Wells Fargo beats on earnings, sets aside $1 billion for legal woes

Wells
Fargo

Brendan
McDermid/Reuters

Wells
Fargo reported third quarter earnings Friday,
showing mixed results for the scandal-ridden bank.

The bank delivered adjusted earnings of $1.04 per
share, slightly above the $1.03 per share Wall
Street analysts expected and down from $1.05 last quarter.

The bank reported unadjusted earnings per share of $0.84 after
accounting for losses due to “discrete litigation
accrual.” Wells currently faces a class action lawsuit over
its fraudulent accounts scandal and other legal woes. It set
aside $1 billion in the quarter for the various litigation.

Here’s are the other big numbers from the release, which all
missed analysts expectations:

• Revenue of $21.9 billion versus analyst
  expectations of $22.4 billion, and down from $22.5 billion
  in the second quarter.
• Net income of $4.6 billion, much
  lower than analysts expectations of $5.13 billion,
  and down from $5.28 billion in the second quarter.
• Net charge offs: rose to 0.30% from a
  post-crisis low of 0.27% in the second
  quarter.

The bank has faced numerous challenges stemming from its fake
accounts scandal that broke a year ago. In September 2016,
Wells reached a settlement with regulators after it was found
that employees opened 2 million accounts in customers names
without their knowledge between 2011 and 2015.

The scandal resulted in multiple congressional hearings and the
eventual ouster of CEO John Stumpf. Also, reports suggest that
the fake accounts practices may have taken place for many years
prior to the original findings and resulted in at least

1.4 million more fraudulent accounts than originally
believed.

Current CEO Tim Sloan was grilled by
lawmakers on October 3, the one year anniversary of
the scandal, facing tough criticism from senators on both
sides of the aisle.

Analysts will also expect updates on efforts to decrease
management costs as well as any new details on the firms ongoing
legal inquiries and litigation. 

Citi and JPMorgan kicked off
the earnings
cycle for US banks Thursday, each handily beating
earnings estimates.