NEW YORK -- Wells Fargo's earnings slipped in the third quarter, the bank said Friday, as the financial giant started dealing with the aftermath of a sales practices scandal that has consumed it in recent weeks.
Wells Fargo said it earned $5.6 billion, or $1.03 per share, compared with $5.8 billion, or $1.05 per share, in the same period a year earlier. The results beat analysts' expectations of $1.01 per share.
Wells Fargo revenue in the quarter was $22.33 billion, up 2 percent from a year earlier.
Shares of Wells Fargo were down less than 1 percent to close at $44.71 in trading Friday on the New York Stock Exchange. Shares have traded as low as $43.55 and as high as $56.34 over the past year.
The San Francisco-based bank is being roiled by a crisis that ultimately toppled its CEO this week. Wells Fargo reached a $185 million settlement with regulators last month following allegations that its employees opened up to 2 million bank and credit card accounts without their customers' authorization in order to meet sales goals.
Under pressure from politicians and investors, the bank's longtime CEO, John Stumpf, abruptly retired on Wednesday. Chief Operating Officer Tim Sloan was named to replace him. That has not stopped politicians such as Sen. Elizabeth Warren, D-Mass., from calling for Wells Fargo to be criminally charged for defrauding its customers.
"I am deeply committed to restoring the trust of all of our stakeholders, including our customers, shareholders, and community partners," Sloan said in a statement. "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."
It is too early to see the total, long-term impact the scandal will have on Wells Fargo's bottom line, since most of the developments from the scandal broke in mid- to late September, when the quarter was nearly over. The bank had noticeably higher noninterest expenses in the quarter, due partly to the $185 million settlement.
In the branches, there were signs that customers were backing away from the bank.
In a presentation to investors released Friday, Wells Fargo reported a drop in what it calls banker and teller "interactions" in September from both a year ago and from August, the month before the scandal broke. Consumer checking account openings dropped by 25 percent in September from a year earlier and 30 percent from August. Consumer applications for Wells credit cards also fell sharply in September.
In other parts of Wells Fargo's business, the bank said referrals for mortgages from their retail branches were down 24 percent from August. Retail branch referrals account for 10 percent of all Wells Fargo's mortgage originations. Wells Fargo is the nation's largest mortgage lender.
Wells Fargo community banking franchise, the bank's largest division and the business at the center of the scandal, had net income in the quarter of $3.23 billion compared with $3.56 billion in the same period a year earlier.
Wells Fargo's wholesale banking division, which consists of its investment bank, lending to companies and others, reported net income of $2.04 billion in the quarter, up from $1.93 billion a year earlier.
Business on 10/15/2016