Wells Fargo Posts Double-Digit Auto Origination Decline

Wells Fargo Dealer Services‘ first quarter consumer auto originations declined 29% year over year, as the company tightened its underwriting standards, according to its earnings report released this morning.

The bank originated $5.5 billion in consumer auto loans in the first quarter, compared to $7.7 billion during the same period a year ago. This marks the second consecutive decline in year-over-year originations, following a 15% drop in the fourth quarter.

“We’ve tightened credit underwriting standards as a response to early signs of rising delinquencies across the industry, and declining used-car values,” John Shrewsberry, senior executive vice president and chief financial officer at Wells Fargo, said during the earnings call. “As a result, the quality of originations has improved, and we expect to see the size of our auto portfolio to continue to decline in 2017.”

Total charge offs increased by 31% in the first quarter to $167 million up from $127 million the prior year. Total delinquencies — at $1.29 billion — also rose nearly 20% year over year, up from $1.08 billion a year ago.  

Consumer auto outstandings year over year, stayed relatively flat at $60.4 billion, compared with $60.7 at the same time a year prior. However, Wells expects that slight decline to continue throughout the year, the company reported.

Separately, Laura Schupbach was named as the head of Wells Fargo Dealer Services at the start of April, and Shrewsberry said today, that her goals will focus on “improving execution and efficiency through increased standardization and centralization.” He added that the company will have more to say about its auto portfolio during its upcoming investors day event.