One on One with Howard Atkins, CFO, Wells Fargo
Thursday, April 09, 2009
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SUSIE GHARIB: Earlier today I talked with the bank's(Wells Fargo) Chief Financial Officer, Howard Atkins and asked him if he expects to see profit growth continuing.
HOWARD ATKINS, CFO, WELLS FARGO: Well, it really was a great quarter and of course we're going to try to keep the profits going. There was pretty good momentum in the quarter along those lines. We had very significant flows in our mortgage business. We had good profit margins. Our deposit inflows were good. Our lending businesses were good. We have yet to achieve the expense savings that we expect coming from the consolidation of Wells Fargo and Wachovia. So still, a lot of good underlying momentum in the numbers.
GHARIB: Mr. Atkins, what's the impact of the California economy on Wells Fargo, given that unemployment is high and businesses and consumers are struggling in the state?
ATKINS: Well, the interesting thing about California for us right now is that if anything, it looks like the parts of the mortgage market, the housing market actually may be stabilizing a little bit. There's a lot activity going on in the lower end of the housing market. Yes, some of that is purchases of foreclosed property. But there is activity. And you can see that again in our numbers, you know. We took $190 billion of mortgage applications during the quarter. A fair amount of that was in California. A lot of that is refi activity, but a fair chunk of that is new home purchases.
GHARIB: Well, from your perspective as a mortgage lender, what's your read on the financial health of the consumer? Are they in good shape to keep borrowing?
ATKINS: Well, you know, unemployment is high and it's probably going to go higher. The economy is clearly not out of the woods yet. You know, I think the first quarter GDP report will probably show a negative and maybe even into the second quarter. But there again are some signs of emerging health, perhaps. Some of the sales statistics are looking a little bit better. Some of the auto sales numbers are looking better. Also keep in mind that even though unemployment is high, most people are employed, not unemployed in the economy. And most homeowners are paying their mortgages on time, even though delinquencies are relatively high. So overall, you know, we think things are -- could look a little bit better as we go through the year.
GHARIB: Now Wells Fargo took $25 billion in government bailout funds. Considering that things are doing better at the bank, how close are you to paying off that loan?
ATKINS: We would like to repay that as soon as practical. But I think the key thing for us in order to make all these good things happen, is really two things. One we are determined to keep credit flowing in the economy. We're doing everything that we can to make sure that creditworthy borrowers do get credit and you can see that in some of the very large credit numbers, credit extension numbers that we indicated for the first quarter. And the second thing of course, is we are trying to earn money. The more profit that we can earn, that's good for our employees. It's good for our shareholders. It's good for the government. It's good for the U.S. taxpayer. And we are hoping it will lead to an earlier date of repaying that investment from the government.
GHARIB: But Mr. Atkins do you think that down the road you might need more government money? There are reports today that our nation's biggest banks are passing those government stress tests, but they still might need more money down the road. What about Wells Fargo?
ATKINS: Well, you know, things like stress tests really involve interaction with regulators and we typically don't comment on that. What I can tell you again is the focus of our organization right now is providing credit and making money. And if we can do that, do that successfully, that should be fine. You know, again when you think about how much money the company is earning, you know, every day that goes by, we are adding to capital of the company naturally just because we're earning, you know, another day's worth of profit in the company. And that's really the best way of growing capital.
GHARIB: Mr. Atkins, thank you so much for coming on our program. We really appreciate it.
ATKINS: Thank you so much.
