Wells Fargo (WFC) CEO Concerned Over Home Equity Losses

Wells Fargo (NYSE:WFC) Chief Executive Officer John Stumpf said on the top of his concerns is the effects unemployment may have on home-equity, which could result in huge losses.

Citing Stumpf, Sanford C. Bernstein & Co. said, “Stumpf noted that home-equity losses remain his number one concern, which makes sense to us given Wells has the largest portion of its loan book allocated to mortgages and home-equity loans among large banks.”

“Management was clear that it views the outlook for home-equity and mortgage losses to be more tied to employment conditions than home prices,” Bernstein analyst John McDonald wrote.

"Wells Fargo held $117.5 billion of home-equity loans at the end of December, with $42.8 billion of those made in California and Florida, according to the bank’s year-end filing. Almost $110.6 billion of the loans was held in a so-called core portfolio. The unemployment rate in the bank’s mortgage footprint is a percentage point higher than the national average of 8.9 percent," added McDonald.

He maintains an "Outperform" rating on the bank, which closed Thursday at $31.54, gaining $0.16, or 0.51 percent.