Wells Fargo (NYSE: WFC) reported third quarter revenue that missed expectations Friday, sending shares lower in Friday trading.
The bank reported: Earnings per share of $1.04, ex-items, vs. the $1.03 a share expected by analysts. Revenue of $21.93 billion, vs. $22.4 billion expected. Revenue fell 2% from the same quarter last year.
The adjusted EPS excludes 20 cents of charges related to litigation for a mortgage-related regulatory case from before the financial crisis. The litigation cost of $1 billion contributed to an operating loss of $1.3 billion in the third quarter and increased the efficiency ratio to a worse-than-expected 65.5%.
A rising efficiency ratio indicates a bank's expenses are increasing or the company's revenues are declining. Overall non-interest expenses rose $14.4 billion, more than the $13.6 billion projected by experts.
Net interest income, a key measure of profitability, rose nearly $500 million from the third quarter last year to $12.48 billion, but missed expectations of $13.14 billion projected.
Wells Fargo has struggled to recover from a massive consumer sales scandal last year that resulted in hundreds of millions of dollars in penalties and the resignation of then-CEO John Stumpf.
The new CEO, Timothy Sloan, has since grappled with revelations of more fraudulent consumer accounts and a shakeup of board members.
Wells Fargo shares are up just 0.2% for the year. In contrast, the Financials SPDR Fund has climbed 12% to highs not seen since 2007.
Shares began Friday down $1.97, or 3.6%, to $53.24.
