Wells Fargo Records First Quarterly Loss Since 2008, Slashes Dividend

Wells Fargo (WFC) posted a second quarter loss of $2.4 billion, or $0.66 per share -- its first quarterly loss since the fourth quarter of 2008. Analysts expected a second quarter loss of $0.20 per share.

The San Francisco-based bank posted a profit of $6.21 billion in the year-ago quarter.

Wells Fargo set aside $8.4 billion in the second quarter to allow for potential loan losses.

The bank’s second quarter revenue of $17.8 billion also fell below analysts’ $18.4 billion expectation.

Wells Fargo also cut its dividend to $0.10 per share from $0.51. (Wells Fargo was forced to slash its dividend after the annual Federal Reserve stress test.)

As of 10:35 p.m. EDT, Wells Fargo shares were down 6.12%.

“We are extremely disappointed in both our second quarter results and our intent to reduce our dividend,” said CEO Charlie Scharf. “Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter.”

Unlike its large banking peers, Wells Fargo still must contend with a slew of regulatory consent orders as punishment for a scandal in 2016 whereby some employees created fake accounts to pad their sales statistics. Among other measures, the Federal Reserve capped the bank’s asset growth.

Scharf suggested last month that the bank may have to cut costs and jobs. Chief Financial Officer John Shrewsberry said the bank wants to get “our total head count to as lean a state as we can responsibly operate.”

Wells Fargo is also facing a low interest rate environment – its net interest margin dropped by 33 basis points from the previous quarter to 2.25%.

Also, unlike most of its peers, Wells Fargo does not boast a large Wall Street trading division – a business that has flourished this year.

Wells Fargo’s stock has fallen by more 50% this year, the worst performer among the largest U.S. banks.