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NEW YORK (AP) — Wells Fargo’s earnings slipped in the third quarter, the bank said Friday, as the banking giant started dealing with the aftermath of a sales practices scandal that has consumed it in recent weeks.
Wells said it earned $5.6 billion, or $1.03 per share, compared with $5.8 billion, or $1.05 per share, in the same period a year earlier. The results beat analysts’ expectations of $1.01 per share.
The San Francisco-based bank is being roiled by a crisis that toppled its CEO this week. Wells reached a $185 million settlement with regulators last month following allegations that its employees opened up to 2 million bank and credit card accounts without their customers’ authorization in order to meet sales goals.
Under pressure from politicians and investors, the bank’s long-time CEO, John Stumpf, abruptly retired on Wednesday. Chief Operating Officer Tim Sloan was named to replace him. Politicians like Sen. Elizabeth Warren, D-Massachusetts, have called for Wells to be criminally charged.
“I am deeply committed to restoring the trust of all of our stakeholders, including our customers, shareholders, and community partners,” Sloan said in a statement. “We know that it will take time and a lot of hard work to earn back our reputation, but I am confident because of the incredible caliber of our team members. We will work tirelessly to build a stronger and better Wells Fargo for generations to come.”
It is too early to see the total, long-term impact the scandal will have on Wells’ bottom line, since most of the developments from the scandal broke in mid-to-late September, when the quarter was nearly over. The bank had noticeably higher non-interest expenses in the quarter, due partly to the $185 million settlement.
In the branches, there were signs that customers were backing away from the bank. In a presentation to investors released Friday, Wells reported a drop in what it calls banker and teller “interactions” in September from both a year ago and from August, the month before the scandal broke. Consumer checking account openings dropped by 25 percent in September from a year earlier and 30 percent from August. Consumer applications for Wells credit cards also fell sharply in September.
In other parts of Wells’ business, the bank said referrals for mortgages from their retail branches were down 24 percent from August. Retail branch referrals account for 10 percent of all Wells’ mortgage originations. Wells is the nation’s largest mortgage lender.
Wells Fargo revenue in the quarter was $22.33 billion, up 2 percent from a year earlier.
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