Last time I weighed in, I called Wells Fargo & Company ( WFC ) a Hold at $80.56. Since then, shares have popped another 16%, hit a high near $97.76 and landed around $93.56 now. Most of that move came asWith over 15 years of experience in the markets and a degree in economics, I focus on breaking down companies with clarity and discipline. My goal is to give individual investors a straightforward, honest view—what’s working, what isn’t, and where the risks and opportunities actually are. I don’t chase narra ...

Market Overview - Major stock indices have experienced significant declines, with the Nasdaq down 380.83 points or 1.6 percent, the S&P 500 down 74.49 points or 1.1 percent, and the Dow down 282.68 points or 0.6 percent [1] - The decline in stock prices is attributed to rising geopolitical tensions and specific company performance issues [2] Company Performance - Wells Fargo shares have dropped by 5.5 percent following a report of better-than-expected fourth-quarter earnings but weaker-than-expected revenues [2][3] - Bank of America shares fell by 4.9 percent despite reporting fourth-quarter results that exceeded analyst estimates [3] - Citigroup also saw a significant decline in its stock price, even after reporting better-than-expected fourth-quarter results [3] Economic Indicators - The U.S. Commerce Department reported a 0.6 percent increase in retail sales for November, surpassing expectations of a 0.4 percent rise [4] - Excluding motor vehicle and parts dealers, retail sales grew by 0.5 percent in November, compared to a 0.2 percent increase in October [5] Sector Performance - Airline stocks have significantly declined, with the NYSE Arca Airline Index down by 2.4 percent after reaching a two-year high [6] - Software stocks also faced a downturn, as indicated by a 2.3 percent drop in the Dow Jones U.S. Software Index [6] - Networking, semiconductor, and banking stocks are experiencing considerable weakness, while energy and telecom stocks have shown strong gains [7]

Expense management remained a central theme. Scharf noted the company generated positive operating leverage and said Wells Fargo has reduced headcount for 22 consecutive quarters, with headcount down more than 25% since the second quarter of 2020. The company returned $23 billion of capital to shareholders in 2025, including a 13% increase in the common dividend per share and $18 billion of common stock repurchases. Scharf said the bank expects share repurchases to be lower in 2026 given opportunities for o ...

Core Viewpoint - Wells Fargo & Company (WFC) reported fourth-quarter 2025 adjusted earnings per share of $1.76, exceeding the Zacks Consensus Estimate of $1.66, and up from $1.42 in the prior-year quarter [1][10]. Financial Performance - The results were bolstered by an increase in net interest income (NII), higher non-interest income, and lower provisions, although a rise in non-performing assets negatively impacted the results [2][10]. - The net income (GAAP basis) for the quarter was $5.36 billion, a 6% increase from the prior-year quarter, while total revenues were $21.29 billion, missing the Zacks Consensus Estimate of $21.6 billion but increasing 4.5% year over year [3][4]. - For the full year 2025, total revenues reached $83.69 billion, which also fell short of the consensus estimate of $84.03 billion, but represented a 2% year-over-year increase [4]. Income and Expenses - NII was reported at $12.33 billion, a 4% year-over-year increase, driven by higher loan and investment securities balances, although the net interest margin contracted by 10 basis points to 2.60% [5][10]. - Non-interest income grew 5% year over year to $8.96 billion, benefiting from the absence of prior-year losses and higher fees in various segments [6]. - Non-interest expenses decreased by 1% year over year to $13.72 billion, attributed to lower assessment expenses and efficiency initiatives, resulting in an improved efficiency ratio of 64% compared to 68% in the previous year [7]. Loan and Deposit Growth - As of December 31, 2025, total average loans increased by 3% sequentially to $955.8 billion, while total average deposits also rose by 3% to $1.37 trillion [8]. Credit Quality - The provision for credit losses was $1.04 billion, down 5% from the prior-year quarter, with net loan charge-offs at 0.43% of average loans, a decrease from 0.53% in the previous year [11]. - Non-performing assets increased by 7.1% year over year to $8.5 billion, indicating mixed credit quality [10][11]. Capital Ratios and Profitability - The Tier 1 common equity ratio as of December 31, 2025, was 10.6%, down from 11.1% in the fourth quarter of 2024 [12]. - Return on assets was 1.02%, slightly down from 1.05% in the prior-year quarter, while return on equity improved to 12.3% from 11.7% a year ago [13]. Share Repurchase and Future Outlook - In the reported quarter, Wells Fargo repurchased 58.2 million shares, amounting to $5 billion of common stock [14]. - The company has achieved a 15% return on tangible common equity (ROTCE) target and set a new medium-term target of 17-18%, positioning itself for continued healthy returns [15][16].

Core Viewpoint - Major U.S. banks are warning that President Trump's proposed cap on credit card interest rates could negatively impact lower-income consumers, the economy, and their profitability [1][2]. Group 1: Bank Executives' Opinions - Executives from JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo agree that while affordability is a concern, capping credit card interest rates is not the appropriate solution [2][3]. - Citigroup's outgoing CFO Mark Mason stated that an interest rate cap could lead to a significant economic slowdown and emphasized the need for collaboration with the administration on affordability issues [3]. - Bank of America CEO Brian Moynihan argued that lowering interest rate caps would restrict credit availability, resulting in fewer credit card approvals and lower credit limits for consumers [4]. Group 2: Market Reactions - Shares of Wells Fargo, Bank of America, Citigroup, and JPMorgan Chase have experienced declines between 5% and 8% over the past week [5]. - JPMorgan and Citigroup reported a decline in net income compared to the fourth quarter of 2024, while Wells Fargo and Bank of America saw an increase [5]. Group 3: Presidential Proposal - President Trump proposed a one-year cap on credit card interest rates at 10%, threatening banks with violations if they do not comply by January 20 [6]. - Analysts have raised questions about how the cap would be implemented without an executive order, voluntary action, or legislative approval [6]. Group 4: Impact on Consumers - JPMorgan CEO Jamie Dimon highlighted that the proposed cap would have a dramatic impact on subprime customers [7]. - Wells Fargo CEO Charles Scharf expressed alignment with the goal of improving affordability and finding solutions to assist consumers [7].

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Financial Data and Key Metrics Changes - The company's net income increased to $21.3 billion, with diluted earnings per share growing 17% year-over-year [4] - Net interest income rose by $381 million, or 3%, from the previous quarter, driven by higher Markets NII [20] - Non-interest income increased by $419 million, or 5%, from a year ago [25] - The return on tangible common equity (ROTCE) increased to 15% in 2025, up from 8% in Q4 2020 [15] Business Line Data and Key Metrics Changes - Fee-based revenue grew by 5% year-over-year, with notable increases in both consumer and commercial businesses [4] - The credit card business saw a 21% increase in new accounts and a 6% rise in credit card balances [8] - The auto business experienced a 19% growth in loan balances [9] - Home lending revenue declined by 6% due to lower net interest income from reduced loan balances [30] Market Data and Key Metrics Changes - Average deposits increased by $23.9 billion year-over-year, with growth in consumer and commercial deposits [24] - The commercial bank reported strong loan growth, with average loans increasing by 5% from the previous quarter [21] - The company achieved a 14% growth in wealth and investment management revenue, driven by asset-based fees [34] Company Strategy and Development Direction - The removal of the asset cap by the Federal Reserve is seen as a pivotal moment for the company, allowing for balance sheet growth [7] - The company aims to optimize capital levels while managing to a CET1 ratio of approximately 10%-10.5% [7] - The focus remains on organic growth opportunities, with expectations for lower share repurchases in 2026 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the economy and customers, while closely monitoring portfolios for signs of weakness [6] - The company anticipates net interest income to be approximately $50 billion in 2026, with expectations for loan growth in the mid-single digits [35][38] - Management highlighted the importance of maintaining expense discipline and realizing benefits from investments to drive stronger revenue growth [16] Other Important Information - The company returned $23 billion of excess capital to shareholders, including a 13% increase in common stock dividends and $18 billion in stock repurchases [7] - The company has reduced headcount by over 25% since Q2 2020, achieving positive operating leverage [5] Q&A Session Summary Question: Can you expand on your thoughts on NII, particularly excluding markets? - Management noted that NII is expected to be flat due to rate cuts, but loan growth will improve results later in the year [45][46] Question: How are you addressing the increased volume around credit card rate caps? - Management acknowledged the importance of affordability and is monitoring the situation closely, but it is too early to determine the impact [48][49] Question: How do you balance growth in lower NIM assets with buyback opportunities? - Management indicated that they can pursue both loan growth and stock buybacks, as they have significant capital generation capacity [52][56] Question: What is the company's stance on M&A? - Management feels no pressure to pursue M&A and is focused on organic growth opportunities, but would consider strategic acquisitions if they align with their goals [68][69] Question: What drove the increase in commercial non-performers? - Management clarified that the increase is not systemic and is driven by individual borrower issues, with most non-performing assets still performing [79]

Financial Data and Key Metrics Changes - The company's net income increased to $21.3 billion, with diluted earnings per share growing 17% year-over-year [4] - In Q4, earnings were $5.4 billion, up 6% from the previous year, with diluted earnings per share at $1.62, a 13% increase year-over-year [18] - Net interest income increased by $381 million, or 3%, from Q3, driven by higher Markets NII [20] - Non-interest income rose by $419 million, or 5%, from a year ago [25] - Non-interest expense declined by $174 million from a year ago [26] Business Line Data and Key Metrics Changes - Consumer Banking and Lending revenue increased by 9% year-over-year, driven by lower deposit pricing and higher loan balances [29] - Credit card revenue grew by 7% year-over-year due to higher loan balances and an increase in card fees [29] - Auto revenue increased by 7% year-over-year, with auto originations more than doubling from a year ago [29] - Commercial banking revenue decreased by 3% year-over-year, while Corporate Investment Banking revenue declined by 4% [30][31] - Wealth and Investment Management revenue increased by 10% year-over-year, driven by growth in asset-based fees [32] Market Data and Key Metrics Changes - The company experienced broad-based loan growth, with average loans increasing by $49.4 billion, or 5%, from a year ago [21] - Average deposits increased by $23.9 billion from a year ago, with growth in consumer and commercial deposits [24] - The company grew its share in M&A, increasing its announced U.S. M&A ranking to eighth in 2025, up from twelfth in 2024 [14] Company Strategy and Development Direction - The removal of the asset cap by the Federal Reserve was a pivotal moment for the company, allowing for balance sheet growth [8] - The company aims to achieve a medium-term ROTCE target of 17%-18% [16] - Continued focus on efficiency and expense management, with a goal of optimizing capital levels [7][16] - The company is committed to organic growth opportunities and maintaining a disciplined approach to capital management [7][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the economy and customers, while closely monitoring portfolios for signs of weakness [6] - The company expects net interest income to be approximately $50 billion in 2026, with loan and deposit growth anticipated [33] - Management highlighted the importance of maintaining expense discipline and realizing benefits from investments to drive stronger revenue growth [16] Other Important Information - The company returned $23 billion of excess capital to shareholders, including a 13% increase in common stock dividends and $18 billion in stock repurchases [7] - The company has reduced headcount by over 25% since Q2 2020, achieving positive operating leverage [5] Q&A Session Summary Question: Thoughts on NII, particularly ex-markets - Management noted that NII growth is expected to be flat due to rate cuts, but loan growth will improve results later in the year [42][43] Question: Increased volume around credit card rate caps - Management acknowledged the focus on affordability and the need for careful consideration of responses to potential regulatory changes [46][47] Question: Balancing growth of lower NIM assets with buyback opportunities - Management indicated that they can support both loan growth and stock buybacks, emphasizing the flexibility provided by the removal of the asset cap [50][55] Question: M&A strategy - Management feels no pressure to pursue M&A, focusing instead on organic growth opportunities, but remains open to strategic acquisitions that enhance value [67] Question: Non-performing assets increase - Management clarified that the increase in non-performing assets is not systemic and is driven by individual borrower issues [76][77]

Financial Data and Key Metrics Changes - The company's net income increased to $21.3 billion, with diluted earnings per share growing 17% year-over-year [4] - Fee-based revenue rose 5% from the previous year, driven by broad-based growth in both consumer and commercial businesses [4] - The company's assets grew 11% year-over-year, supported by loan growth and higher trading assets [5] - Net charge-offs declined 16% from a year ago, indicating strong credit performance [5] - The return on tangible common equity (ROTCE) increased to 15%, up from 8% in Q4 2020, with a medium-term target of 17%-18% [14][16] Business Line Data and Key Metrics Changes - The credit card business saw a 21% increase in new accounts and a 6% rise in credit card balances [8] - The auto lending segment returned to growth with a 19% increase in loan balances [9] - Home lending revenue declined 6% due to lower loan balances, while personal lending revenue also decreased [28] - Consumer small and business banking revenue increased 9%, driven by lower deposit pricing and higher loan balances [28] - Commercial banking revenue decreased 3% year-over-year, while corporate investment banking revenue declined 4% [29][30] Market Data and Key Metrics Changes - Average loans grew 5% year-over-year, with significant contributions from commercial and industrial loans [19] - Average deposits increased by $23.9 billion from a year ago, with a 29 basis point reduction in average deposit costs [23] - Non-interest income rose 5% year-over-year, with notable growth in investment advisory fees and brokerage commissions [24] Company Strategy and Development Direction - The removal of the asset cap by the Federal Reserve is seen as a pivotal moment for the company, allowing for balance sheet growth and improved returns [6][7] - The company aims to optimize capital levels while focusing on organic growth opportunities [6] - There is a commitment to maintaining expense discipline and realizing benefits from investments to drive stronger revenue growth [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the economy and customers, while closely monitoring portfolios for signs of weakness [5] - The company expects net interest income to be approximately $50 billion in 2026, with growth driven by loan and deposit increases [33][35] - Management highlighted the importance of efficiency initiatives and investments in technology to support future growth [39][40] Other Important Information - The company returned $23 billion of excess capital to shareholders in 2025, including a 13% increase in the common stock dividend and $18 billion in stock repurchases [6] - The company has reduced headcount by over 25% since Q2 2020, indicating a focus on operational efficiency [5] Q&A Session Summary Question: Thoughts on NII, particularly excluding markets - Management indicated that NII growth is expected to be flat due to rate outlook, but loan growth will improve results later in the year [43][45] Question: Increased volume around credit card rate caps - Management acknowledged the importance of affordability and is monitoring the situation closely, but it is too early to determine the impact on growth [47][48] Question: Balancing growth of lower NIM assets with buyback opportunities - Management stated that they can support both loan growth and stock buybacks, emphasizing the flexibility gained from the removal of the asset cap [51][56] Question: M&A strategy - Management feels no pressure to pursue M&A, focusing instead on organic growth opportunities, but remains open to strategic acquisitions that enhance value [68][69] Question: Impact of markets NII growth on trading fees - Management confirmed that growth in markets NII may partially offset trading fees, but overall revenue in the markets business is expected to increase [72][73]

Core Viewpoint - Wells Fargo's CEO Charles Scharf emphasized that the company does not feel pressured to pursue mergers and acquisitions (M&A), citing confidence in the quality of its franchises and existing opportunities [1] Group 1: Company Strategy - The company has focused on cutting expenses and removing regulatory restrictions to enhance growth potential [1] - The Federal Reserve lifted an asset cap on Wells Fargo in June, which had been in place for seven years following a fake account scandal [1]