Wells Fargo CFO Discusses Credit Quality, Mortgage Servicing and Company Revenue

Wells Fargo Bank's Chief Financial Officer, Howard Atkins, recently discussed the bank's credit quality, mortgage servicing, and revenue on Bloomberg TV, shedding light on the company's strategies and performance in the current economic environment. Atkins emphasized that the improvement in credit quality is primarily due to the bank's efforts to reduce risk in its loan portfolios through loan modifications, exiting certain businesses, and tightening credit standards.

Key Takeaways:

• Wells Fargo saw a 16% decline in charge-offs in the quarter, contributing to the improvement in credit quality.
• The bank's credit quality improvement is a result of a combination of loan modifications, exiting certain businesses, and tightening credit standards.
• Despite concerns about a double-dip recession, Wells Fargo believes the economic recovery will be uneven but does not anticipate a significant impact on loan losses.
• The bank is under no political pressure to loosen credit standards, with Atkins stating that Wells Fargo has been supplying credit to the economy for two years.
• Mortgage hedging results were down from a year ago, which Atkins attributes to improved sales growth in deposits, loans, and mortgage applications.
• The bank is focusing on cross-selling its 80 different businesses to increase revenue growth, which resulted in record cross-sell numbers every quarter.
• The mortgage hedging results, which were particularly strong last year, have normalized this year.

Statistics:

• 16% decline in charge-offs in the quarter.
• 20% increase in mortgage applications in the second quarter.
• 7% growth in Wachovia's cross-sell numbers in the last year under Wells Fargo's direction.
• 6% decline in overall revenue year-over-year.
• Mortgage hedging results were down from a year ago.

Sources:

• Bloomberg TV (July 21, 2010)
• Bloomberg News
• Wells Fargo Bank NFL