Wells Fargo & Co. saw “broad based growth” across many of its commercial and consumer portfolios, however, auto was an “exception,” John Shrewsberry, the company’s chief financial officer, said during its fourth-quarter earnings call last Friday.
“Auto originations in the fourth quarter totaled $6.4 billion, down 21% from the third quarter, and down 15% from a year ago,” he said. “We currently expect balances in our auto portfolio to continue to decline in the near term.” To respond to conditions in a competitive landscape and to maintain the bank’s risk tolerances, Wells Fargo tightened underwriting standards, Shrewsberry said.
“We’ve been holding fast on term,” he said of the company’s policy not to exceed 72-month terms. “Between leasing as a competitive product, and other lenders’ willingness to go to seven-year [terms] and beyond more frequently than we are, sticking by that has caused us to lose some volume.” Wells Fargo “disproportionately” provides financing for loans rather than leases, which “at this part of the cycle,” it’s causing Wells Fargo to lose marketshare, he added.
Dawn Martin Harp, president of Wells Fargo Dealer Services, announced she will retire from her position, effective April 1. Wells Fargo is looking both internally and externally for her replacement.
