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Wells Fargo takes $1B charge for mortgage investigations

Wells Fargo & Co. on Oct. 13 reported net income applicable to common shares of $4.18 billion, or 84 cents per share, for the third quarter, compared to net income of $5.24 billion, or $1.03 per share, in the third quarter of the prior year.

The S&P Capital IQ consensus estimate for normalized EPS in the third quarter was $1.03.

The company's third-quarter results included a $1 billion litigation accrual, not tax-deductible, for "previously disclosed mortgage-related regulatory investigation," the company said in a press release. The accrual reduced EPS for the quarter by 20 cents.

Revenue totaled $21.93 billion during the quarter, compared to $22.17 billion in the preceding quarter and $22.33 billion in the year-ago quarter.

Its efficiency ratio worsened in the most recent quarter, rising to 65.5% from 61.1% in the prior quarter, and from 59.4% in the 2016 third quarter.

The community banking segment reported net income of $2.23 billion, down from $2.99 billion in the previous quarter, and from $3.23 billion in the year-ago quarter.

The company ended the quarter with 5,927 retail bank branches, reflecting 145 branch consolidations from Jan. 1 through Sept. 30.

The company's net interest margin for the quarter was 2.87%, down from 2.90% in the linked quarter and up from 2.82% a year ago.

Wells Fargo reported net loan charge-offs of $717 million for the recent quarter, down $88 million from the third quarter of 2016. It recorded a provision for credit losses of $717 million, compared to $555 million in the previous quarter and down from $805 million a year earlier.

At the end of the third quarter, nonperforming assets totaled $9.33 billion, down from $9.84 billion in the linked quarter and compared to $12.01 billion a year ago.