Wells Fargo reported record net income of $3.8 billion for first-quarter 2011, up from $2.5 billion, or 48% for first-quarter 2010.

The bank noted significant improvement in credit quality as net loan charge-offs and non-performing loans declined $629 million and $1.8 billion, respectively, from the previous quarter. Significantly, the provision for credit losses in the first quarter was $2.2 billion, down 59% from $5.3 billion in the first quarter last year. Wells Fargo reported a net reserve release of $1 billion (pre-tax) reflecting improved portfolio performance and said it expects future reductions in the allowance absent significant deterioration in the economy.

“Our strong first-quarter results reflected positive trends in our business fundamentals as credit quality improved, capital ratios increased and cross-selling reached new highs,” said chairman and CEO John Stumpf. “As the economy continued an uneven recovery, our business customers increased borrowing and utilization of credit lines – a hopeful sign that businesses are once again investing for growth.”

To read Wells Fargo’s earnings release in its entirety, click here.