Friday, February 28, 2025
50.0°F

Wells Fargo posts $2 billion profit in 3Q, reversing 2Q loss

Matt Ott | Hagadone News Network | UPDATED 4 years, 4 months AGO
by Matt Ott
| October 15, 2020 12:03 AM

SILVER SPRING, Md. (AP) — Wells Fargo says it earned $2 billion in the third quarter, less than half of what it made in the same period last year but a significant improvement from this year's second quarter, when it posted a loss as the coronavirus swept through the U.S.

The San Francisco bank said Wednesday that it earned 42 cents per share, down from 92 cents per share a year earlier and less than the 44 cents Wall Street analysts were expecting.

Wells reported revenue of $18.86 billion in the quarter, also down from last year's third quarter when it took in $22 billion. The bank's revenue for the quarter surpassed Wall Street projections of $18 billion.

Wells set aside $769 million in the third quarter for loan loss provisions, which is the money set aside to cover potentially bad loans. That's just a fraction of the billions it set aside in the previous quarter when the coronavirus shuttered the economy, forced millions of people out of work and jeopardized the ability of businesses and individuals to make loan and mortgage payments.

Wells Fargo lost $2.4 billion in the second quarter, the first quarterly loss for the bank since the real estate crash of 2008.

Wells Fargo said its net interest income was $9.4 billion, down $2.3 billion from last year's period. Noninterest income of was $9.5 billion, down $891 million from 2019.

As the coronavirus outbreak persists in many areas of the U.S. and with a cold-weather resurgence possible in many others, many fear that potential business closures this fall and winter could throw the U.S. economy into a tailspin similar to last spring.

Charlie Scharf, Wells Fargo’s chief executive officer, acknowledged the boost his bank got from the government’s injection of trillions of dollars in loans and relief into the U.S. economy, giving consumers the power to spend and helping many businesses stay afloat. But with another aid package stalled in Congress, the country’s economic future is cloudy.

“As we look forward, the trajectory of the economic recovery remains unclear as the negative impact of COVID continues and further fiscal stimulus is uncertain,” Scharf said.

On top of the difficulties presented by the virus pandemic, Wells has been in seemingly constant trouble with regulators for years. The nation's biggest mortgage lender, Wells has been operating under strict federal guidelines due to a series of scandals, limiting its ability to grow.

In 2018, the Fed capped the size of Wells Fargo’s assets beginning in 2016 with the uncovering of millions of fake checking accounts its employees opened to meet sales quotas. The Fed lifted that cap in April as part of the federal government’s Payroll Protection Program because many of Wells’ small business customers were getting shut out from applying.

Shares in the consumer bank fell about 2% in pre-market trading.

MORE IMPORTED STORIES

Wells Fargo posts $2 billion profit in 3Q, reversing 2Q loss
Columbia Basin Herald | Updated 4 years, 4 months ago
Wells Fargo loses $2.4 billion in 2Q, first loss since 2008
Columbia Basin Herald | Updated 4 years, 7 months ago
Banks brace for big loan defaults by US, global customers
Columbia Basin Herald | Updated 4 years, 10 months ago

ARTICLES BY MATT OTT

New US home construction dips again in February
March 18, 2020 10 a.m.

New US home construction dips again in February

WASHINGTON (AP) — Construction of new homes fell again in February, but not as much as the previous month. Those declines follow a December surge which had pushed home construction to the highest level in 13 years.

US services companies grow in February
March 4, 2020 11:08 a.m.

US services companies grow in February

WASHINGTON (AP) — Services companies grew at a faster pace in February than the previous month, an indication that the economy was still expanding immediately after the first cases of the coronavirus were reported in the U.S.

January 8, 2021 12:03 a.m.

US services sector grows for seventh consecutive month

SILVER SPRING, Md. (AP) — The U.S. services sector, where most Americans work, grew for the seventh consecutive month in December even as coronavirus cases surged through the holidays.