Wells Fargo’s fake account scandal started last year. Angeli Kakade (@angelikakade) has the story.
Shares of Wells Fargo edged lower Friday after the U.S. banking giant, which has struggled with a scandal over its sales practices, reported a mixed performance for its fourth quarter.
The San Francisco-based bank, trying for months to rebound from acknowledgments that more than 3 million accounts that may not have been authorized by customers, reported revenue of $22.05 billion. The result fell below the nearly $22.64 billion consensus forecast of financial analysts surveyed by S&P Global Market Intelligence.
Wells Fargo reported a $6.15 billion profit, or $1.16 per share, falling below the $1.54 projection of the financial analysts.
The results were boosted by the sweeping federal tax overhaul approved in December by Congress and the Trump administration, the company said.
Shares of Wells Fargo, one of the nation’s largest banks, were 0.2% lower at $62.88 in midday trading.
Wells Fargo said its quarterly results included a $3.25 billion pre-tax expense, or 59 cents per share, for litigation accruals for the sales practices that led to the scandal and other matters, including mortgage-related regulatory investigations. Most of the larger-than-expected expense was not tax-deductible, the company said.
Providing the first look at the impact of the federal tax overhaul, the bank said its financial results included a $3.35 billion after-tax benefit, or 67 cents per share, from the tax changes.
Wells Fargo also said it got a $3.89 billion estimated tax benefit from the reduction to net deferred income tax, as well as an $848 million pre-tax gain, or 11 cents per share, from the sale of Wells Fargo Insurance Services USA.
As a result of that tax overhaul benefit, Wells Fargo said it is increasing the minimum hourly pay rate for all U.S.-based team members to $15.00, an 11% boost from the previous rate, effective March 2018.
During a conference call with investors, CEO Tim Sloan said the bank is examining a potential increase for employees already earning $15 an hour, or slightly more. Early results show the tax changes will benefit Wells Fargo’s customers and help grow the economy, he said.
In an effort to help that process, the bank said it is targeting $400 million in donations to community and nonprofit organizations in 2018. Starting next year, Wells Fargo said it would target 2% of after-tax profits for corporate charitable giving.
The litigation accruals came after Wells Fargo took a $1 billion write-down in the third quarter for an expected federal settlement over marketing and sales of mortgage-backed securities before the national financial crisis.
A regulatory filing in June said the bank was responding to federal and state investigators’ requests for information about its handling of residential mortgages.
Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc
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