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For the fourth quarter in a row, Wells Fargo Dealer Services’ delinquencies and charge-offs have grown amid a rapidly declining originations volume environment, and the company expects the volume declines to continue into the second half of 2018.

Originations were down 47% in the third quarter compared to the same period the year prior, marking the third consecutive quarter of double-digit originations declines. As a result, auto outstandings dropped 12% year over year to $55.5 billion in the third quarter.

“The decisions we made last year have really worked because the average Fico scores of our customers have now increased, and that’s exactly what we wanted,” said Tim Sloan, president and chief executive of Wells Fargo & Co., during the earnings call. “That said, I think you should expect that portfolio, even if we turn things up a notch, to decline through the fourth quarter and to bottom out sometime in the second half of next year. We like that business, don’t get us wrong, and our expectation over time is that we will regain share in that business. But right now we’re cautious and we have a lot of changes that we have to execute on.”

Chief among those changes is the consolidation of its 57 collections centers into three regional facilities.

“While that’s happening we’d rather have a higher credit profile of the average customer just so that we know we’re dealing with fewer defaults as we deal with that change,” said John Shrewsberry, senior executive vice president and chief financial officer, during the call.

Additionally, indirect loan delinquencies 30 days or more past due grew to $1.5 billion in the third quarter, compared with $1.3 billion during the same period the year prior.

Indirect loan net charge-offs were up 49% during the quarter to $198 million, largely driven by a “moratorium” on the repossession of borrowers vehicles who have been impacted by the bank’s forced-insurance policy, according to Wells Fargo’s earnings report.

Last year, Wells Fargo self-identified that its collateral protection insurance policy had force-placed insurance on consumers who had already purchased outside coverage. The company stopped placing the policies in September of 2016 and disclosed the practice a year later.

The company began sending remediation checks to the 570,000 consumers impacted by the policy this month to the tune of $80 million total. However, an earlier report identified some 230,000 additional consumers who could be impacted and the company is currently under investigation by both the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency.

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