Wells Fargo CEO says bank is ‘capable of much more’ after coronavirus impacts earnings

New CEO Charlie Scharf is tasked with fixing the bank

Wells Fargo & Co. reported mixed fourth-quarter earnings on Friday as the company continues to be hampered by the coronavirus pandemic as well as ongoing issues at the bank that were inherited by new CEO Charlie Scharf.

The San Francisco-based lender earned $3 billion, or 64 cents per share, beating the 60 cents that Wall Street analysts surveyed by Refinitiv were expecting. Earnings were impacted by $781 million in restructuring charges and $321 million in customer remediation accruals, though they were aided by $757 million from reserve releases because of the sale of its student loan portfolio.

Revenue, however, came in at $17.93 billion, well below the $18.13 billion that was anticipated.

“Although our financial performance improved and we earned $3.0 billion in the fourth quarter, our results continued to be impacted by the unprecedented operating environment and the required work to put our substantial legacy issues behind us," Scharf said in a statement.

“Our agenda is clear and we are making progress. We have prioritized and are moving forward on our risk and control buildout – the recently terminated BSA/AML consent order is just one of many, but it is an important step forward; we have a new management team in place; the disciplines we use to manage the company are completely different than one year ago; we have clarified our strategic priorities and are exiting certain non-strategic businesses; and we have identified and are implementing a series of actions to improve our financial performance,” he added.

“With a more consistent broad-based recovery and as we continue to press forward with our agenda, we expect you will see that this franchise is capable of much more,” Scharf concluded.

Shares of Wells Fargo have dropped over 29% during the past 12 months.

TickerSecurityLastChangeChange %
WFCWELLS FARGO & CO.38.63+1.23+3.29%

WELLS FARGO TERMINATES EMPLOYEES OVER POTENTIAL COVID-19 RELIEF FRAUD

The company noted the 5% decline in revenue was due in part to an 8% decline in its Consumer and Small Business Banking unit, as well as a 7% decline in its Credit Card unit, both impacted by the COVID-19 pandemic.

Net interest income fell 11% from the year-ago quarter to $9.275 billion due to the Federal Reserve holding the Fed funds rate near zero to boost the U.S. economy during the pandemic.

The mixed fourth-quarter results come on the heels of a strong third quarter, which saw Wells Fargo benefit from mortgage banking fees, higher equity markets and declining sequential charge-offs, according to Scharf.

Shares of Wells Fargo were lower in early Friday trade, falling 2.9%% to $33.75.

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