Investors have been gritting their teeth and awaiting the results of Wall Street's third quarter, when markets were roiled by credit fears. But for Lehman Brothers, the first big firm to report, the numbers were not so bad.

Lehman said earnings fell 3 percent in the quarter from a year ago, as strong gains in equities trading and investment banking offset declines as a result of mortgage-related investments and leveraged loans commitments.

"Despite challenging conditions in the markets, our results once again demonstrate the diversity and financial strength of the Lehman Brothers franchise, as well as our ability to perform across cycles," Lehman's chief executive, Richard Fuld, said in a statement.

Lehman earned $887 million, or $1.54 per share, in the third quarter. Net revenue, or total revenue minus interest expenses, also rose 3 percent, to $4.3 billion, but is a decline of 22 percent from the second quarter. The results exceeded analysts' forecasts.

The collapse of the subprime mortgage market, which began with the slump in housing, has had aftershocks throughout Wall Street. Many firms had a lucrative business in securities that were tied to the performance of subprime mortgages. The resulting loss of confidence in the credit markets has also made the debt used to finance deals less attractive.

Lehman noted that it recorded in the third quarter "very substantial valuation reductions, most significantly on leveraged loan commitments and residential mortgage positions."

Lehman  announced this summer that it is shutting down its subprime mortgage lending business, and cutting 2,500 jobs.