Wells Fargo Burned Again by Past Misdeeds
Wells Fargo released a disappointing fourth-quarter earnings report before the opening bell on Tuesday, made worse by litigation accruals.
When Wells Fargo & Co. (NYSE: WFC | WFC Price Prediction) released its fourth-quarter earnings report before the opening bell on Tuesday, the megabank said that it had $0.60 in earnings per share (EPS) and $19.9 billion in revenue. The consensus estimates had called for $1.12 in EPS and revenue of $20.14 billion. In the same period of last year, Wells Fargo said it had EPS of $1.21 and $20.98 billion in revenue.
Note that the EPS miss this quarter was negatively impacted by litigation accruals to the tune of $0.33 per share.
During the latest quarter, average loans were $956.5 billion, up $10.2 billion from the third quarter. Period-end loan balances were $962.3 billion.
Total average deposits for the quarter were $1.3 trillion, up $53.0 billion from the prior quarter, primarily due to growth in both commercial and consumer deposits.
Book value per common share was $40.31, down from $40.48 in the third quarter and $38.06 in the same period from last year.
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In terms of its segments, Wells Fargo reported as follows:
- Community Banking revenues were down 8.2% year over year at $10.52 billion.
- Wholesale Banking revenues decreased by 3.7% to $6.67 billion.
- Wealth and Investment Management revenues increased 2.9% to $4.07 billion.
Chief Financial Officer John Shrewsberry commented:
Wells Fargo reported $2.9 billion of net income in the fourth quarter and diluted earnings per share of $0.60, which included the impact of $1.5 billion, or $(0.33) per share, of litigation accruals for a variety of matters, including previously disclosed retail sales practices matters. Our net interest income declined in the fourth quarter driven predominantly by the impact of the lower interest rate environment. In addition, while we are spending what is necessary in order to improve risk management, our other expenses were too high and becoming more efficient remains a top priority.
Shares of Wells Fargo traded early Tuesday at $50.25, in a 52-week range of $43.34 to $54.75. The consensus price target is $53.33.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
