Wells Fargo & Company: Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Wells Fargo & Company is a leading financial services company with approximately $2.2 trillion in assets, operating through four reportable segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. The company ranked fourth in assets among U.S. banks as of the reporting date.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 | Q4 2025 |
|---|---|---|---|
| Total Revenue | $21,446 million | $20,149 million | $21,292 million |
| Net Income | $5,253 million | $4,894 million | $5,361 million |
| Diluted EPS | $1.60 | $1.39 | $1.62 |
| Net Interest Income | $12,096 million | $11,495 million | $12,096 million |
| Noninterest Income | $9,350 million | $8,654 million | $9,196 million |
| Noninterest Expense | $14,330 million | $13,891 million | $13,726 million |
| Provision for Credit Losses | $1,135 million | $932 million | $1,040 million |
| Return on Average Assets (ROA) | 0.98% | 1.03% | 1.02% |
| Return on Average Equity (ROE) | 12.2% | 11.5% | 12.3% |
| Efficiency Ratio | 67% | 69% | 64% |
| Net Interest Margin (TE) | 2.47% | 2.67% | 2.60% |
| Total Assets (Period-End) | $2,205,752 million | $1,950,311 million | $2,148,631 million |
| Total Loans (Period-End) | $1,016,787 million | $913,842 million | $986,167 million |
| Total Deposits (Period-End) | $1,454,939 million | $1,361,728 million | $1,426,207 million |
| CET1 Ratio (Standardized) | 10.29% | 11.09% | 10.61% |
| Liquidity Coverage Ratio (LCR) | 120% | 125% | 119% |
Material Changes vs. Prior Periods
- Revenue Growth: Total revenue increased 6% year-over-year (YoY) driven by higher net interest income (+5%) and noninterest income (+8%). Noninterest income growth was led by investment advisory fees (+11%) and card fees (+9%), partially offset by lower mortgage banking income (-39%).
- Expense Pressure: Noninterest expense rose 3% YoY, primarily due to a 104% increase in advertising and promotion, higher technology costs (+14%), and increased personnel expense (+1%).
- Net Interest Margin Compression: Net interest margin decreased to 2.47% from 2.67% YoY, attributed to growth in lower-yielding assets in the Markets business and increased interest-bearing deposits.
- Credit Quality: The provision for credit losses increased 22% YoY to $1.1 billion. Net charge-offs rose to $1.1 billion, driven by higher losses in the commercial and industrial portfolio, partially offset by improved performance in credit cards. Nonperforming assets (NPAs) increased to $8.8 billion (0.86% of total loans).
- Balance Sheet Expansion: Total assets grew 13% YoY. Loans increased 11% YoY, driven by commercial and industrial growth and auto loans. Deposits grew 7% YoY.
Guidance, Outlook, and Risks
- Capital Management: The company maintained a strong capital position. The Common Equity Tier 1 (CET1) ratio under the Standardized Approach was 10.29%, exceeding the regulatory minimum and buffers. The Total Loss Absorbing Capacity (TLAC) ratio was 22.98%.
- Share Repurchases: The company repurchased 46.3 million shares of common stock for $4.0 billion in Q1 2026. Approximately $25.8 billion of repurchase authority remains under the Board's authorization.
- Regulatory Developments: On March 5, 2026, the Federal Reserve Board terminated the consent order regarding governance oversight and compliance that had been in place since 2018.
- Risks and Contingencies:
- Legal Actions: The company faces various legal proceedings, including advisory account cash sweep litigation, anti-money laundering investigations, and home mortgage discrimination litigation. The high end of the range of reasonably possible losses in excess of accruals was approximately $1.6 billion as of March 31, 2026.
- Interest Rate Risk: The company expects to benefit from higher interest rates as assets reprice faster than liabilities, but faces risks from lower rates and deposit mix changes.
- Credit Risk: Economic scenarios used for the allowance for credit losses assume uncertainty related to trade policies, inflation, and a decline in commercial real estate prices.
Key Facts for Investor Verification
- Segment Realignment: Verify the impact of the Q1 2026 reclassification of wealth management services from the Wealth and Investment Management segment to Consumer Banking and Lending, which affects segment comparability.
- Commercial Real Estate (CRE) Exposure: Review the stability of the CRE portfolio ($132.2 billion) and the specific allowance coverage (1.87%) amidst economic forecasts predicting a decline in CRE asset prices.
- Advertising Spend: Investigate the 104% YoY increase in advertising and promotion expenses ($369 million) to understand the strategic shift and expected ROI.
- Legal Reserves: Monitor the status of the $1.6 billion range of reasonably possible losses for legal actions, particularly regarding the home mortgage discrimination and hiring practices litigation.
- Capital Ratios: Confirm the binding framework for capital ratios remains the Standardized Approach and track the impact of the G-SIB surcharge (1.50%) on future capital distributions.