Wells Fargo & Company (WFC - Free Report) is slashing 100 jobs in its mortgage operations branch located in Fort Mill on account of subdued activity in U.S. housing market.
"The decision to reduce our workforce is made with great concern for our team members. Wells Fargo Home Mortgage is committed to retaining valued team members and, where possible, we will work to identify other opportunities within Wells Fargo," the bank said.
Wells Fargo has taken this decision to better align staff levels with present sales volume. The U.S. mortgage market is facing declining origination volumes as mortgage rates are becoming expensive. Further, intense competition and falling supplies of homes for sale has also impacted housing demands.
For the first three months of 2018, Wells Fargo reported a decline in residential mortgage loan originations compared with the last few months of 2017.
Similar Layoffs by Other Banks
Wells Fargo is not the only company to be impacted by declining mortgage activity. Other mortgage lenders have also announced layoffs in 2018 while some have shut down the segment altogether.
In late May 2018, Movement Mortgage, a South Carolina-based mortgage lender, announced the decision to lay off about 100 employees after having already reduced its workforce by 75 employees in February.
Also, U.S. Bancorp’s (USB - Free Report) banking subsidiary, U.S. Bank, announced that it will cut 260 jobs, starting July, as it plans to close its Bedford mortgage and consumer banking office.
In April 2018, MB Financial (MBFI - Free Report) disclosed plans to shut down its national mortgage origination business, which resulted in the layoff of almost 600 employees at locations across southeast Michigan.
"With recent economic changes, the competitiveness of the mortgage industry, and recent low origination margins, we determined that we would be unable to successfully execute that strategy within a reasonable period of time", CEO Mitch Feiger said in a statement at the time.
Wells Fargo is finally on the journey to move ahead of its past misconducts and legal involvements. Its impressive cost-control plan for 2018 will help it deal with the pressure on costs. Also, the bank’s efforts to recover its image, along with an improving economic backdrop might support the company’s growth in the near term.
The stock has lost 1.9% in the past year against the industry’s growth of nearly 13%.
Wells Fargo currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the same space is Fifth Third Bancorp (FITB - Free Report) . Its earnings estimates have been revised upward by 6.4%, in the last 60 days. Additionally, the stock has gained nearly 21% in a year’s time. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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