- Price
- $82.40
- Fair value
- $92.00
- Discount
- 10.4%
- Uncertainty
- Medium
- LSEG rating
- 2.11
- Moat
- Wide
- Next earnings
- 2027-01-13
- Next earnings is estimate
- Yes
- Company name
- Wells Fargo
- Sector
- Banks
- About
- Wells Fargo is one of the largest banks in the United States, with $2.25 trillion of assets and $1.50 trillion of deposits at September 30, 2026. It has four operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. It makes most of its money from net interest income, the difference between what it earns on loans and securities and what it pays on deposits and debt. In Q3 2026, net interest income was $12.5 billion of $21.9 billion of revenue. The rest comes from fees for investment advice, investment banking, trading, cards, deposits and mortgages. For years a Federal Reserve limit stopped Wells Fargo from growing its balance sheet. Now that the limit is gone, the bank grows again. Average loans grew 11% in the year to Q3 2026.
- Thesis
- The market doubts that Wells Fargo can turn its new balance sheet growth into higher returns while interest rates rise. Loans and deposits grew 11% in the year to Q3 2026, but the net interest margin fell to 2.43% from 2.61% a year earlier, because new deposits cost more and part of the growth is in lower-margin Markets assets. Higher rates in Q3 2026 also doubled the accumulated other comprehensive loss, from $8.3 billion at June 30 to $16.5 billion at September 30. This cut the CET1 ratio by 38 basis points to 10.0% and reduced the capital that is free for buybacks, which fell to $2.5 billion in Q3 from $3.0 billion in Q2. Fee income was also weaker, down 9% from Q2 2026, with lower venture capital and trading results. For the gap to close, three things must be true. Net interest income must reach about $13 billion in Q4 2026, as guided, and keep growing in 2027. Return on tangible common equity must stay at or above the 16.2% of the first nine months of 2026, with expenses near the $55.7 billion guided for 2026. The CET1 ratio must stay near 10% while buybacks continue, and credit losses must stay low, near the 0.38% net charge-off ratio of Q3 2026. The next check is the Q4 2026 report in mid-January 2027, with the 2027 outlook. If these hold, the gap can close over the next three to five quarters. If rates rise further, bond losses can keep limiting buybacks.
- Risks
- Higher interest rates lower the value of the bank's securities and its capital. The accumulated other comprehensive loss doubled to $16.5 billion in Q3 2026, and this cut the CET1 ratio by 38 basis points to 10.0%. More rate increases can slow buybacks.
Balance sheet growth can lower margins and raise risk. The net interest margin fell to 2.43% in Q3 2026 from 2.61% a year earlier, as deposit costs rose and lower-margin Markets assets grew. Fast loan growth after the asset cap can bring higher credit losses in a downturn.
Credit losses can rise. The CEO named higher interest rates, higher oil prices and inflation as risks to the economy on October 13, 2026. Commercial net charge-offs rose to 0.18% of loans in Q3 2026 from 0.10% in Q2.
Fee income depends on markets. Trading gains and venture capital results fell in Q3 2026, and fee income dropped 9% from Q2. A weak market can lower these revenues again.
- Balance sheet
- Wells Fargo funds itself mostly with client deposits. At September 30, 2026, total assets were $2,253.3 billion and total deposits were $1,502.7 billion, of which $365.7 billion paid no interest. Other funding was $182.9 billion of long-term debt, $38.2 billion of short-term borrowings and $220.5 billion of repurchase agreements and similar funding. Cash and amounts due from banks were $40.6 billion, and interest-earning deposits with banks were $140.5 billion. Debt securities were $448.4 billion: $255.8 billion available for sale and $192.6 billion held to maturity. Loans were $1,048.1 billion, with an allowance for loan losses of $13.8 billion. Capital is the real limit. The CET1 ratio was 10.0% at September 30, 2026, a preliminary estimate, down from 10.3% at June 30, mostly because the accumulated other comprehensive loss grew to $16.5 billion. The liquidity coverage ratio was 122%, and the total loss absorbing capacity ratio was 23.0%. Common stockholders' equity was $158.8 billion, and preferred stock rose to $17.1 billion after a $1.75 billion issue in August 2026. On September 24, 2026, the bank issued $6.0 billion of senior notes due 2030 and 2037.
As of 2026-09-30.
- Checkpoints
- Jan 13, 2027 (estimate): Q4 2026 results and 2027 outlook. Pending. Watch: Net interest income near $13 billion in Q4 2026, a 2027 outlook with higher net interest income and continued buybacks pass; lower net interest income or smaller buybacks fail.
Jun 2027 (estimate): Federal Reserve stress test results. Pending. Watch: A stress capital buffer that lets the bank keep buybacks near current levels passes; a higher buffer that cuts buybacks fails.
2027 (estimate): Returns after balance sheet growth. Pending. Watch: Return on tangible common equity at or above 16% with a stable net interest margin passes; a margin that keeps falling or returns below 15% fail.
- Recent events
- 2026-10-13: Wells Fargo reported Q3 2026 results. Net income was $5.95 billion, and diluted EPS was $1.87, up 13%. Revenue was $21.9 billion, down 3% from Q2 2026, as fee income fell 9%. The net interest margin was 2.43%. The accumulated other comprehensive loss rose to $16.5 billion from $8.3 billion because of higher rates, and the CET1 ratio fell to 10.0% from 10.3%. Wells Fargo bought back $2.5 billion of stock and kept its 2026 guidance of about $50 billion of net interest income and about $55.7 billion of expenses.
2026-09-24: Wells Fargo issued $6.0 billion of senior fixed-to-floating rate notes: $2.5 billion due 2030 and $3.5 billion due 2037.
2026-09-23: Wells Fargo appointed Scott Powell, its Chief Operating Officer, as Chief Risk Officer from January 15, 2027. He will then no longer be Chief Operating Officer.
2026-08-19: Wells Fargo sold $1.75 billion of 6.55% fixed rate reset non-cumulative perpetual preferred stock, Series HH.
2026-07-14: Wells Fargo reported Q2 2026 results. Diluted EPS was $2.00, up 25%, and revenue grew 9%. Return on tangible common equity was 17.7%. It bought back $3.0 billion of stock in the quarter and about $7 billion in the first half of 2026. The CEO said that the bank now grows its balance sheet with care after years under the asset cap.