Wells Fargo warns investors that the bank is likely to face more regulatory setbacks

Wells Fargo isn’t out of the woods yet when it comes to its regulatory mess.

That’s the message the bank sent in its most recent filing with the Securities and Exchange Commission this week. Wells Fargo said it is “likely to experience issues or delays” in satisfying demands from multiple U.S. regulators – a subtle, but meaningful shift in language from earlier filings where the bank said it “may” experience delays.

The development means that the most significant regulatory constraint on Wells Fargo — a Federal Reserve edict forcing the bank to keep its balance sheet frozen at 2017 levels — could take even longer to resolve, JPMorgan analyst Vivek Juneja said Wednesday in a research note.

“The key risk is that any further issues or delays would increase scrutiny and could further delay the asset cap getting lifted,” Juneja said in the note, citing comments from Fed chairman Jerome Powell that the asset cap won’t be lifted until compliance issues are resolved. Expenses tied to the regulatory overhaul could remain higher for longer, the analyst said.

The disclosure shows that CEO Charles Scharf, who took over two years ago, is still consumed with cleaning up the mess revealed by the bank’s 2016 fake accounts scandal. In September, the Office of the Comptroller of the Currency hit the bank with a $250 million fine tied to its mortgage division.

Scharf told analysts last month that the latest fine indicates that despite resolving a pair of consent orders, the company is “likely to have setbacks” over the next few years as the CEO and his deputies work to improve the firm’s compliance functions.

When an analyst pressed for more information on the setbacks, Scharf noted the complex set of consent orders the bank was working on.

“I just want to make sure that people understand that we have these things that are out there, and don’t want you to be surprised if something happens,” Scharf said.

A Wells Fargo spokesperson declined to comment beyond the filing. Shares of the bank have surged more than 70% this year amid a broader rebound in financial companies.

With assistance from CNBC’s Michael Bloom