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Wells Fargo's Q3 Earnings Report Shows Subpar Performance

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Big banks are having their earnings calls this week and Wells Fargo finally had its turn. While other financial institutions managed to exceed the predictions — namely BlackRock and JPMorgan Chase — Wells Fargo's third-quarter results largely reflected a struggling economy. Ultimately, Wells Fargo's third-quarter earnings fell short of the expectations.

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When did Wells Fargo report its earnings?

Wells Fargo reported its third-quarter earnings on Wednesday, Oct. 14 in the pre-market hours. Overall, the results were lower than the estimates.

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According to Wells Fargo executives, the dip in the bank's fiscal performance is due to low interest rates across the board.

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In the earnings report, CEO Charlie Scharf said, "Our third quarter results reflect the impact of aggressive monetary and fiscal stimulus on the US economy. Strong mortgage banking fees, higher equity markets, and declining sequential charge-offs positively impacted our results, while historically low interest rates reduced our net interest income and our expenses continued to remain elevated."

Scharf said that the bank continues to defer payments and waive fees in an attempt to help its 3.2 million customers and the small businesses that it serves.

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Highlights from Wells Fargo's earnings report

There's a lot to say about Wells Fargo's third-quarter earnings call, but here are the key takeaways.

  • The net interest income decreased 19 percent from the third quarter of 2019 to $9.368 billion.
  • Wells Fargo's EPS was below the estimates of $0.45 and reached $0.42.
  • The revenue decreased 14 percent from the previous quarter to $18.86 billion. The revenue was above estimates by about $1 billion.

There was some good news in Wells Fargo's third-quarter earnings call. With $769 million reserved for third-quarter credit losses, Wells Fargo is doing better than the $1.76 billion estimate and its second-quarter credit loss reservation of $9.5 billion. The bank's non-interest income and mortgage-banking income both beat the expectations.

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What is Wells Fargo's stock price today?

Before the market opened on Oct. 14, Wells Fargo stock — which goes by the ticker symbol "WFC" on the NYSE — fell 1.7 percent due to the bank's subpar third-quarter earnings report. 

By mid-morning on Oct. 14, Wells Fargo had dipped an additional 4 percent and reached $23.69 per share by 10:30 a.m. ET. The level is the lowest that the stock has been since Sept. 23. So far, Wells Fargo stock has dropped 54 percent in 2020.

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Wells Fargo's dividend

Wells Fargo pays out dividends to its investors on a quarterly basis. Currently, Wells Fargo's dividend yield is 1.69 percent with a PE ratio of 27.07, which equates to an annual dividend of about $0.40 per share.

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What to expect from Wells Fargo stock

Wells Fargo is used to being in the news. In 2016, the bank was linked to a scandal regarding fraudulent savings and checking accounts. The scandal hasn't been resolved yet. Wall Street analysts expect Wells Fargo to improve slightly over the next year, but don't expect it to reach its pre-pandemic level.

Investors can learn more about the third-quarter earnings and future earnings calls on the Wells Fargo investor relations website.

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