A Wells Fargo office is shown, Wednesday, Jan. 13, 2021 in New York. Wells Fargo & Co. says its profit rose 4% to $2.99 billion in the fourth quarter of 2020. The bank, based in San Francisco, said Friday that it had earnings of 64 cents per share, compared with earnings of 60 cents a year earlier. (AP Photo/Mark Lennihan)
SILVER SPRING, Md. (AP) — Wells Fargo had its best quarter of 2020 as its profit rose 4% in the fourth quarter of a year defined by the coronavirus outbreak.
The bank, based in San Francisco, said Friday that its earnings rose to $3 billion, or 64 cents per share, compared with earnings of $2.87 billion , or 60 cents a share, a year earlier.
The results surpassed Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of 59 cents per share.
The biggest U.S. mortgage lender posted revenue of $17.93 billion in the period, just short of projections of $18.1 billion.
Net interest income fell 17%, the company said, mostly due to falling interest rates. However, economists are forecasting modest mortgage rate rises this year. Long-term bond yields, which can influence interest rates on mortgages and other consumer loans, have climbed recently amid expectations of higher U.S. government spending on pandemic relief and an economic recovery as more people get vaccinated for COVID-19.
On Thursday night, President-elect Joe Biden unveiled a $1.9 trillion coronavirus plan that would speed up vaccines and deal financial help to those struggling with the pandemic’s prolonged economic fallout. Biden proposed $1,400 checks for most Americans and extending a temporary boost in unemployment benefits and a moratorium on evictions and foreclosures through September.
Like it has for most businesses, it’s been a tumultuous year for Wells Fargo, which set aside $3.83 billion in the first quarter to cover potentially bad loans as the economy ground to halt because of the coronavirus outbreak. Then the lender lost $2.4 billion in the second quarter, its first quarterly loss since the real estate crash of 2008. Wells bounced back somewhat last quarter with $2 billion in profit.
As if the challenges presented by the virus pandemic weren’t enough, Wells has been in hot water with regulators for years. The bank has been operating under strict federal guidelines due to a series of scandals, limiting its ability to grow.
The biggest of those scandals was the opening of fake accounts, discovered in 2016, a cloud which still hangs over the company.
On Friday, the Office of the Comptroller of the Currency assessed a $3.5 million penalty against James Strother for his role in Wells' sales practices misconduct.
The penalty is part of a settlement with the bank’s former general counsel and is connected to charges against Strother and four other senior bank executives from January 2020. The announcement Friday is in addition to settlements with six other former senior bank executives announced last year.
Following those charges announced in January of last year, Wells' board of directors slashed the bonuses and other compensation of its then-CEO Tim Sloan and other top executives.
“Our results continued to be impacted by the unprecedented operating environment and the required work to put our substantial legacy issues behind us,” CEO Charlie Scharf said.
Wells Fargo shares fell 6.5% in midday trading and have lost about a third of their value in the past 12 months.
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7 Tech Stocks To Buy On Sale
This too shall pass. Those four words should be taped to the computer screen of every investor. If you own shares of the tech sector, you’ve seen your portfolio take quite a hit. Tech stocks were largely immune from the effects of the pandemic.
However, as investors are looking to rebalance their portfolios, tech stocks were obvious targets for some profit-taking. And at the end of the day, that’s what I believe the latest tech selloff amounts to. Stocks don’t move in one direction all the time. Sure, there may be some saber-rattling about breaking up big tech. But with an election in less than two months, nobody will have the political will to do anything.
That doesn’t mean that it’s all going to be smooth sailing. Sure, the Federal Reserve did its part by promising low-interest rates until the end of time (or at least through 2023 whatever comes first). But the rest of 2020 is likely to be volatile for stocks.
First, there’s still the novel coronavirus hanging around. It’s not going to simply disappear after election day. That will take some combination of a vaccine and/or therapeutic. And all the likely candidates seem to be getting farther away the deeper into clinical trials they get.
And we have an election. But we are not likely to know the winner of the election on election night. In fact, for those who remember the spectacle of “hanging chads”, this election could make that one look like amateur hour.
The bottom line is there will be uncertainty. But there are always gains to be found, particularly now that their stock price has come down a little bit. Here are seven tech stocks that you can look to add or increase a position in now that they’re trading at a discount.
View the "7 Tech Stocks To Buy On Sale".