Wells Fargo Auto Originations Slow as 2012 Closes

January 14, 2013

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SAN FRANCISCO — Wells Fargo — the auto lending market leader according to the latest data generated by Experian Automotive — watched its originations soften as the year closed, but they still improved compared to the last quarter of 2011.

Reflecting what they described as seasonality and increased competition, company officials said their fourth-quarter auto originations totaled $5.4 billion, a level 15 percent lower than prior quarter but 8 percent higher than the prior year period.

The origination figure left Wells Fargo with $46.1 billion in outstanding auto loan balances as of the fourth quarter, an amount flat against the previous quarter but 9 percent above the year-ago mark.

Wells Fargo indicated both its net charge-offs as a percentage of average direct consumer loans as well as its 30-day delinquencies as a percent of direct consumer loans ticked higher in the fourth quarter compared to the third quarter.

The charge-off reading jumped from 1.02 percent to 1.46 percent, while the delinquency reading moved up from 1.27 percent to 1.30 percent.

Switching over to indirect consumer loans — contracts arranged through dealers — net charge-offs and delinquencies rose, too, according to the company.

Wells Fargo reported that the indirect net charge-off percentage climbed to 0.93 percent in the fourth quarter, up from 0.52 percent in the previous quarter. The delinquency percentage on indirect consumer loans increased to 1.82 percent from 1.40 percent.

Looking at the commercial side of its auto business, Wells Fargo announced dealer floor plan utilization rates hit the highest levels since its merger with Wachovia. The company's amount of fourth-quarter floor plan loans came in at $7.4 billion, up 12 percent from the previous quarter and 31 percent year-over-over as officials said the portfolio "continued strong credit performance."

Experian discovered that Wells Fargo surpassed Ally Financial to grab the top spot in the consumer auto lending market as of the third quarter, securing 5.90 percent of the industry share and strengthening its hold on used-vehicle lending with 7.29 percent.

The performance of its auto lending interests helped Wells Fargo's financial report as a whole.

The company reported diluted earnings per common share of $3.36 for 2012, up 19 percent from $2.82 in 2011. Full year net income was $18.9 billion, compared with $15.9 billion in 2011. For fourth quarter 2012, net income was $5.1 billion, or $0.91 per share, compared with $4.1 billion, or $0.73 per share, for fourth quarter 2011.

Chairman and chief executive officer John Stumpf said, "2012 was an outstanding year for Wells Fargo. We saw the continued benefits of our diversified business model and reported record full year and fourth quarter earnings, robust deposit and solid loan growth, and strong performance across our business units. The company's success is due to our more than 265,000 team members who remained focused on our customers and on our vision to satisfy all of our customers' financial needs.

"This time last year, I said we would benefit from the many opportunities we saw for 2012 — and we did just that," Stumpf continued. "From growing revenue, making strategic acquisitions and achieving efficiency improvements, I am extremely pleased with our 2012 performance. We also returned more capital to our shareholders through common stock dividends and common stock repurchases. We are very well positioned for and look forward to 2013, as Wells Fargo continues to work hard to contribute to a growing U.S. economy by doing what we do best: helping customers succeed financially."

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