Wells Fargo Chief Stumpf Says Lender’s Primary Focus Controlling Expenses
By - May 23, 2011 7:56 AM CT
Chief Executive Officer John Stumpf. Photographer: Davis Turner/Bloomberg
Wells Fargo & Co. (WFC), the biggest U.S. home lender, is concentrating on controlling expenses including the cost of bad mortgages, Chief Executive Officer John Stumpf said.
The bank “continued to focus on corporate-wide expense reductions,” according to a presentation by Stumpf today at a London investor conference sponsored by Barclays Plc. Non- interest expenses dropped 5 percent in the first quarter from the final three months of 2010, the presentation said.
The first quarter didn’t yet reflect a new company-wide effort to identify reductions, and the San Francisco-based bank expects expenses tied to soured loans will drop if the economy doesn’t weaken, according to Stumpf’s prepared remarks.
Wells Fargo, as the second-largest U.S. mortgage servicer, faces scrutiny from federal regulators, state officials and consumer advocates over its handling of foreclosures. The lender was one of 14 of the largest servicers to sign consent decrees compelling them to overhaul procedures for seizing homes and pay back homeowners for losses on foreclosures that were mishandled.
State and federal officials have been negotiating with the mortgage servicers, which include Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. and Ally Financial Inc., which handle almost 60 percent of U.S. home loans.
The five banks proposed paying $5 billion to settle the probe by all 50 states that’s being led by Iowa Attorney General Tom Miller into the mortgage servicing industry, two people familiar with the matter said earlier this month. Stumpf declined today to predict the outcome.
Wachovia Merger
Wells Fargo is in the final year of integrating Wachovia Corp., and has reported more than $25 billion in profit after buying the Charlotte, North Carolina-based bank in 2008. Stumpf said today he doesn’t regret doing the deal, which will “pay dividends for years and years to come.”
While there are signs of increasing demand for loans from business customers, retail customers are still “cleaning up their portfolios,” Stumpf said.
On the regulatory front, Stumpf said reform of the federally backed companies that guarantee home mortgages isn’t likely before 2013. Resolving the status of Fannie Mae and Freddie Macmay be delayed in part by the 2012 election cycle, he said.
Wells Fargo closed at $28 last week on the New York Stock Exchange. The shares are down 9.7 percent this year, making the stock one of the worst performers in the 24-company KBW Bank Index, which dropped 4.8 percent this year.
To contact the reporters on this story: Laura Marcinek in New York atlmarcinek3@bloomberg.net; Dakin Campbell in San Francisco at dcampbell27@bloomberg.net.
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.
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