Profits rose at Wells Fargo in the three months through March, the embattled lender said on Friday, beating Wall Street estimates as investors eagerly await any new information from the bank on its search for the next top executive.
Net income at the San Francisco-based company was $5.9 billion in the first quarter, or $1.20 per share, higher than Wall Street expectations. Revenue in the period was $21.6 billion, slightly down year-over-year but also beating analysts predictions.
Earnings in two of Well Fargo’s core business segements — community and investment banking — slipped quarter-to-quarter to $2.8 billion and $577 million, respectively. Meanwhile, wholesale banking revenue grew to $2.8 billion.
While the report should mitigate some investor concerns, there remain significant worries over the company’s signature business segments. Interim CEO Allen Parker said it has “more work ahead.”
“All these efforts are focused on creating a first-rate organization that is characterized by a strong financial foundation, a leading presence in our chosen markets, focused growth within a responsible risk management framework, operational excellence, and highly engaged team members,” he said in a statement.
Parker provided no updates on the CEO search, telling investors that the board of directors is approaching the task with “care and seriousness.”
“Although I’m available to the board for any necessary consultation…I’m not involved in the search process so unfortunately, I don’t have any insight in the criteria…or the timetable they are thinking about,” he told investors.
Net interest income at Wells rose slightly to $12.3 billion. Average deposits fell 3 percent to $1.3 trillion, after dropping $42.7 billion in the fourth quarter of 2018. The company attributed the decline to decreases in deposits in its wholesale and investment banking divisions.
Wells Fargo’s loan business also continued to slip, dropping to $950.1 billion in the quarter — largely in-line with Wall Street expectations. Mortgage lending, however, rose from the prior quarter to $708 million but declined by 24 percent year-over-year, a sign that the U.S. housing market could be in an upswing. Auto loans also rose 24 percent to $5.4 billion.
Former CEO Tim Sloan announced last month he would vacate his post, a move that analysts largely viewed as a critical step to the lender moving beyond its slew of scandals.
The bank is conducting an external search for its next top executive and experts have cited a number of potential candidates from rivals including JPMorgan Chase.
Some shareholders, including famed investor Warren Buffett, have advised Wells to look outside the financial sector for its next CEO. Analysts have cited Google CFO Ruth Porat or Neel Kashkari, current president of the Federal Reserve Bank of Minneapolis as possible new CEOs.
Wells Fargo’s regulatory challenges stem from a scandal at the nation’s fourth-largest lender that involved the creation of millions of fraudulent customer accounts.
Since then, the company has settled several lawsuits totaling billions of dollars, including a $575 million settlement with 50 states and the District of Columbia over the phony accounts.
The lender also paid nearly $2.1 billion to settle with the Justice Department over claims that it misled customers on the quality of its mortgage loans.