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Wells Fargo has confirmed that on Friday it eliminated jobs related to its mortgage-lending business, just eight days after the bank reported the largest quarterly drop in net income in nearly a decade.
The bank has not disclosed how many mortgage-lending positions were eliminated, nor the costs associated with the eliminations.
In an "Environmental, Social, and Governance Goals and Performance Data" report published in July 2021, the company reported it had a total workforce of 266,876, including 235,642 in the United States. Various social media posts last week suggested that 550 positions were eliminated, but the bank has not confirmed that number.
Neither the bank nor its home lending division has filed a Worker Adjustment and Retraining Notification (WARN) Act notice with the California Department of Labor, according to a spokesperson. Under California's WARN Act, employers are required to provide at least 60 days’ notice to both employees and the government when conducting mass layoffs, relocating a facility, or terminating workers as a result of a plant closure.
In a brief email statement, Lylah Holmes of Wells Fargo Public Affairs said the employee “displacements last week were the result of cyclical changes in the broader home-lending environment.”
She said Wells Fargo is “providing assistance” to the displaced workers, including severance and career counseling. She did not disclose details on the severance package offered to workers.
“Additionally, we are committed to retaining as many employees as possible and will do everything we can to help them identify other opportunities within Wells Fargo,” she said.
Wells Fargo, the fourth-largest U.S. bank by assets, on April 14 reported first quarter 2022 net income of $3.7 billion, or 88 cents per diluted share, down 20.8% from $4.6 billion and $1.02 per diluted share in the same quarter a year earlier.
Wells Fargo CEO Charles Scharff said during an earnings call that day that higher interest rates had negatively affected the bank’s mortgage origination business. He described it as “one of largest declines I can remember.”
The bank reported mortgage banking noninterest income in the quarter of $693 million, down from $1.3 billion a year earlier and below analysts’ expectations.
Mike Santomassimo, senior executive vice president and chief financial officer of Wells Fargo, added some clarification, saying the quarterly drop was the largest the bank had seen since 2003 and was largely driven by lower refinancing activity.
The elimination of positions by Wells Fargo capped a week of job cuts by mortgage-related companies, with brokerage Better.com announcing a third round of layoffs in the past four months without indicating the number of positions involved, and fintech Blend Labs eliminating 200 positions, or about 10% of its workforce. Both companies cited rising rates and reduced refinancing activity as reasons for the cuts.