{"id":16199,"date":"2017-10-22T21:27:38","date_gmt":"2017-10-22T21:27:38","guid":{"rendered":"https:\/\/dominiclevent.com\/blog\/?p=16199"},"modified":"2019-04-17T17:16:08","modified_gmt":"2019-04-17T17:16:08","slug":"wells-fargos-looming-1-billion-mortgage-litigation-settlement-brings-down-3q-earnings-housingwir","status":"publish","type":"post","link":"https:\/\/dominiclevent.com\/blog\/wells-fargos-looming-1-billion-mortgage-litigation-settlement-brings-down-3q-earnings-housingwir\/","title":{"rendered":"Wells Fargo’s looming $1 billion mortgage litigation settlement brings down 3Q earnings – HousingWir…"},"content":{"rendered":"


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Wells Fargo saw a drop in its third-quarter earnings from both the previous quarter and the previous year due to its previously disclosed $1 billion pre-crisis mortgage litigation regulatory investigation<\/a>.<\/p>\n

An article by Laura Keller and Dakin Campbell for Bloomberg explained Wells Fargo is of the last of the global lenders to reach an accord with the U.S. Department of Justice <\/strong>over alleged wrongdoing in selling mortgage bonds prior to the crisis..<\/p>\n

From the article<\/a>:<\/p>\n

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\u201cWe are now having a negotiation, so it\u2019s a matter of probably months or quarters, not anything more than that,\u201d (Wells Fargo Chief Financial Officer John) Shrewsberry said in a Friday telephone interview. The bank took the $1 billion charge for regulatory investigations into its pre-crisis mortgage activity because it has \u201cgotten to the point in our negotiations where you could say that an outcome like this is both probable and estimable,\u201d he said.<\/em><\/p>\n<\/blockquote>\n

Now, that settlement has affected the bank\u2019s bottom line. Wells Fargo reported that it accrued $1 billion in litigation expenses in the third quarter, presumably setting aside the money to pay off the settlement. Wells Fargo also reported\u00a0revenue of $21.9 billion, down 2% from $22.3 billion in the third quarter 2016. This is also down from $22.2 billion in the second quarter.<\/p>\n

Net income also decreased, dropping 18% from $5.64 billion last year and 21% from $5.81 billion in the second quarter to $4.6 billion in the third quarter.<\/p>\n

Diluted earnings per common share dropped to just $0.84 in the third quarter, down 18% from $1.03 per share last year and 21% from $1.07 per share last quarter.<\/p>\n

\u201cOver the past year we have made fundamental changes to transform Wells Fargo as part of our effort to rebuild trust and build a better bank,\u201d Wells Fargo CEO Tim Sloan said. \u201cWhile our financial performance in the third quarter included the impact of a litigation accrual for previously disclosed, pre-crisis mortgage-related regulatory investigations, I am proud of the commitment of our 268,000 team members who put our customers first.\u201d<\/p>\n

\u201cWe saw total average deposit growth; loan growth in our residential mortgage, credit card and subscription finance portfolios; as well as higher assets under management in wealth and investment management,\u201d Sloan said.<\/p>\n

However, mortgage banking income plummeted 37% from last year, dropping from $1.7 billion in the third quarter 2016 to just over $1 billion. This is also down from $1.1 billion in the second quarter this year.<\/p>\n

Wells Fargo reported net servicing income decreased 14% from last year\u2019s $359 million to $309 million in the third quarter.<\/p>\n

But despite all of these setbacks, the company\u2019s leadership continues to face the year ahead with a positive outlook.<\/p>\n

\u201cWells Fargo reported $4.6 billion of net income in the third quarter, which included the impact of the $1 billion, or -$0.20 per share, discrete litigation accrual,\u201d said John Shrewsberry, Wells Fargo chief financial officer. \u201cWe continued to see good credit performance and our liquidity and capital remained exceptionally strong.\u201d<\/p>\n

\u201cDuring the quarter, our first under our 2017 Capital Plan, we returned $4 billion to shareholders through common stock dividends and net share repurchases, up from $3.4 billion in the second quarter,\u201d Shrewsberry said. \u201cWe remain committed to our target of $2 billion of expense reductions by the end of 2018 which will be reinvested in the business and an additional $2 billion by the end of 2019 intended to go to the bottom line.\u201d<\/p>\n

[Update: This article is updated to reference the reason for Wells Fargo booking the $1 billion in legal expenses during the third quarter.<\/em>]<\/p>\n<\/div>\n


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Wells Fargo saw a drop in its third-quarter earnings from both the previous quarter and the previous year due to its previously disclosed $1 billion pre-crisis mortgage litigation regulatory investigation. An article by Laura Keller and Dakin Campbell for Bloomberg explained Wells Fargo is of the last of the global lenders to reach an accord … <\/p>\n

Continue reading “Wells Fargo’s looming $1 billion mortgage litigation settlement brings down 3Q earnings – HousingWir…”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-16199","post","type-post","status-publish","format-standard","hentry","entry"],"yoast_head":"\nWells Fargo's looming $1 billion mortgage litigation settlement brings down 3Q earnings - HousingWir... - Dominic Levent Solicitors Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/dominiclevent.com\/blog\/wells-fargos-looming-1-billion-mortgage-litigation-settlement-brings-down-3q-earnings-housingwir\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Wells Fargo's looming $1 billion mortgage litigation settlement brings down 3Q earnings - HousingWir... - Dominic Levent Solicitors Blog\" \/>\n<meta property=\"og:description\" content=\"Wells Fargo saw a drop in its third-quarter earnings from both the previous quarter and the previous year due to its previously disclosed $1 billion pre-crisis mortgage litigation regulatory investigation. 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