Wells CFO: California economy close to bottom

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Wells Fargo, the San Francisco banking giant, is sounding more bullish on the California housing market – at least compared with places like New York, where the downturn began later.

“It’s premature to say the economy has bottomed out,” Wells’ chief financial officer, Howard Atkins, said in an interview this morning as the bank reported record earnings.

“But clearly there are signs that indicate to me we are closer to the bottom,” Atkins said. “Some of that is in the housing sector. With interest rates so low, we are seeing volumes picking up, even in California – not just refinancings, but home purchases.”

Because California’s housing market collapsed earlier than many other states, “it will come out earlier. New York is definitely still declining,” Atkins said.

Wells’ first-quarter statistics showed $1.6 billion in revenue from mortgage loan originations and sales on $101 billion in new home loans. That put it ahead of Bank of America Corp. as the biggest originator.

There were $100 billion in additional mortgages in the pipeline at the end of the first quarter, up 41% from the previous quarter, Wells said.

Atkins said that Wells has added 5,000 mortgage employees to handle the surge caused by rates in the 5% range for 30-year fixed-rate loans. Given the backlog of pending home loans, they’ll be kept busy at least through the end of this quarter, he said.

Bank of America also recently said that it is adding 5,000 employees to handle the huge volume of loans.

Atkins’ comments came as Wells released first-quarter earnings. As the bank pre-announced April 9, its profit was about $3 billion before dividends to preferred shareholders. After dividend payments – including $372 million owed on $25 billion in taxpayer bailout funds – it earned $2.38 billion.

A year earlier, Wells had turned a profit of $2 billion. But in the fourth quarter it lost $2.7 billion.

-- E. Scott Reckard