Wells Fargo Dealer Services originated $6.4 billion in consumer auto loans in the fourth quarter, which is a 15% drop compared to the same period last year, and a 21% decline from the third quarter, the company disclosed in its earning report.
Wells — which originated more auto loans than any other lender through September according to Experian and CU Direct — said the quarterly decline is due to a “focus on risk discipline.” However, the decline came during what is historically a record-breaking year in automotive sales.
“To respond to conditions in the competitive landscape and maintain our risk tolerances, we’ve tightened our underwriting standards,” said John Shrewsberry, chief financial officer for Wells Fargo, during the investors call. “We currently expect balances in our auto portfolio to continue to decline in the near term.”
Total consumer delinquencies 30 days past due grew to $1.6 billion, from $1.4 billion at the same time a year prior, and as a percentage of overall loans, delinquencies rose to 2.7% up from 2.4% during the same period. That rise represents a 14% increase in delinquencies YoY.
Net charge-offs rose to $1.66 billion compared to $1.35 billion at the same time a year prior. The increase represents a 23% climb in net charge-offs YoY.
Despite hits to its origination volume, total consumer outstandings topped $62 billion, representing a 4% increase compared to the year prior and a 1% decline from the third quarter.
The result come at the tail end of a whirlwind year for the company. Wells Fargo Dealer Services paid a $24 million consent order from the Department of Justice and Comptroller of the Currency last year to settle claims that the company illegally repossessed the vehicles of service members.
Wells Fargo’s flagship banking division also paid $185 million to settle charges from the Consumer Financial Protection Bureau that the company made consumer banking accounts without the knowledge or consent of the customer.
Auto Finance News found little connection between the banking scandal and the company’s auto sector in a November feature.
It was also announced this week that Dawn Martin Harp will retire as president of Wells Fargo Dealer Services after six years in the position and 20 with the company overall.
