Wells Fargo lowers estimate for legal losses

Wells Fargo said Wednesday it could spend as much as $911 million above what it has already set aside for legal costs, a decline from its previous projection of $951 million.

The San Francisco-based bank made the disclosure in a filing with the Securities and Exchange Commission.

The new figure reflects an estimate as of the end of the first quarter. The prior estimate was as of the end of last year.

Banks maintain litigation reserves to cover potential legal costs. In quarterly securities filings, banks disclose their estimated potential legal costs above and beyond what is in the reserves. An increase in the estimate signals a bank perceives heightened legal risks. A decrease indicates lower risk.

In Wednesday's securities filing, the bank also said it has reached a settlement with the employee retirement system of the city of Farmington Hills in Michigan. In a class-action complaint, the retirement system claimed Wells Fargo made risky investments on behalf of the system, which suffered losses as a result. The settlement, reached last month, needs court approval, Wells Fargo said.