Wells Fargo’s profit jumped 6 percent during the first quarter, but that may be revised following an offer by federal regulators to settle a host of investigations into the consumer banking giant at a cost of $1 billion.
Wells is navigating several investigations tied to the opening by employees of fake customer accounts, unnecessary auto insurance policies, unfair fees tied to mortgage rates and other matters. The potential $1 billion penalty, first reported by Reuters, involves the auto insurance and mortgage fee matters, according to the bank.
Wells did not say if it will pay the fine and is “unable to predict final resolution” of the matter. It provided no estimate on potential costs.
Wells reported first-quarter earnings of $5.9 billion, or $1.12 per share, topping Wall Street’s per-share expectations by 6 cents, according to a FactSet survey, That profit exceeds last year’s $5.46 billion, or $1.03 per share, in profit.
The bank paid $1.37 billion in taxes in the first quarter, about 36 percent less than the $2.13 billion it paid last year thanks to the sweeping overhaul of the nation’s tax policy by the GOP. The bank recorded a benefit of $3.35 billion last quarter due to the change.
The largest mortgage lender in the U.S. had revenue of $21.9 billion, compared with $22 billion in the first quarter of 2017. Even with interest rates rising for the past two years, Wells reported net interest income of $12.2 billion, down $86 million, or 1 percent, from the year-ago quarter.
Shares ticked down slightly in premarket trading and are up just slightly in the past 12 months. They have declined about 13 percent since the beginning of the year, a large chunk of that loss coming in early February after the Federal Reserve said it would freeze the bank’s asset growth until it could demonstrate how it will prevent future scandals internally.