SILVER SPRING, Md. (AP) — Wells Fargo had its best quarter of 2020 as its profit rose 4% in the fourth quarter of a year defined by the coronavirus outbreak.
The bank, based in San Francisco, said Friday that its earnings rose to $3 billion, or 64 cents per share, compared with earnings of $2.87 billion , or 60 cents a share, a year earlier.
The results surpassed Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of 59 cents per share.
The biggest U.S. mortgage lender posted revenue of $17.93 billion in the period, just short of projections of $18.1 billion.
Net interest income fell 17%, the company said, mostly due to falling interest rates. However, economists are forecasting modest mortgage rate rises this year. Long-term bond yields, which can influence interest rates on mortgages and other consumer loans, have climbed recently amid expectations of higher U.S. government spending on pandemic relief and an economic recovery as more people get vaccinated for COVID-19.
On Thursday night, President-elect Joe Biden unveiled a $1.9 trillion coronavirus plan that would speed up vaccines and deal financial help to those struggling with the pandemic’s prolonged economic fallout. Biden proposed $1,400 checks for most Americans and extending a temporary boost in unemployment benefits and a moratorium on evictions and foreclosures through September.
Like it has for most businesses, it’s been a tumultuous year for Wells Fargo, which set aside $3.83 billion in the first quarter to cover potentially bad loans as the economy ground to halt because of the coronavirus outbreak. Then the lender lost $2.4 billion in the second quarter, its first quarterly loss since the real estate crash of 2008. Wells bounced back somewhat last quarter with $2 billion in profit.
As if the challenges presented by the virus pandemic weren’t enough, Wells has been in hot water with regulators for years. The bank has been operating under strict federal guidelines due to a series of scandals, limiting its ability to grow.
The biggest of those scandals was the opening of fake accounts, discovered in 2016, a cloud which still hangs over the company.
On Friday, the Office of the Comptroller of the Currency assessed a $3.5 million penalty against James Strother for his role in Wells’ sales practices misconduct.
The penalty is part of a settlement with the bank’s former general counsel and is connected to charges against Strother and four other senior bank executives from January 2020. The announcement Friday is in addition to settlements with six other former senior bank executives announced last year.
Following those charges announced in January of last year, Wells’ board of directors slashed the bonuses and other compensation of its then-CEO Tim Sloan and other top executives.
“Our results continued to be impacted by the unprecedented operating environment and the required work to put our substantial legacy issues behind us,” CEO Charlie Scharf said.
Wells Fargo shares fell 6.5% in midday trading and have lost about a third of their value in the past 12 months.