Taking a break from the seemingly never-ending bad news on its massive fake account scandal, Wells Fargo is about to release its third-quarter earnings early Friday morning, once again opening its doors to the scrutiny of investors as it works to rebuild its tainted reputation.      

The mega bank shocked the market at the beginning of September when news came out that more than 5,000 of the bank’s former employees opened more than 2 million fake accounts to get sales bonuses.

As a result, Wells Fargo is facing heat from the House of Representatives, the Senate, the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, various states and municipalities and more.  And a lot of the attacks are going after the man at the top of the food chain, Wells Fargo’s CEO John Stumpf, to figure out if he, and other senior executives, knew about the fake account issue before it became public knowledge.

Mark Decambre stated in an article in MarketWatch that although these issues may not have a sizable impact on the bank’s quarterly results, they are sure to be the focus of Wall Street.

The article noted that the bank is expected to report per-share earnings of $1.01, down from $1.14 in the same period a year ago, and quarterly revenue of $22.237 billion, down from $23.132 billion a year ago.

The focus of the bank’s third-quarter conference call this time around will be on the bank’s CEO, who is on the call and answers questions.

From the article:

“This is the first call that we analysts will have to ask questions of the CEO,” prominent bank analyst Mike Mayo at CLSA told MarketWatch. Mayo said Wells Fargo has been too late in addressing its cross-selling debacle. Many banks shop additional products and services to customers, particularly amid what has been a protracted period of ultralow interest rates.

“Given that we have a flat yield curve [banks were] pushing what’s on the retail side,” Paul Miller, bank analyst at FBR Capital Markets, told CNBC Wednesday morning.

But to many observers, Wells Fargo’s cross-selling practices highlight a high-pressure environment that may have fostered a culture of fraud by rewarding low-level employees bonuses based on hard-to-achieve sales goals.

The CFPB’s report stated that in recent years, the bank has sought to distinguish itself in the marketplace as a leader in “cross selling” these products and services to existing customers who did not already have them. When cross selling is based on efforts to generate more business from existing customers based on strong customer satisfaction and excellent customer service, it is a common and accepted business practice.

Cross selling is quite prevalent among the big banks especially, as employees are encouraged to push new accounts onto existing customers, as evidenced by two independent reactions to the Wells Fargo fine from Richard Bove, vice president of equity research at Rafferty Capital Markets, and Josh Brown, the chief executive officer of Ritholtz Wealth Management.

Here’s Brown on the cross selling culture:

When I first read the story, I almost couldn’t believe it. Almost. But then I remembered everything I’ve been told by people working at the major banks. How they’re regularly whipped to cross-sell loans to their wealth management customers, credit cards to their banking clients, insurance products to their brokerage accounts, etc. It’s bad.

These are the metrics that Wall Street wants to see and they’re the yardstick by which executives are judged. So the decree goes out across the land and the rank-and-file employee incentives are set accordingly. And then, as these things always go, someone takes it too far. In this case, a lot of someones.

In the second quarter, Wells Fargo’s earnings report was in in line with Capital IQ Consensus at $1.01, with its revenues rising 4% annually.

“Wells Fargo's second-quarter results demonstrated our ability to generate consistent performance during periods of economic, capital markets and interest rate uncertainty,” said Stumpf at the time. “Compared with a year ago, we had solid growth in loans, deposits and customers, which are our fundamental drivers of long-term value.”

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