How Wells Fargo Is Moving On From Stumpf Resignation and Accounts Scandal

Wells Fargo & Co. (NYSE: WFC) reported its third-quarter financial results before the markets opened on Friday. Overall this megabank reported solid earnings for the quarter, despite having to deal with a huge systemic scandal. Also it was no surprise that leadership had to change as well.

The company posted $1.03 in earnings per share (EPS) on $22.3 billion in revenue. The consensus estimates from Thomson Reuters called for $1.01 in EPS on $22.22 billion in revenue. The same period from last year had $1.05 in EPS on $21.88 billion in revenue.

Total loans were $961.3 billion at the end of the quarter, up $4.2 billion sequentially. Loan growth was driven by growth in commercial loans, including real estate mortgage and commercial and industrial, as well as growth in consumer loans. Total average loans were $957.5 billion in the third quarter, up $6.7 billion from the prior quarter.

Total average deposits for third quarter 2016 were $1.3 trillion, up 2% from the prior quarter, driven by both commercial and consumer growth. The average deposit cost for third quarter 2016 was 11 basis points, flat compared with the prior quarter.

Capital levels remained strong in the third quarter, with a Common Equity Tier 1 ratio (fully phased-in) of 10.7%, compared with 10.6% in the same period from last year.

Assets under management totaled $498 billion, up 4% primarily due to higher market valuations, and positive fixed income and money market net inflows.

On October 12, former Chairman and CEO John Stumpf retired from the company after 34 years of service. The board elected Tim Sloan, president and chief operating officer, to succeed Stumpf as chief executive, and Stephen Sanger, its lead director, to serve as the board’s non-executive chair, as well as independent director Elizabeth Duke to serve as vice chair. Sloan also was elected to the board.

Sloan commented:

I am deeply committed to restoring the trust of all of our stakeholders, including our customers, shareholders, and community partners. We know that it will take time and a lot of hard work to earn back our reputation, but I am confident because of the incredible caliber of our team members. We will work tirelessly to build a stronger and better Wells Fargo for generations to come.

Shares of Wells Fargo closed Thursday down 1.3% at $44.75, with a consensus analyst price target of $50.14 and a 52-week trading range of $43.55 to $56.34. Following the release of the earnings report, the stock was up about 0.6% at $45.00 in early trading indications Friday.