CHARLOTTE, NC (Deon Roberts/The Charlotte Observer) - Wells Fargo is preparing for as much as $1 billion in civil fines from two regulators, in what would be the largest penalties yet against the bank for its sales practices.
The Consumer Financial Protection Bureau is readying sanctions along with the Office of the Comptroller of the Currency, the San Francisco-based bank said Friday in announcing first-quarter financial results. The bank cautioned those results might need to be restated later to account for the penalties' eventual impact.
The announcement of fresh action from regulators comes after Wells Fargo last year disclosed problematic practices involving auto insurance and mortgage products. Those included improperly charging customers to lock in mortgage interest rates, and charging customers premiums for auto insurance they didn't need.
On Friday, Wells, which maintains its biggest employee hub in Charlotte, said it is in ongoing discussions with both agencies over its practices, as well as to resolve matters regarding Wells' compliance risk management. Wells Fargo's quarterly report did not break out the amount in fines it expected from each regulator, and a bank spokesman declined to comment.
Media reports earlier this week had said regulators planned to seek the penalties. A spokesman for the comptroller declined to comment. Representatives for the Consumer Financial Protection Bureau could not be immediately reached.
CEO Tim Sloan, who took over in 2016 following a different scandal over unauthorized accounts, said in a statement that Wells continues to make progress rebuilding trust with customers, employees, regulators and others.
"I'm confident that our outstanding team will continue to transform Wells Fargo into a better, stronger company," Sloan said. "However, we recognize that it will take time to put all of our challenges behind us."
The CFPB fines would be the first from former Charlotte-area congressman Mick Mulvaney, whom President Donald Trump tapped last year to head the agency. Trump, in a tweet last December, took aim at Wells, pledging that fines and penalties against the bank "will not be dropped." The tweet came after news reports that Mulvaney was reviewing whether Wells should pay tens of millions of dollars over alleged mortgage abuses.
Earnings beat expectations
In preliminary results reported Friday, Wells said it posted a first-quarter profit of $5.9 billion, up about 6 percent from $5.6 billion in the same quarter last year. Earnings per share were $1.12, topping Wall Street's per-share expectations by 6 cents, according to a FactSet survey.
Revenue dropped nearly 2 percent, as average loans and deposits fell. The bank said other factors behind the decline include the roll-out of new overdraft fee policies, and the sale of an insurance business.
On a big day for bank earnings news, JPMorgan Chase said it earned $8.71 billion in the first quarter, or $2.37 a share, up from $6.45 billion, or $1.65 a share, in the same period a year earlier. Citigroup reported a profit of $4.62 billion, or $1.68 a share, compared with a profit of $4.1 billion, or $1.35 per share, in the same period a year earlier.
Both New York banks beat analyst expectations. Charlotte-based Bank of America reports its results Monday.