Wells Fargo & Co. fell the most in more than a month after reporting that loans dropped in the second quarter while expenses came in higher than analysts had expected.
Total average loans fell $6.9 billion from the previous three-month period to the lowest in more than two years, fueled by drops in both commercial and consumer lending, the San Francisco-based firm said Friday in a statement. Non-interest expenses increased 3 percent, while analysts had predicted a slight decline.
“The broad-based weakness of Wells Fargo’s results is troubling, with many indicators such as deposits, commercial and consumer lending trending down,” Octavio Marenzi, chief executive officer of consultant Opimas, said in an emailed statement. “It appears that the slew of scandals that Wells Fargo has been involved in are taking their toll.”
Shares of Wells Fargo dropped 3.9 percent to $53.86 at 9:51 a.m. in New York, the most intraday since May 29 and the worst performance in the 24-company KBW Bank Index. The stock has fallen 11 percent this year.
In February, the Fed prohibited Wells Fargo from increasing assets until it fixes missteps involving misleading sales practices at its consumer bank.
Since then, the nation’s third-largest lender by assets has faced more scrutiny, with the U.S. Department of Justice and Securities and Exchange Commission examining the wealth-management unit, a person familiar with the probes had said.