Wells Fargo & Co. (NYSE: WFC) new car loans and automotive profile have dropped by almost half in the second quarter making it the lowest level in 2 years. The bank has reduced a great number of loans it made to buyers of new and used autos after many borrowers fell behind on payments. As a result, Wells Fargo was forced to write off the bad loans indicated in their second quarter earnings statement. Auto originations fell 45 percent to $4.54 billion from a year earlier which was the lowest in 3 years. This reduced Wells Fargo’s auto loan portfolio to about $58 billion.
On top of this, the bank has been struggling to recover from a sales practices scandal in its retail unit and is also trying to overcome a hurdle in their consumer operations. However, they still have some source of revenue coming from their mortgage lending slip as well as improvements in wealth management earnings and benefits of several one-time items such as a sale of an insurance unit. These helped offset a drop in their lending businesses as total net income increased from a year earlier.
CEO Tim Sloan is still struggling to move the company past the turmoil that happened in September where branch staff was accused of opening millions of fake deposit and credit card accounts to reach sales goals. Money is still being thrown as lawyers, advertising, and consultants need to get paid.