Summary
Wells Fargo & Company/MN (WFC) filed an 8-K/A amendment to its previous 8-K filing on April 23, 2018, to provide a clarification regarding its first quarter 2018 financial results. The amendment specifically addresses the financial impact of consent orders entered into with the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) on April 20, 2018, totaling $1 billion in civil money penalties. The primary impact of these penalties, which resolved issues related to the company's compliance risk management program and past practices concerning automobile collateral protection insurance and mortgage interest rate lock extensions, was an additional legal accrual of $800 million. This accrual, which was not tax deductible, reduced the company's previously reported net income to $5.1 billion and net income applicable to common stock to $4.7 billion for the quarter ended March 31, 2018. Consequently, diluted earnings per common share were reduced by $0.16 to $0.96.
Key Highlights
- 1Wells Fargo entered into consent orders with the CFPB and OCC, agreeing to pay $1 billion in civil money penalties.
- 2These penalties resolve matters concerning compliance risk management and past practices with auto insurance and mortgage rate locks.
- 3An additional $800 million legal accrual was recognized in the first quarter of 2018 due to these resolutions.
- 4This accrual was non-deductible for tax purposes, impacting net income directly.
- 5Reported net income for Q1 2018 was reduced to $5.1 billion.
- 6Net income applicable to common stock for Q1 2018 was revised to $4.7 billion.
- 7Diluted earnings per common share for Q1 2018 were lowered by $0.16 to $0.96.