Wells Fargo & Co. reported that its auto finance portfolio last quarter climbed to $55.2 billion, up $1.2 billion during the quarter and $5.5 billion more than at the end of the third quarter of last year.
During a company conference call with analysts, company officials once again bragged about the bank’s No. 1 status as an auto lender.
“We’re the No. 1 auto lender in the country,” said Wells Fargo Chief Financial Officer John Shrewsberry. “Auto loans were up $5.5 billion or 11% from last year, reflecting strong originations.”
In response to a question about how much of the bank’s growth might be coming from market share gains as opposed to increased demand, Wells Fargo Chief Executive John Stumpf said, “If you look at more than just commercial customers broadly, there has actually been fairly good activity. Now, there has been volatility lately in the market, but if you look auto sales and we participate in that business of course, August was the biggest sales month, maybe in I don’t know how many years.”
Another analyst pointed out that Shrewsberry had highlighted that it is the nation’s largest bank lender of auto. But they wanted to understand what the bank is thinking about that status, given the securitization risk retention rules that will soon be implemented in Washington.
The analyst noted that at this point, the rules are just a proposal, so they aren’t fully baked into the system just yet, but at some point in the future, Wells would have to hold 5% of any securitizations that it does in auto.
Stumpf responded that it doesn’t matter to Wells Fargo in its current business model because it does not securitize its auto loans.
“We own 100% of the risk on every one of them,” he said. “And frankly in the auto loan securitization business for those who do use securitization that’s the general business model which is that people own the bottom of the capital structure and retain their own risk which is different than mortgage, but that’s how auto finance companies generally works. I don’t think that’s going to have a real impact on Wells Fargo.”
