Wells Fargo & Company Q1 Earnings Call Highlights

Key Points

• Wells Fargo reported solid Q1 results with diluted EPS up 15% year-over-year and revenue rising 6% (NII +5%, non-interest income +8%), while returning $5.4 billion to shareholders—including $4.0 billion in buybacks—and maintaining a CET1 ratio of 10.3%.
• Balance-sheet growth was strong—period-end loans rose 11% YoY to exceed $1 trillion and average deposits increased 6%—but net interest margin fell 13 bps QoQ and management expects further margin compression while keeping 2026 net interest income guidance at about $50 billion (±).
• Loans to non-bank financial institutions totaled about $210 billion (21% of loans); management says the portfolio is well-secured with strong credit performance (non-accruals $237 million, 11 bps) and private credit exposure of $36.2 billion.

Wells Fargo & Company NYSE: WFC reported first quarter results that executives said showed continued momentum from investments made across the franchise, including higher earnings, broad-based revenue growth, and growth in both loans and deposits.

Chief Executive Officer Charlie Scharf said diluted earnings per share increased 15% from a year earlier as revenue rose 6%, driven by a 5% increase in net interest income and an 8% increase in non-interest income. Scharf noted that each operating segment posted revenue growth year-over-year, including Consumer Banking and Lending and Commercial Banking, both up 7%. Within the Corporate and Investment Bank, he cited an 11% increase in Banking revenue and a 19% increase in Markets revenue, while Wealth and Investment Management revenue rose 14%.

Investments, expenses, and capital return

Scharf said the company remains focused on “expense discipline” while increasing spending in technology, including AI, and advertising. He also pointed to “23 consecutive quarters of headcount reductions” as the bank executes efficiency initiatives. With revenue outpacing expenses, he said pre-tax, pre-provision profit increased 14% from a year ago.

The bank returned $5.4 billion to shareholders during the quarter, including $4.0 billion of common stock repurchases, according to Scharf. Mike Santomassimo, Wells Fargo’s CFO, said capital levels remained strong, with a CET1 ratio of 10.3%—within the company’s 10% to 10.5% target range and above its regulatory minimum plus buffers of 8.5%.

Loan and deposit growth, margin pressure, and 2026 guidance

Santomassimo said net interest income increased $601 million, or 5%, from a year earlier but declined $235 million, or 2%, from the fourth quarter, citing two fewer days in the first quarter and the impact of prior-quarter rate cuts on floating-rate loans and securities. He also explained a 13-basis-point decline in net interest margin from the fourth quarter, attributing it primarily to growth in lower-margin Markets balance sheet assets, a greater mix of interest-bearing deposits and short-term borrowings, and lower interest rates.

He said the company expected margin contraction when it issued full-year guidance previously and “would expect additional margin compression next quarter.” In response to analysts’ questions, Santomassimo emphasized that loan pricing competition was not driving the margin decline, saying the bank was not chasing “irrationally tight spreads” to generate growth.

On balance sheet growth, Santomassimo said period-end loan balances increased 11% from a year earlier and exceeded $1 trillion for the first time since the first quarter of 2020, with average loans up 10% year-over-year. Average deposits rose $75.7 billion, or 6%, from a year earlier, and he said the bank reduced average deposit cost by 15 basis points from a year ago as rates declined.

For the full year, Santomassimo said Wells Fargo maintained its guidance of approximately $50 billion “±” of net interest income in 2026 and continued to expect net interest income to grow over the course of the year. He noted that the outlook assumed two to three Federal Reserve cuts, while fewer cuts than expected would likely be positive for net interest income excluding Markets but would have only a modest effect this year because the assumed cuts were back-weighted.

Non-bank financial institutions exposure and credit performance

Both Scharf and Santomassimo addressed investor focus on Wells Fargo’s lending to non-bank financial institutions. Santomassimo said “financials except banks” loans totaled approximately $210 billion at quarter-end, or 21% of total loans. He said Wells Fargo was comfortable with the exposure due to borrower profiles, collateral diversity, historical loss experience, underwriting practices, and structural protections such as advance rates and collateral-related covenants.

He described the portfolio’s credit performance as strong and said it included $237 million of non-accrual loans in the first quarter, or 11 basis points of total loans. In the largest category—Asset Managers and Funds—Santomassimo said 85% of the loans were originated in fund finance, “predominantly subscription facilities” backed by limited partner commitments, with no single fund representing more than 1.5% of total commitments.

Santomassimo also detailed commercial finance exposures, including supply chain-related receivables lending, commercial asset-backed securities tied to leased assets such as aircraft containers and equipment, broadly syndicated loan warehouses, and asset-based lending. On corporate debt finance, which he said includes most of the company’s private credit exposure, Santomassimo stated that over 98% is secured by first-lien loans and structured to an AA-equivalent credit rating, with a weighted average effective advance rate of less than 60%.

During the Q&A, Santomassimo said the “vast majority” of Wells Fargo’s private credit exposure sits in the corporate debt finance bucket, which he quantified at $36.2 billion. He also said BDC exposures are a subset of that figure.

On overall credit quality, Santomassimo said performance in the first quarter remained strong despite macro uncertainty. He reported that the net loan charge-off ratio was stable from a year ago, with commercial net charge-offs rising modestly to 24 basis points due partly to a “single fraud-related loss” in the Real Estate Finance category within the financials-except-banks portfolio. He said the bank reviewed the portfolio and believed it was an isolated incident, later explaining that teams conducted an in-depth review of clients, processes, and collateral perfection, with independent resources brought in to help revalidate controls.

Consumer net charge-offs increased modestly from the fourth quarter to 78 basis points due to seasonally higher credit card losses, but declined eight basis points from a year ago with improvements across consumer portfolios and net recoveries in residential mortgage, he said.

Strategic updates: consent orders, product initiatives, and market outlook

Scharf said Wells Fargo closed its “final outstanding consent order” last month, bringing the total to 14 terminated since 2019. He said the milestone allows management to focus more fully on “accelerating growth and improving returns.” He also said Wells Fargo has “substantially completed” efforts to simplify the company by exiting or selling 12 businesses since 2019, noting the sale of the railcar leasing business at the beginning of the quarter.

On the consumer side, Scharf highlighted the launch of two new travel-focused rewards credit cards for Premier and private wealth clients, and said new credit card account growth increased nearly 60% from a year ago. He also cited auto originations that “more than doubled,” supported by preferred financing relationships for Volkswagen and Audi vehicles in the U.S. He added that consumer checking account openings rose more than 15% year-over-year, while mobile active users surpassed 33 million and Fargo, the bank’s AI-powered virtual assistant, exceeded 1 billion customer interactions in less than three years.

On the economic backdrop, Scharf described an orderly but uneven cooling in the U.S. labor market and said consumer resilience was increasingly “bifurcated,” with higher-income households supported by income and asset values while lower-income consumers faced more exposure to higher interest rates and energy prices. He said the bank expected higher energy prices could lead consumers to adjust spending over several months, likely in the second half of the year, and noted the ultimate impact on credit performance was not yet clear.

In Corporate and Investment Banking, Scharf said the investment banking outlook remained strong and that the company entered the second quarter with a “strong pipeline” driven by M&A and equity capital markets. Santomassimo added that equity capital markets saw some delay in IPO activity late in the first quarter, but said there remained a pipeline of companies waiting to go public and cited activity in converts and other parts of the equity capital markets “wallet.”

Executives also discussed proposed capital rules. Scharf said Wells Fargo estimated risk-weighted assets could decrease by approximately 7% under the proposal, based on its current balance sheet composition, and said the bank expected to remain around a 1.5% G-SIB surcharge “for the foreseeable future.” Santomassimo told analysts that the decline would be driven largely by credit risk changes, including benefits for investment-grade commercial credits and mortgages, while market risk was “flattish” and operational risk would rise but less than initially expected under prior proposals. Management said it was not yet ready to change its CET1 target range until the rules are finalized.

About Wells Fargo & Company NYSE: WFC

Wells Fargo & Company is a diversified, U.S.-based financial services company headquartered in San Francisco, California. Founded in 1852 by Henry Wells and William G. Fargo, the firm has evolved from its origins in express delivery and pioneer-era banking into one of the largest full-service banks in the United States. The company provides a broad range of financial products and services to individual, small business, commercial, and institutional clients. Charles W. Scharf serves as chief executive officer.

Wells Fargo operates across several core business segments, including consumer banking and lending, commercial banking, corporate and investment banking, and wealth and investment management.

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