Summary
Wells Fargo & Company (WFC) announced on February 1, 2016, an agreement in principle with the U.S. Federal Government to resolve certain civil claims related to its Federal Housing Administration (FHA) lending program between 2001-2010, and other FHA lending activities. The proposed resolution involves a payment of $1.2 billion to the government. In connection with this agreement, Wells Fargo has increased its legal accrual by $200 million, which reduced its net income for the year ended December 31, 2015, by $134 million, or $0.03 per common share. The company's reported net income for 2015 is now $22.9 billion, or $4.12 per common share. Investors should note that this is an agreement in principle, and final documentation with the Federal Government is still pending, meaning the resolution is not yet finalized.
Key Highlights
- 1Agreement in principle reached with the Federal Government to resolve civil claims regarding FHA lending program.
- 2Proposed settlement amount totals $1.2 billion.
- 3The claims relate to FHA lending activities between 2001-2010 and other periods.
- 4An additional legal accrual of $200 million was recorded for this resolution.
- 5Net income for the year ended December 31, 2015, was reduced by $134 million ($0.03 per share) due to this accrual.
- 6Reported net income for 2015 is now $22.9 billion ($4.12 per common share).
- 7The settlement is subject to final agreement on documentation.