- Wells Fargo's $1.6 billion charge for litigation connected to its retail scandals brought down the bank's third-quarter earnings by 35 cents a share, the bank said in a statement Tuesday.
- The bank’s net income decreased 23% from a year ago — to $4.61 billion from $6.01 billion.
- Net interest income, the bank's biggest revenue source, fell $470 million from last quarter to $11.6 billion. The bank lowered its forecast for that indicator again last month, predicting it would be down 6% for 2019, according to Bloomberg.
The nation's fourth-largest bank is in transition. This marked the final earnings call with interim CEO C. Allen Parker at the helm. He'll return to his previous role as general counsel when Bank of New York Mellon's Charlie Scharf becomes Wells Fargo's chief executive Oct. 21.
"Everybody's waiting for Charlie to come in," Kyle Sanders, an analyst at Edward Jones, told Bloomberg.
The $1.6 billion legal charge "indicates that things are still dragging on in terms of sales practices," Sanders said.
"We thought we were past a lot of that and then you see a $1.6 billion charge. It's a little disappointing," he told CNN.
But the earnings call had showcased some positives. A $1.1 billion sale of the bank's institutional retirement and trust business boosted earnings by 20 cents a share. And Wells Fargo generated $608 million from new mortgages, a 26% jump from the previous quarter.
"Our continued efforts to transform Wells Fargo and our unwavering commitment to serve our customers resulted during the third quarter in higher branch customer experience survey scores, growth in primary consumer checking customers, and increased loan and deposit balances," Parker said during Tuesday's earnings call. "We have more work ahead, but I’m confident that our focused efforts and the fundamental strengths of Wells Fargo will continue to enable us to achieve success."
Wells Fargo made headlines in 2016, when it was revealed that bank employees opened millions of fraudulent accounts to receive sales-based incentives. The repercussions of those legal and regulatory issues could continue to keep costs up. The Federal Reserve capped Wells Fargo's asset growth under $1.95 trillion last year, according to CNBC. The cap will stay in place through the end of 2019.