Wells Fargo Agrees to Sell Private Student Loan Portfolio

Rhea-AI Summary

Wells Fargo has agreed to sell its private student loan portfolio valued at $10 billion to investors, with Firstmark (a division of Nelnet) set to service the loans after the transaction is completed in the first half of 2021. This decision follows the company's notice to customers in September about its exit from the private student loan market, although it will still accept new applications from existing customers until January 28, 2021.

Positive

• Strategic exit from the private student loan business aligns with Wells Fargo's focus on core competencies.
• Expected transaction value of $10 billion may enhance liquidity and financial flexibility.

Negative

• Exiting the private student loan market could lead to a loss of future revenue streams.

Wells Fargo & Company (NYSE: WFC) announced today it has entered into an agreement to sell its private student loan portfolio to investors, with Firstmark, a division of Nelnet (NYSE: NNI), assuming responsibility for servicing the portfolio upon the sale.

External view of a Wells Fargo building with a glass front and individuals walking by on the sidewalk. (Photo: Business Wire)

Wells Fargo notified customers in September of its intention to exit the private student loan business. The company will continue to accept new student loan applications from existing private student loan customers until January 28, 2021.

As of September 30, 2020, the principal balance of the private student loan portfolio was $10.0 billion. The transaction is expected to close in the first half of 2021.

Wells Fargo Securities, LLC served as exclusive financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel, to Wells Fargo in connection with the transaction.

More information is available for Wells Fargo student loan customers here.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.92 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,200 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 31 countries and territories to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 30 on Fortune’s 2020 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.

Additional information may be found at www.wellsfargo.com | Twitter: @WellsFargo

Cautionary Statement about Forward-Looking Statements

This news release contains forward-looking statements about our future financial performance and business. Because forward-looking statements are based on our current expectations and assumptions regarding the future, they are subject to inherent risks and uncertainties. Do not unduly rely on forward-looking statements as actual results could differ materially from expectations. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. For information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our most recent Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.

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View source version on businesswire.com: https://www.businesswire.com/news/home/20201218005687/en/

FAQ

What is the latest news regarding Wells Fargo's private student loan portfolio?

Wells Fargo announced it will sell its private student loan portfolio valued at $10 billion to investors, with Firstmark assuming servicing responsibilities.

When will Wells Fargo exit the private student loan business?

Wells Fargo has notified customers of its exit from the private student loan business, with the final date for new applications set for January 28, 2021.

What are the implications of Wells Fargo's student loan portfolio sale for investors?

The sale may enhance Wells Fargo's liquidity and focus on core business areas, though it risks loss of future revenue from student loans.

Who is involved in servicing the student loan portfolio after the sale?

Firstmark, a division of Nelnet, will assume responsibility for servicing Wells Fargo's private student loan portfolio following the sale.