2017 has been quite a year for Wells Fargo, as it continued to face fallout from its massive fake accounts scandal.
Several states, including California, Ohio and New Mexico, rose up against the bank, banning it from doing business with their governments.
But the fake accounts scandal wasn’t the only malpractice discovered at the bank. In October 2017, The Financial Industry Regulatory Authority ordered Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network to pay more than $3.4 million in restitution to affected customers over faulty sales practices.
The bank has also taken steps to improve its business over the year, including getting rid of its sales incentives, which were blamed for causing the original scandal, changing up its leadership for its compliance team with a new chief compliance officer, who will start in January 2018, and even announcing a new CEO.
Now, the bank’s fourth quarter earnings show Wells Fargo paid a total of $3.25 billion in pre-tax expenses for litigation accruals on a variety of matters including mortgage-related regulatory investigations, sales practices and other consumer-related matters. A majority of this expense was not tax deductible.
The bank’s noninterest income surpassed that of the third quarter at $9.7 billion, up from $9.4 billion, however this income was partially offset by a decrease in mortgage banking.
Mortgage banking noninterest income was $928 million in the fourth quarter, down from $1 billion in the third quarter. Residential mortgage loan originations were $53 billion in the fourth quarter, down from $59 billion in the third quarter.
Mortgage servicing also continues to decrease. Mortgage servicing income was $262 million in the fourth quarter, down from $309 million in the third quarter.
Overall, the bank made $88.4 billion in revenue in 2017, up from $88.3 billion in 2016. Net income increased 4%, or $1.8 billion to $49.6 billion for the year.
During the fourth quarter, revenue increased slightly to $22.1 billion, up from $21.8 billion in the third quarter and $21.6 billion in the fourth quarter of 2016.
The net income increased to $6.15 billion, up from $4.54 billion in the third quarter and $5.27 billion in the fourth quarter 2016.
This is diluted earnings per common share of $1.16, up from $0.83 per share in the third quarter and $0.96 per share in the fourth quarter the previous year.
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