Wells Fargo has eased off the gas pedal in auto lending, as concerns about weakening industrywide credit standards continue to spread.
The San Francisco bank originated $6.7 billion in auto loans during the fourth quarter, which was down 1% from the same period a year earlier, according to results released Wednesday. Earlier in 2014, Wells reported growth in auto loan originations that ranged from 9%-15% on a year-over-year basis.
Wells Chief Financial Officer John Shrewsberry said in an interview Wednesday that the bank's declining loan volume is the result of more competition in the auto finance market.
Regarding loans to borrowers with top-notch credit scores, he said: "We'll feel the pinch there, where people are just willing to go below us in price terms. And so be it."
On subprime auto loans, Shrewsberry said: "If someone else will accept a lower risk-adjusted return, then we miss it." He also noted that Wells declines to bid on some of the subprime auto loans being arranged by car dealers.
During the third quarter of 2014, Wells Fargo was the nation's largest lender in the used-car market, and the second largest retail auto lender overall, behind Ally Financial, according to Experian Automotive.
Other banks began to cede market share in auto lending before Wells did, according to data from Experian. In the third quarter, banks had 35.4% of the total auto market share, which was down from 38.2% a year earlier. The finance arms of auto manufacturers took market share during the same period.
U.S. auto loans outstanding stood at $944 billion in the third quarter, the latest period for which data was available from the Federal Reserve Board. That was up from $866 billion a year earlier.
Across the auto-finance sector, late payments have been on the rise. As of the third quarter, 2.66% of all loans were 30 days delinquent, up from 2.56% a year earlier, according to Experian. Loans that were 60 days delinquent rose to 0.74% from 0.68%.
Wells Fargo reported Wednesday that 2.52% of its auto loans arranged through dealers were 30 days or more past due in the fourth quarter, up from 2.13% a year earlier.