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Wells Fargo & Company WFC plans to halt loans provided to the independent car dealer clients due to the economic impacts of the coronavirus pandemic. The news was first reported by CNBC.
The article quoted Natalie Brown, spokeswoman for Wells Fargo, “As a responsible lender, we also have an obligation to review our business practices in light of the economic uncertainty presented by COVID-19 and have let the majority of our independent dealer customers know that we will suspend accepting applications from them,”.
Brown added, “The independent dealers we will continue doing business with are those with deep, long-standing relationships with Wells Fargo.”
Independent car dealers are typically involved with the selling of used cars, unlike franchised dealerships that are involved with new vehicles from specific manufacturers.
Earlier, Wells Fargo announced to temporarily suspend new home equity lines of credit (“HELOC”) from Apr 30 onward, having assessed the uncertainties tied with the COVID-19 outbreak.
The key reason behind the move is that during times of economic uncertainty, HELOCs are considered to be risky products for banks as in case of a foreclosure, the lender who made the primary mortgage is first in line to get paid in a recovery. JPMorgan JPM is another Wall Street giant to have suspended HELOC.
Amid the coronavirus outbreak-induced mayhem, the scandal-plagued bank is struggling to abide by the asset cap placed on the bank by the Federal Reserve. Having witnessed significant deposits and demand for loans tied to the pandemic, the company had to move deposits outside.
The asset cap is “unfortunate, especially in an environment like this, but it’s a fact of life, and we’re more focused than ever on doing the work that’s necessary to get it behind us,” CEO Charlie Scharf said in a conference.
Over the past six months, shares of Wells Fargo have lost 45.9% compared with a 27.6% decline recorded by the industry.
Currently, the company carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks from the same space are mentioned below. Each of these stocks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SB Financial Group, Inc.’s SBFG Zacks Consensus Estimate for current-year earnings has been revised upward by 17.9% over the past 60 days. Moreover, the stock has declined 16% in the past six months.
TrustCo Bank Corp NY TRST has witnessed a 2% upward earnings estimate revision for the current year over the past 60 days. The company’s shares have lost 45.9% in the past six months.
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JPMorgan Chase Co. (JPM) : Free Stock Analysis Report
Wells Fargo Company (WFC) : Free Stock Analysis Report
TrustCo Bank Corp NY (TRST) : Free Stock Analysis Report
SB Financial Group, Inc. (SBFG) : Free Stock Analysis Report
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