Wells Fargo is acknowledging that federal regulators have offered to resolve a host of investigations into the consumer banking giant for $1 billion. The disclosure, first reported by Reuters, comes as Wells Fargo reports its first-quarter profit.
Wells Fargo 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.
The bank continues to navigate several investigations related to:
- the opening of fake customer accounts;
- forcing customers to take unnecessary auto insurance policies; and
- unfairly charging fees tied to mortgage rates, and other matters.
Wells Fargo says the potential $1-billion penalty involves the auto insurance and mortgage fee matters.
The bank’s Q1 profits
Wells Fargo’s profit jumped 6% during the first quarter, but that may be revised following the federal regulators’ settlement offer.
The bank 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% 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 Fargo reported net interest income of $12.2 billion, down $86 million, or 1%, 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% 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.