Wells Fargo can't seem to escape its troubled past

New York(CNN Business) Wells Fargo is still being haunted by its history of ripping off customers.

More than four years after the Wells Fargo (WFC) fake-accounts scandal erupted, the bank reported Friday another $321 million of quarterly losses tied to customer refunds. That brings Wells Fargo's 2020 total for what it calls customer "remediation" to a staggering $2.2 billion.

Wells Fargo did not specify which of its many scandals were responsible for the latest refunds, which bank executives had previously suggested were in the rearview mirror. Instead, the bank said the money is "primarily for a variety of historical matters." That could include anything from the millions of fake accounts Wells Fargo admitted to opening, to forcing customers to pay for unneeded auto insurance or charging unnecessary mortgage fees.

The losses underscore how Wells Fargo is still being dogged by what the Federal Reserve has called "widespread customer abuse."

Charlie Scharf, Wells Fargo's fourth CEO since the fall of 2016, acknowledged the toll on the bank's bottom line.

"Our results continued to be impacted by the unprecedented operating environment and the required work to put our substantial legacy issues behind us," Scharf said in a statement.

Wells Fargo has repeatedly signaled confidence that it had turned the page on its scandals. In July, John Shrewsberry, its former chief financial officer, said the "worst" was over in terms of customer refunds. Then the bank reported another $961 million of remediation in the third quarter.

In October, Shrewsberry acknowledged to reporters that his earlier prediction was "wrong," but added that the bank believed it has "now fully accounted for what it takes to close these things out." That, too, turned out not to be the case.

Mike Santomassimo, Wells Fargo's new CFO, told reporters on Friday that the process has dragged out in part because it sometimes involves going back "many years" across different platforms and systems, some of which have changed over time.

"It can get pretty complicated and complex," said Santomassimo, who took over as CFO last year.

Former Wells Fargo executives continue to get punished by regulators for their behavior at the bank. The Office of Comptroller of the Currency announced Friday a $3.5 million fine against James Strother, the bank's former general counsel. The OCC cited Strother's role in Wells Fargo's "systematic sales practices misconduct." The agency said last year it was seeking a $5 million fine against Strother. As part of the settlement, Strother has agreed to cooperate on other potential OCC investigations into Wells Fargo.

Another $16 billion of buybacks

Despite its ongoing legal troubles, Wells Fargo managed to grow its fourth-quarter profit by 5% to $3 billion. That's because in the prior-year period Wells Fargo set aside $1.5 billion for litigation expenses linked to its scandals.

But the bank disappointed Wall Street by reporting a 10% slide in revenue to $17.9 billion. The bank's shares fell more than 3% in premarket trading, eating into its 2021 gains. Last year, Wells Fargo lost 44% of its value, far outpacing the losses among other big banks.

As it has done in recent years, Wells Fargo is leaning on share buybacks to placate frustrated shareholders. The bank boosted its buyback plan by another 500 million shares. At current prices, that translates to more than $16 billion worth of buybacks.

The bank is really hurting from extremely low interest rates, which make it hard for lenders to make money. Net interest income, a key metric of profitability, plunged 17% because of low rates and fewer loans.

Wells Fargo suffered a 26% quarter-over-quarter decline in markets revenue, driven by an across-the-board slump in trading volumes. By contrast, rival JPMorgan Chase (JPM) reported a record quarterly profit Friday, boosted by its Wall Street arm.

Hundreds of branches are closing

Unlike its rivals, Wells Fargo can't outrun low rates by either lending more or spending less. That's because Wells Fargo is still operating under an unprecedented asset cap imposed by the Fed three years ago. Those sanctions limit Wells Fargo's ability to lend and requires it to spend more to resolve its compliance problems.

Wells Fargo reported average loans of $900 billion, down 6% from a year earlier. That includes a sharp 15% decline in loans to businesses.

After setting aside $14 billion to cushion against bad loans during the first three quarters, Wells Fargo is no longer stockpiling cash. The bank modestly trimmed its reserve levels during the final three months of 2020, underscoring the improved economic outlook for the US economy.

The bank is also under pressure from Wall Street to cut costs, and aims to cut another $1.5 billion of expenses in 2021, which will include laying off workers.

Over the next three to four years, Wells Fargo said it hopes to eliminate $8 billion of expenses in various ways. The bank closed 329 branches last year and is planning to shut another 250 in 2021.

Like other major companies, Wells Fargo is also rethinking its office space. The bank plans to cut its 46 million square feet of office real estate by 15% to 20% by the end of 2024.