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- Wells Fargo missed third-quarter earnings estimates after posting a continued drop in net interest income.
- The bank cited the "lower interest rate environment" for the figure's decline. Wells Fargo stock fell as much as 1.2% following the report's release.
- Wells Fargo also announced a $1.6 billion expense related to its sales malpractice litigation. The bank remains steeped in controversy following its 2016 fake account scandal.
- The firm recently ended its months-long search for a new CEO in September, announcing Charles Scharf as its new chief executive. The former BNY Mellon CEO takes over Monday.
- Watch Wells Fargo trade live here.
Wells Fargo narrowly missed third-quarter earnings estimates after posting a continued decline in net interest income.
Net interest income — the difference between asset-based revenues and the expenses paid for liabilities like customer interest — was among the most important metrics for investors eyeing the latest report. The Federal Reserve's recent rate cuts increased pressure on bank margins, and Wells Fargo cited the "lower interest rate environment" for the figure's decline.
The bank also took out a $1.6 billion expense related to sales malpractice lawsuits. Wells Fargo faces several investigations and a Fed-imposed growth restriction following a slew of controversies, including its 2016 fake account scandal.
Wells Fargo stock fell as much as 1.1% on the news.
Here are the key numbers:
Revenue: $22.01 billion, versus the $21.17 billion estimate
Earnings per share: $1.07, versus the $1.14 estimate
Net interest income: $11.63 billion, versus the $11.75 billion estimate
Net interest margin: 2.66%, versus the 2.69% estimate
The bank ended its months-long search for a new CEO in September, announcing Charles Scharf as its new chief executive. Scharf formerly served as chairman and CEO of Bank of New York Mellon.
Wells Fargo remains steeped in regulatory scrutiny after bank employees created millions of fake accounts to pad sales figures in 2016. The controversy led to former CEO John Stumpf leaving the firm.
"We have more work ahead, but I'm confident that our focused efforts and the fundamental strengths of Wells Fargo will continue to enable us to achieve success," interim CEO Allen Parker said in a statement. Scharf is scheduled to take over on Monday.
Wells Fargo closed at $49.27 per share Monday, up roughly 7% year-to-date.
The bank has 10 "buy" ratings, 17 "hold" ratings, and five "sell" ratings from analysts, with a consensus price target of $50.38, according to Bloomberg data.
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