Wells Fargo laid off hundreds of mortgage bankers this week as part of a sweeping round of cuts triggered by the bank’s recent strategic shift, CNBC has learned.
The layoffs were announced Tuesday and ensnared some top producers, including a few bankers who surpassed $100 million in loan volumes last year and who recently attended an internal sales conference for high achievers, according to people with knowledge of the situation.
Under CEO Charlie Scharf, Wells Fargo is pulling back from parts of the U.S. mortgage market, an arena it once dominated. Instead of seeking to maximize its share of American home loans, the bank is focusing mostly on serving existing customers and minority communities. The shift comes after sharply higher interest rates led to a collapse in loan volumes, forcing Wells Fargo, JPMorgan Chase and other firms to cut thousands of mortgage positions in the past year.
Those cut this week at Wells Fargo included mortgage bankers and home loan consultants, a workforce spread around the country, who are compensated mostly on sales volume, according to the people, who declined to be identified speaking about personnel matters.
The company cut bankers who operated in areas outside of its branch footprint and who therefore didn’t fit in the new strategy of catering to existing customers, the people said. Those cuts include bankers across the Midwest and the East Coast, one of the people said.
Palm Desert resortSome of those people were successful enough last year to be flown to a resort in Palm Desert, California, for a company-sponsored conference earlier this month. Palm Desert is a luxury enclave known for its warm weather, golf courses and proximity to Palm Springs.
It’s common practice in finance to reward top salespeople with multiday events held in swanky resorts that combine recognition, recreation and educational sessions. For instance, JPMorgan’s mortgage division is holding a sales conference in April.
A Wells Fargo spokeswoman said the bank has communicated with affected employees, provided severance and career guidance, and tried to retain as many workers as possible.
“We announced in January strategic plans to create a more focused home-lending business,” she said. “As part of these efforts, we have made displacements across our home-lending business in alignment with this strategy and in response to significant decreases in mortgage volume.”
The bank will also continue to serve customers “in any market in the United States” through its centralized sales channel, she added.
Hitting your numbersWhile this latest round of cuts wasn’t based on employees’ performance, Wells Fargo has also been cutting mortgage workers who don’t meet minimum standards of production.
In areas with expensive housing, that could be a minimum of at least $10 million worth of loans over the past 12 months, said one of the sources.
Last month, the bank said that mortgage volumes continued to shrink in the fourth quarter, falling 70% to $14.6 billion. Wells Fargo said it almost 11,000 fewer employees at the end of 2022 than in 2021.
The January mortgage announcement, reported first by CNBC, led recruiters to swarm top performers in the hopes of poaching them, according to one of the people.
Scharf addressed employees in a Jan. 25 town hall meeting in which he reiterated his rationale for the mortgage retrenchment.