Wells Fargo Q3 EPS, Revenue Top Expectations; Shares Edge Higher Pre-Bell

Wells Fargo (WFC) inched higher in premarket trading after the bank holding company reported Q3 results that beat Wall Street expectations.

Shares rose as much as 0.7%.

EPS decreased to $1.03 in the September quarter, from $1.05 in the year-ago period. That beat the $1.01 average estimate of analysts polled by Capital IQ.

Q3 revenue increased 2% to $22.3 billion, also beating the analyst consensus of $22.1 billion.

Wells Fargo said on Friday that the independent directors of the board have launched an investigation into the company’s retail banking sales practices and related matters. Independent directors have retained the Shearman & Sterling law firm to assist in the investigation.

The investigation comes after Wells Fargo reached agreements on Sept. 8 with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the Office of the Los Angeles City Attorney, regarding allegations that some of its retail customers received products and services they did not request.

The amount of the settlements, which the company had fully accrued for as of June 30, totaled $185 million, plus $5 million in customer remediation.

Wells Fargo said in the earnings statement on Friday that former chairman and chief executive officer John Stumpf forfeited unvested equity awards valued at $41 million. Carrie Tolstedt has left the company and will receive no severance and has forfeited unvested equity awards valued at $19 million and will not exercise outstanding options during investigation. Moreover, neither executive will receive a bonus for 2016, the company said.

On Oct. 12, 2016, Stumpf retired from the company after 34 years of service. The board elected Tim Sloan, the company’s president and chief operating officer, to succeed him as CEO, and Stephen Sanger, its Lead Director, to serve as the board’s non-executive chairman, and independent director Elizabeth Duke to serve as Vice Chair. Sloan also was elected to the board.

“I am deeply committed to restoring the trust of all of our stakeholders, including our customers, shareholders, and community partners,” Sloan said in Friday’s statement. “We know that it will take time and a lot of hard work to earn back our reputation.”

By Sherwood Contributor