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ells Fargo reported worse than expected Q3 earnings before the bell Tuesday. $WFC reported along with JPMorgan $JPM and Goldman Sachs  . The bank reported a $1.6 billion litigation charge citing the continued ramifications from the sales scandal.

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Wells Fargo & Co NYSE: WFC Reported Earnings Before Open Tuesday

$1.07 Missed $1.15 EPS And $22.00 Bil Beat $21.2 Billion Forecast in Revenue 

Earnings

Wells Fargo announced on Tuesday net income of $4.6 billion in the third quarter, down 23% from a year earlier or $1.07 a share adjusted vs. $1.15 a share expected by analysts surveyed by Refinitiv. Unadjusted 92 cents per share which missed the average analysts’ estimate of $1.14 per share. EPS for the quarter included discrete litigation accrual of 35 cents and a gain of 20 cents from the sale of its Institutional Retirement and Trust unit. Without these two one-time items, Q3 EPS would still have missed the estimate by 7 cents.

Revenues of $22 billion for the third quarter of 2019, which beat the street consensus of $21.2 billion. Without these two one-time items, Q3 EPS would still have missed the estimate by 7 cents.

Last month, Wells Fargo had announced the appointment of Charles W. Scharf as the new Chief Executive Officer and President, effective October 21. Scharf was previously Chairman and CEO at Bank of New York Mellon.

Wells Fargo & Co NYSE: WFC

Market Reaction Pre-market 48.70 −0.57 (-1.16%))

Highlights

CFO John Shrewsberry said, “Our net charge-off rate remained near historic lows, and we had strong capital returns, including increasing our quarterly common stock dividend by 19% and reducing our common shares outstanding by 9% compared with a year ago, while maintaining a strong capital position.”

  • Wells Fargo’s loan balances at the end of September totaled $954.9 billion, up $5 billion from the previous quarter
  • Reported unchanged commercial loans, consumer loans made up the $5 billion increase, driven by more family real estate mortgages as well as more credit card and auto loans.

Wells fargo Q3 2019 earnings

Wells Fargo received a non-objection to its 2019 capital plan from the Federal Reserve. As part of this plan, the San Francisco-based bank is expected to increase its third quarter 2019 common stock dividend to $0.51 per share, subject to approval by its Board of Directors. This capital plan also includes up to $23.1 billion of gross common stock repurchases, subject to management discretion, for the four-quarter period from the third quarter of 2019 through second quarter 2020.

Wells Fargo is still trying to recover from the fake account scandal surrounding its sales practices, in which employees in its consumer banking division created fake accounts amid a high-pressure sales environment. More issues surrounding the bank's practices continue to surface. The Fed in February last year barred the bank from growing until it "sufficiently improves its governance and controls."

Source: WFC, AlphaStreet

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