Wells Fargo (WFC) stock was rising slightly on Friday despite a mixed earnings release marred by deposit losses.
Wells Fargo shares were up 0.52% to $51.73 as of 1:10 p.m. ET.
The 166-year-old, San Francisco-based banking giant reported revenue of $21.94 billion, which barely edged FactSet analyst consensus of $21.84 billion. Earnings per share were a disappointing $1.13 against a consensus of $1.19.
The miss was partly driven by a significant drop in deposits that was one effect of a number of scandals at the bank in recent years that included creating fake banking accounts.
The issue was exacerbated by the success of competitors like JPMorgan Chase (JPM) , which reported record deposit growth.
"Average deposits declined $40 billion from a year-ago reflecting lower Wholesale Banking deposits including the actions taken in the first half of the year to manage to the asset gap, as well as lower Wealth and Investment Management deposits as customers allocated more cash to higher-rate alternatives," CFO John Shrewsberry said.
The bank is one of the largest U.S. financial institutions with $1.9 trillion in assets and $1.3 trillion in deposits. It is the third-largest bank by deposits in the United States, behind Bank of America (BAC) and JPMorgan.
The Noise is Quieting
While not dismissive of the scandal that has caused the bank to lag its peers, producing a double digit loss in its stock price year-to-date, analysts keyed in on more important factors than deposit losses.
"As can be expected, there was a lot of noise this quarter and deposit balances declined significantly," Piper Jaffray Senior Research Analyst Kevin Barker said. "But operating expenses seem headed in the right direction and net interest margin remained stable."
He issued a neutral rating on the stock, but noted that for a company recovering from multiple scandals, the numbers were certainly not depressing.
"All things considered, we thought the quarter was decent given where (WFC) stands today," he concluded.
Loans Leave A Lot to be Desired
To be sure, scandals over deposits are not the only thing weighing on the company, as its history of fraudulent loans and predatory loans have not helped it keep up with contemporaries either.
"Loans were down 1% year over year," Atlantic Equities analyst John Heagerty wrote in his take on the earnings Friday morning. "The tepid loan growth underlines the fact that WFC will continue to face stronger earnings headwinds than its peers."
He and his team issued a neutral rating with a $60 price target for the stock.