Wells Fargo 10-Qquarter ended 2026-09-30
MixedRestructuring
Commercial and auto loan growth lifts interest income, while securities and hedge losses erode the capital cushion.
Filed 2026-10-28 08:59 ET
Key figures · Q3 FY2026 · period ended 2026-09-30
- Net revenue$21.9B1YoY +2.0%QoQ −3.3%
- Net income$6.0BYoY +6.5%QoQ −7.1%
- Total assets$2.3TYoY +9.2%QoQ −1.3%
- Total debt$221.0B2YoY −45.9%QoQ +6.6%
How total debt adds up Long-term debt $182,851M + Short-term borrowings $38,192M Total debt $221,043M Lines as the filer presents them on its balance sheet.
- Shareholders' equity$175.8BYoY −3.0%QoQ −2.5%
- Tangible book value$150.8B3YoY −3.4%QoQ −2.9%
Notes (3)
- Net revenue: Net interest income plus non-interest income, as the filer presents them.
- Total debt: Excludes deposits, repurchase agreements, federal funds purchased and securities loaned. Borrowings the company raised to fund itself: long-term and short-term borrowings, FHLB advances, subordinated debt and finance leases.
- Tangible book value: No intangible assets are reported.
How this filing reads
- Health+0.2CET1 fell to 10.03% from 10.61%, but remained above the 8.50% requirement.
- Momentum+0.5Q3 revenue rose 2.0% and net income 6.5%, while credit-loss provisions increased 51%.
- Outlook−0.3CET1 fell to 10.03% and credit-loss provisions rose 51%, potentially constraining lending and distributions.
Executive Summary
Wells Fargo provides banking, lending, investment banking and wealth management to consumers, businesses and institutional clients, earning interest and fees. It is concentrating on commercial and auto lending, wealth management and customer activity while investing in technology and reducing staffing. Q3 revenue rose 2.0%, as balance-sheet growth outweighed a narrower interest margin and weaker trading and mortgage income. Net income increased 6.5%, but higher credit provisions and securities-and-hedge valuation losses show that growth is not translating uniformly into stronger financial capacity. The opportunity is to deepen customer relationships; the constraint is a declining capital cushion that could limit lending growth and shareholder returns.
What's Happening in the Business
- Lending mix: Commercial and industrial lending drove loan growth, while auto and securities-based lending expanded within consumer banking. Auto originations increased 15% to $10.1B, and credit-card purchase volume rose 12%, indicating stronger customer activity even though card balances were broadly flat.
- Wealth management: Higher market valuations lifted advisory fees, while larger loan and deposit balances supported interest income. Advisory net inflows were $3.6B vs $5.1B a year earlier, so stronger asset-based revenue did not reflect faster new-money gathering.
- Investment banking and Markets: Corporate and Investment Banking investment-banking fees rose 10%, but trading revenue fell 23% to $1.05B, mainly from weaker fixed-income, currencies and commodities results. This offset part of the benefit from a larger Markets balance sheet.
- Smaller mortgage and leasing businesses: Home Lending revenue fell 15% to $743M, while residential loans serviced for others declined to $344B from $397B at year-end. The completed January rail-car leasing sale also reduced revenue and expenses, making some declines reflect a smaller business rather than deteriorating pricing.
Key Financial Highlights
| Metric | Q3 2026; Y/Y change | 9M 2026; Y/Y change | Investor interpretation |
|---|---|---|---|
| Revenue | $21.9B; +2.0% | $65.9B; +5.7% | Lending and advisory fees offset weaker trading and mortgage income. |
| Net interest income | $12.5B; +4.7% | $36.9B; +5.1% | More earning assets and fixed-rate asset repricing outweighed lower floating-rate yields. |
| Net income | $5.95B; +6.5% | $17.6B; +10% | Lower quarterly personnel costs and taxes helped absorb higher provisions. |
| Diluted EPS | $1.87; +13% | $5.47; +18% | Repurchases reduced average diluted shares, amplifying earnings growth per share. |
| Provision for credit losses | $1.03B; +51% | $3.08B; +18% | Commercial and industrial and auto growth required additional reserves despite improving commercial real estate performance. |
| Segment | Q3 revenue; Y/Y change | Q3 net income; Y/Y change |
|---|---|---|
| Consumer Banking and Lending | $11B; +4.8% | $2.8B; +21% |
| Commercial Banking | $3.2B; +6.4% | $1.2B; +2.8% |
| Corporate and Investment Banking | $5.0B; +2.6% | $1.9B; −2.1% |
| Wealth and Investment Management | $4.1B; +12% | $600M; +19% |
- Margin and funding: Taxable-equivalent net interest margin fell to 2.43% from 2.61%; growth in lower-yielding Markets assets and interest-bearing deposits diluted margin even as interest income grew.
- Cost trade-off: Headcount fell 8% Y/Y, helping contain quarterly expenses, while technology expense increased 13%. Efficiency savings are funding investment rather than producing an equivalent reduction in total costs.
- Earnings quality: Nine-month equity-security gains were $1.02B vs a $75M loss, including unrealized gains from observable private-investment price changes; this is not recurring banking revenue.
- Capital erosion outside earnings: Nine-month after-tax other comprehensive loss was $9.84B. Falling securities and cash-flow-hedge values reduced equity and regulatory capital without passing through current net income.
- Shareholder returns: Nine-month repurchases totaled $9.59B; common shares outstanding fell by 91.0M, or 2.9%, net of issuance since year-end.
Risk Assessment
- Capital flexibility: The binding standardized common equity tier 1 ratio fell to 10.03% from 10.61% at year-end, against an 8.50% requirement including buffers, narrowing room for growth and distributions.
- Credit migration: Commercial and industrial criticized exposure increased, and auto charge-offs rose as those portfolios expanded; improving commercial real estate performance could mask emerging losses elsewhere.
- Interest rates and securities: The securities portfolio’s unrealized shortfall widened to $53.6B from $34.4B at year-end, while falling rates could hurt interest income, exposing Wells Fargo to different pressures in either direction.
- Legal and compliance: Continuing anti-money-laundering, sanctions and banking-access inquiries could bring costs or restrictions; reasonably possible legal losses above accruals reach ≈$1.5B.
A 10-Q does not have to restate the risk factors in the annual report. Full list: the company's 10-Ks on SEC.
What to Watch
- Loan growth quality: Commercial and industrial and auto lending are expanding; success means sustained customer activity without worsening reported charge-offs and criticized loans, while rising losses would undermine the growth benefit.
- Wealth gathering: Advisory fees benefit from market valuations, but net inflows slowed; stronger inflows would demonstrate customer gains, while weak flows would leave growth more dependent on markets.
- Markets returns: Balance-sheet expansion supported interest income while trading weakened; subsequent segment earnings will show whether additional assets generate worthwhile returns or merely consume capital.
- Capital versus distributions: Repurchases continue as capital ratios decline; stabilization would support both lending and returns, while further erosion could force slower growth or reduced buybacks.
Longer version: the summary of each of the report's 33 sections, written by an AI model from the same filing.
Changes since the previous 10-Q
The core bet (weakened): Expand lending, underwriting, Markets and wealth services as consumer and business customer activity deepens. → Lending and wealth activity expanded, but Markets returns weakened and auto losses rose.
- Risk escalated Capital capacity
CET1 fell to 10.26%; growth and distributions were narrowing room for further expansion. → CET1 fell further to 10.03%, versus an 8.50% requirement including buffers. - Watch item worsened Corporate banking expansion
Underwriting and Markets led growth; sustained customer revenue would justify their larger balance sheet. → Investment-banking fees rose 10%, but trading fell 23%; segment net income declined 2.1%. - Watch item mixed Auto partnership economics
Auto originations reached $9.7B; continued growth with contained losses would support partnership economics. → Originations reached $10.1B, but auto charge-offs rose as the portfolio expanded.
Figures are computed from the filing's XBRL data; the summary and scores are written by an AI model reading the filing.
Model 006 · prompt v130 · 2026-10-28 14:41:08Z