The banking giant announced the settlement with the federal government – to resolve claims related to its FHA
lending program – last year. In the third quarter of 2017, that settlement finally hit the bank’s bottom line, according to a HousingWire report. Wells Fargo announced in its Q3 earnings report that it accrued $1 billion in “litigation expenses” during the third quarters – likely money set aside to pay off the settlement, according to HousingWire. The bank also reported a revenue drop, with Q3 revenue of $21.9 billion down from $22.2 billion in the second quarter and $22.3 billion in Q3 of 2016.
Meanwhile, diluted earnings per common share fell to $0.84 in Q3 – a 21% nosedive from $1.07 the previous quarter.
Wells Fargo also saw dramatic drops in mortgage-related income, HousingWire reported. Mortgage banking income dropped 37% from last year – from $1.7 billion in Q3 of 2016 to just over $1 billion in Q3 of 2017. Net servicing income saw a year-over-year decline of 14%, from $359 billion last year to $309 million.
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A $1.2-billion mortgage litigation settlement has put a dent in Wells Fargo’s earnings even as the bank’s mortgage-banking income took a nosedive.