New York, January 14, 2026, 17:37 EST — After-hours
- WFC shares dropped roughly 4.6% following quarterly results that fell short of expectations
- The 2026 net interest income forecast fell slightly short of expectations
- Bank executives highlighted uncertainty surrounding the proposed cap on credit card rates
Wells Fargo & Company shares fell roughly 4.6% to $89.25 in after-hours trading Wednesday, following a fourth-quarter earnings miss. This marked the bank’s first full quarter after U.S. regulators finally lifted its longstanding asset cap. (Reuters)
The miss hit hard since investors were counting on a straightforward catch-up trade now that the Fed lifted the cap on Wells Fargo’s balance sheet. The bank could finally expand, but the market expected interest income to come through clearly and guidance to meet expectations.
Bank stocks took a broader hit, showing little tolerance for “mixed” earnings reports. The S&P 500 bank index dropped, with Citigroup and Bank of America among the decliners. Traders focused on President Donald Trump’s proposal to cap credit-card interest rates at 10%, viewing it as a policy risk that could quickly alter the profit outlook. “After a nice run, and so-so or mediocre earnings, you’re seeing profit-taking and consolidation,” said Michael O’Rourke, chief market strategist at JonesTrading. (Reuters)
Wells Fargo’s latest SEC filing shows total revenue hitting $21.29 billion, with net income at $5.36 billion, or $1.62 per diluted share. The bank also bought back 58.2 million common shares, totaling $5.0 billion, during the fourth quarter. A notable charge included $612 million in severance expenses. CEO Charlie Scharf highlighted the asset-cap removal and ending several consent orders as he outlined fresh medium-term return goals. (SEC)
On a conference call, CFO Mike Santomassimo noted loan growth accelerated, with commercial loans rising 12% in the fourth quarter. He also hinted at additional job cuts following Wells Fargo’s $612 million reserve for severance expenses linked to planned layoffs this year. (Reuters)
Net interest income — the difference banks earn on loans after covering deposit costs — is the immediate focus, since that figure shifts rapidly with rate changes and deposit competition. Traders are also eyeing whether Wells Fargo can control expenses while stepping up efforts in credit cards and other fee-based businesses.
The downside is straightforward. If the credit-card rate-cap proposal picks up steam, banks might tighten lending, derailing growth strategies right as they push into 2026. Quicker-than-anticipated rate cuts would squeeze interest margins, and any slip in credit quality would quickly refocus attention on loss reserves.
On Wednesday, markets received fresh signals on interest rates as Philadelphia Fed President Anna Paulson said further cuts this year might be warranted, provided inflation keeps easing and the labor market steadies. (Reuters)
The Federal Reserve’s January 27-28 meeting is the next major macro event, as investors hunt for new signals on the pace of interest rate cuts and the impact on bank profits. (Federal Reserve)
Wells Fargo’s next big moment comes with its first-quarter 2026 earnings report, due April 14. Investors will be watching closely, pushing management on whether the 2026 interest-income forecast still stands and how much further cost reductions might be on the horizon. (Wellsfargo)
