VALUATION HIGHLIGHTS

1. Corp & Investment Banking constitutes 33% of the Trefis price estimate for Wells Fargo & Co.'s stock.
2. Community Banking constitutes 32% of the Trefis price estimate for Wells Fargo & Co.'s stock.
3. Commercial Banking constitutes 19% of the Trefis price estimate for Wells Fargo & Co.'s stock.

WHAT HAS CHANGED?

Latest Earnings: Fourth Quarter 2025

Wells Fargo reported fourth quarter 2025 revenue of $21.29 billion, a 4% increase year-over-year but slightly below analyst estimates of $21.65 billion. Net income reached $5.4 billion, or $1.62 per diluted share, representing a 13% increase in EPS from the $1.43 reported in the prior-year period. Excluding a $612 million severance charge related to ongoing efficiency initiatives, adjusted EPS stood at $1.76. Growth was primarily fueled by a 4% rise in net interest income to $12.3 billion, driven by higher loan balances and fixed-rate asset repricing, alongside a 5% increase in non-interest income led by investment advisory and card fees.

Note: Wells Fargo's FY'25 ended on December 31, 2025.

Federal Reserve Lifts Long-Standing Asset Cap

A defining pivot for the company occurred on June 3, 2025, when the Federal Reserve officially removed the $1.95 trillion asset cap that had constrained the bank since 2018. This regulatory milestone has allowed Wells Fargo to aggressively expand its balance sheet for the first time in seven years. Since the lifting, total assets have grown by approximately 11% to $2.1 trillion as of year-end 2025. The company is now actively deploying capital into its Corporate and Investment Banking markets business and expanding its commercial lending portfolios, sectors that were previously the most restricted under the cap.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Wells Fargo's value that present opportunities for upside or downside to the current Trefis price estimate:

Consumer and Commercial Lending

• Net Interest Income Momentum: Management has guided for 2026 net interest income of approximately $50 billion, supported by mid-single-digit growth in average loans and deposits. The lifting of the asset cap allows for higher yielding asset accumulation, which could provide upside to the Trefis estimate if loan utilization rates in the commercial sector exceed current projections. However, any faster-than-expected compression in deposit betas as interest rates shift could present a downside risk to margins.


• Credit Card and Auto Expansion: In 2025, new credit card account originations jumped 21% following the launch of new branded products, while auto loan balances surged 19% due to a new preferred partnership with Volkswagen and Audi. This rapid expansion in higher-yield consumer credit is a significant growth engine. The upside depends on these "new vintages" reaching their profitability inflection point in 2026 without a significant spike in net charge-offs beyond the current 0.43% level.

For additional details, select a driver above or a division from the interactive Trefis split for Wells Fargo at the top of the page.

BUSINESS SUMMARY

Wells Fargo is a diversified, community-based financial services company providing banking, investment, and mortgage products, as well as consumer and commercial finance. It operates through four primary segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. Following years of regulatory transformation, the bank is transitioning from a focus on remediation and cost-cutting to a growth-oriented model leveraging its massive U.S. retail footprint.

SOURCES OF VALUE

Wells Fargo derives its primary value from its massive, low-cost deposit base and its leading position in U.S. middle-market commercial banking.

Unrivaled Consumer Banking Footprint

With approximately $1.4 trillion in total deposits and a presence in one out of every three U.S. households, Wells Fargo possesses a significant cost-of-funds advantage. The bank's 2025 performance saw 50% of new checking accounts opened digitally, demonstrating its ability to leverage its massive scale to acquire customers efficiently while refurbishing its physical branch network.

Commercial Banking Moat

The company maintains a dominant position in the U.S. middle-market segment, recently adding 185 coverage bankers to further capture market share. This segment serves as a steady engine for loan growth and treasury management fees, benefiting from deep, long-term relationships that are difficult for smaller competitors or fintechs to displace.

KEY TRENDS

Regulatory Normalization and Balance Sheet Growth

The removal of the Fed-imposed asset cap in mid-2025 is the most significant macro trend affecting the company. This shift allows Wells Fargo to compete for larger corporate mandates and expand its trading-related assets, which grew 50% in 2025. The bank is now repositioning itself to regain lost market share in investment banking, having already moved from 12th to 8th in U.S. M&A rankings.

Digital Transformation and Efficiency Initiatives

Wells Fargo is executing a multi-year strategy to modernize its technology stack and reduce its efficiency ratio. The company delivered $2.4 billion in gross expense reductions in 2025 and is targeting a medium-term Return on Tangible Common Equity (ROTCE) of 17% to 18%. This shift toward "Agentic AI" and digital-first delivery is intended to offset rising compensation and technology investment costs.