Wells Fargo (WFC, $48.42) Shelled Out a Record $7.4 Billion in Share Buybacks, After Struggling With Scandal Over Two Years

Embroiled in scandals over recent years, Wells Fargo has been apparently trying to shake up its organization and appease shareholders. In the third quarter, the bank showered $7.4 billion towards share buybacks, which is nearly triple the amount it spent the year before.

In September 2016, Wells Fargo got itself in a controversy after announcing that it had fired 5,300 employees over several years for creating millions of fake accounts. Since then, Wells Fargo has spent an average of $3.2 billion each quarter on share repurchases, according to a CNN Business review of company filings. That’s 45% higher than what the bank typically spent during the prior eight quarters.

A company’s stock buyback lowers the count of its outstanding shares, and therefore potentially jacks up the company’s earnings per share (EPS). A higher EPS is usually attractive to investors, and is therefore expected to boost the stock’s demand.  With its shares down -24% in the past year amidst scandals, Wells Fargo seems to have increasingly relied on share buybacks in hopes of bolstering its stock price.

Wells Fargo is also slashing jobs - apparently to deal with the shift in consumer preference to digital banking. In September, the company announced plans to cut as many as 26,500 jobs over three years.  

The bank underwent a -3% drop in deposits in the third quarter on a year-over-year basis, as consumers and businesses held lower balances. It was also hurt by reduced mortgages, while several other big banks like JPMorgan Chase and Citigroup experienced positively solid loan growth in the third quarter.