Wells Fargo CFO says ‘derisking the office portfolio’

Wells Fargo CFO Michael Santomassimo said on the company’s Q1 call: "Our allowance for credit losses increased $643 million in the first quarter, reflecting an increase for commercial real estate loans, primarily office loans as well as an increase for credit card and auto loans… We have $154.7 billion of commercial real estate loans outstanding at the end of the first quarter with 35.7% of office loans, which represented 4% of our total loans outstanding. The office market continues to show signs of weakness due to lower demand, higher financing costs and challenging capital market conditions. While we haven’t seen this translate to meaningful loss content yet, we expect to see more stress over time. As you would expect, we have been derisking the office portfolio, which resulted in commitments declining 5% from a year ago, and we continue to proactively work with borrowers to manage our exposure, including structural enhancements and paydowns as warranted."