SAN FRANCISCO — Wells Fargo reported earlier this month a $10.3 billion year-over-year decline in auto loan balances in the second quarter due to bank's continued runoff of its auto loan portfolio. Executives, however, said auto originations, which fell 3% from the prior-year period to $4.4 billion, have stabilized over the last three quarters and that the bank is positioned for to begin growing its auto business once again.

John Shrewsberry, senior executive vice president and CFO, said the bank expects auto loan portfolio balances to begin growing by mid-2019. Asked if he expects the pace of its auto portfolio decline to slow, the executive said originations should be flat to up in the coming quarters.

“It’s just a question of how fast we’re amortizing in the more seasoned portfolio,” he said. “So where those lines cross, whether it’s late this year, early next year or a little bit later into next year, is hard to judge, unless we see quarter by quarter what the originations are. But I would say that we’re happy that we sort of stabilized and are now viewing the origination path as growing.”

The bank has been mired in regulatory scandals since September 2016, when it entered into settlement agreements in which it disclosed that it had opened several million unauthorized retail customer accounts and fired thousands of employees for improper sales practices between 2011 and 2015.

More recently, it was disclosed that Wells Fargo charged hundreds of thousands of borrowers for unneeded collateral protection insurance for their automobiles — a revelation that resulted in the bank entering into $1 billion worth of consent orders with the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC).

Wells Fargo also agreed in May to pay a $480 million fine to resolve a class action lawsuit filed by shareholders who charged the bank with misstating or failing to disclose details about its sales practices. And in April, the Federal Reserve ordered Wells to freeze its growth until it could prove it had improved internal controls. Wells was also ordered to replace several members of its board of directors.

This week, the bank announced it had successfully completed the requirements of a September 2016 consent order with the OCC related to compliance with provisions of the Servicemembers Civil Relief Act. The OCC announced in a posting on its website last Friday that the consent order had been terminated.

The announcement came after the bank reported that second-quarter earnings fell to $5.19 billion from $5.86 million in the year-ago quarter. The bank also revised its first-quarter earnings downward after agreeing to the pay the fines to the CFPB and OCC.

Revenues also declined to $21.6 billion from $22.2 billion in the year-ago quarter. Net interest income was $12.5 billion, up $70 million from a year ago. Noninterest income fell 8% from a year ago to $49 billion.

Consumer loan balances were down $10.4 billion on a year-over-year basis and $2.8 billion from the first quarter, while auto loan balances fell $1.9 billion from the first quartert due to tighter credit underwriting. Commercial auto loans fell 5% from the prior-year period to $10.9 billion on lower dealer floorplan loans.

Net chargeoffs were down $95 million from the first quarter largely due to improved severity and seasonality, the banks said. On a year-over-year basis, chargeoffs were down $13 million, reflecting lower outstanding loans and lower early losses from higher quality new originations. As for delinquencies, auto loans 30-plus-days past due decreased $57 million from the first quarter and $39 million from a year ago.

“To emphasize, as John said, in the auto business, I think we’ve seen the inflection, plus or minus,” said CEO Tim Sloan. “And we should be able to grow originations from here. Where the lines cross, as John mentioned earlier in terms of growing the overall portfolio, it’s likely to happen sometime in the first half of next year — not 100% certain when.”

As for the bank’s overall performance, Sloan added: “During the second quarter we continued to transform Wells Fargo into a better, stronger company for our customers, team members, communities and shareholders. I’m also pleased with our [comprehensives capital analysis and review], which demonstrates the strength of our diversified business model, our sound financial risk management practices, and our strong capital position, and enables us to return more capital to our shareholders in alignment with our goal of creating long-term shareholder value.”