Wells Fargo Burned Again by Past Misdeeds

By Chris Lange Updated Jan 30, 11:16AM EST · Published Jan 14, 9:50AM EST

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Wells Fargo Burned Again by Past Misdeeds — © sshepard / Getty Images

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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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.