits were up 7% from a year ago and average loans increased 5% from a year ago, driven by continued momentum in securities-based lending.
Slide 14 highlights our Corporate results, both revenue and expenses declined from a year ago, driven by the sale of our student loan portfolio and divestitures of our Corporate Trust Services business and Wells Fargo Asset Management. These businesses contributed $791 million of revenue in the first quarter of 2021, including the gain on sale of our student loan portfolio and they accounted for approximately $400 million of the decline in expenses compared with a year ago, including the goodwill write-down on the sale of our student loan portfolio.
We will now take your questions.
