Wells Fargo, the lender whose chief executive officer stepped down this week amid a scandal in its branch network, said third-quarter profit fell 2.6% as expenses climbed and the bank set aside more money for soured loans.
Net income slid to $5.64 billion, or $1.03 a share, from $5.8 billion, or $1.05, a year earlier, the San Francisco-based company said Friday in a statement. That beat the $1.01 average estimate of 28 analysts surveyed by Bloomberg. Total revenue increased 1.8% to $22.3 billion, exceeding analysts' expectations.
Last month's revelation that employees may have opened millions of unauthorized accounts has stained the bank's reputation and prompted Wednesday's resignation of CEO and Chairman John Stumpf, 63. The scandal is forcing the firm to scale back its push to sell more products to customers, while officials including California's treasurer call on government agencies to suspend dealings with the company.
"We know that it will take time and a lot of hard work to earn back our reputation," Tim Sloan, 56, who replaced Stumpf as CEO, said in the statement. "We will work tirelessly to build a stronger and better Wells Fargo."
Wells Fargo's stock is down 18% this year, with much of the drop following a $185 million settlement last month with authorities including the Consumer Financial Protection Bureau. Investigators said the bank may have opened roughly 2 million deposit accounts and credit cards for unwitting customers, generating fees and damaging credit scores.
The abuses triggered public outcry, probes by other agencies and hearings on Capitol Hill, where lawmakers including Senator Elizabeth Warren, a Massachusetts Democrat, urged Stumpf to resign. Politicians and labor groups said the company put undue pressure on workers to meet sales goals, then blamed them for misconduct without holding senior leaders accountable.
Stumpf agreed on Sept. 27 to forgo more than $41 million in pay -- the biggest forfeiture of compensation from a major U.S. bank chief since at least the 2008 financial crisis -- but it wasn't enough to assuage critics. Former community banking chief Carrie Tolstedt, 56, who oversaw the business during the years authorities found abuses and has since left the firm, will waive about $19 million in unvested stock, the company said. She won't receive severance, the bank said Friday.
