Lehman Brothers Holdings Inc. reported net income losses of 3.2% for its third quarter, this morning, exceeding expectations of Wall Street analysts who had feared the losses would have been greater in a market suffering from the fallout of the mortgage crisis.

The New York-based investment bank is America’s fourth largest, and its quarterly announcement is the first in a series of other investment banks releasing their quarterly results this week. Morgan Stanley will report its results tomorrow. Goldman Sachs Group Inc. and Bear Stearns Cos. publish their quarterly numbers on Thursday.

“The fact that their income was only down about 3% over the year is a good sign because they were heavily invested in subprime mortgages and underwrite more mortgage loans than the other banks,” a senior economist with Moody’s Economy.com, Marisa Di Natale, said. “It paints an optimistic picture for the other large banks.”

An analyst with Wachovia Securities, Douglas Sipkin said in a note to investors the results “will be well received by Wall Street.”

For the quarter that ended on August 1, Lehman Brothers reported a net income of $887 million, or $1.54 a common share. The stock decreased 2% compared to one year ago. Analysts polled by Thomson Financial had predicted earnings of $1.47 a share.

The bank’s chairman and CEO, Richard Fuld Jr., said in a statement that despite challenging conditions in the markets, the quarterly results show his company’s continued financial strength.