Wells Fargo & Co reported its fourth fall in quarterly profit in a row as it set aside funds for potential legal costs amid a bogus-account scandal that cost CEO and chairman John Stumpf his job.
The bank, which faces numerous federal and state investigations into its practices, said non interest expenses rose due in part to higher litigation accruals and salaries.
However, both earnings and revenue beat market expectations.
Stumpf, under pressure from lawmakers and other critics, stepped down on Wednesday after 34 years with the bank.
He handed over the CEO role to Timothy Sloan, who had been chief operating officer, and the chairmanship to lead director Stephen Sanger.
"I am deeply committed to restoring the trust of all of our stakeholders, including our customers, shareholders and community partners," Sloan said in a statement today.
"We know that it will take time and a lot of hard work to earn back our reputation, but I am confident because of the incredible caliber of our team members," he said.
Wells Fargo said its revenue rose 2% to $22.33 billion in the third quarter ended September 30, while non interest income fell 0.4% to $10.37 billion.
Net income applicable to shareholders fell 3.7% to $5.24 billion, or $1.03 per share, from $5.44 billion, or $1.05 per share, a year earlier.
Analysts on average had expected the third biggest US bank by assets to report earnings of $1.01 per share and revenue of $22.21 billion, according to Thomson Reuters I/B/E/S.
Stock analysts have cut profit forecasts for the bank for quarters to come following the revelation that bank employees had opened as many as 2 million accounts without customers' knowledge or permission to meet aggressive sales targets.
San Francisco-based Wells Fargo has already agreed to pay $185m to settle regulatory charges and fired about 5,300 employees in connection with the scandal.
Several big customers, including California and Illinois, have also suspended business relations with the bank.
The scandal is a rare setback for the bank, which emerged from the financial crisis relatively unscathed.
The bank, which has been trying to cut costs amid a drawn-out period of low interest rates, said its non-interest expenses rose 7% to $13.27 billion.
The US Federal Reserve, which last raised interest rates by 0.25 percentage points in December, has kept rates unchanged since then but has indicated a possible hike in December.
Wells Fargo said its total loans rose 6.4% to $961.33 billion. The bank set aside $805m to cover potential loan losses, up 14.5% from the third quarter of 2015.
Wells, the largest US mortgage lender, reported $70 billion in home loan originations, up 27.3% from a year earlier and up 11% from the second quarter.
Mortgage banking revenue rose 4.9% to $1.67 billion, accounting for about 16% of noninterest income.
JPMorgan Chase & Co, the biggest US bank by assets, earlier reported a 7.6% drop in quarterly profit after recording a tax expense, compared with a rare tax benefit a year earlier.
Citigroup, the fourth-biggest US bank by assets, also reported a fall in quarterly profit today.
