Wells Fargo Falls Short of Lending Projections, Stocks Suffer Decline

Wells Fargo's First Quarter Earnings Fall Short of Analysts' Estimates

Wells Fargo & Co. reported a disappointing first quarter, with the bank's primary income streams failing to meet analysts' expectations. The company's net interest income totaled $12.1 billion, an increase from the same period last year but short of the estimated $12.3 billion.

In addition to the net interest income shortfall, noninterest income, which encompasses fees from various business lines, came in at $9.35 billion, below the consensus estimate of $9.5 billion. The decline in income streams led to a 4.8% drop in Wells Fargo's shares, the largest decline among companies in the KBW Bank Index. The shares had fallen as much as 7.3% earlier in the day, their largest intraday drop in a year, and have declined 12% in 2026.

The bank's net interest margin, which measures its earnings from lending after costs, narrowed to 2.47% in the first quarter. This decline is attributed to lower interest rates affecting the bank's floating-rate assets. Chief Financial Officer Mike Santomassimo stated that there would likely be additional net interest margin compression in the second quarter, primarily due to the bank's increased deployment of its balance sheet for the markets business and higher interest payments on deposits.

| Bank | Net Interest Income (Q1 2026) | Change from Q1 2025 | | --- | --- | --- | | Wells Fargo & Co. | $12.1 billion | 1.6% | | JPMorgan Chase & Co. | $22.3 billion | 3.2% | | Citigroup Inc. | $13.2 billion | 2.5% |

Wells Fargo's results, alongside those of JPMorgan Chase & Co. and Citigroup Inc., which also reported first-quarter earnings, provided insight into the performance of the largest lenders during a volatile quarter. The bank's executives emphasized that the quarterly changes reflected its growth strategy, which has been consistently communicated.

Chief Executive Officer Charlie Scharf stated that the company remains confident in its growth strategy and that the quarterly fluctuations are normal. The bank's results were also influenced by the Iran war, which drove up oil prices and increased inflation fears, leading to hopes for interest-rate cuts fading.

Given the outlook that borrowing costs could remain higher for longer, investors would have expected Wells Fargo's assets to benefit from the situation, said Keefe, Bruyette & Woods analyst Christopher McGratty. However, the NII miss and unchanged 2026 guidance are likely to cause modest disappointment and weigh on the bank's shares.

Wells Fargo also reported details of its loan book to nonbank financial firms, a category that typically includes loans to firms related to private credit. The bank's exposure to nonbank lenders has raised concerns among investors, as nonstop redemptions and riskier underwriting by nonbank lenders could result in losses to their bank backers. Wells Fargo was a lender to the busted UK firm Market Financial Solutions Ltd. and provided syndicated loans to Goeasy Ltd., a Canadian non-prime lender grappling with bad loans.

The bank's total loans to nonbank financial firms stood at $210.2 billion, with approximately $36.2 billion made to private-credit firms. Chief Financial Officer Mike Santomassimo stated that the loans are structured well and provide a good risk-return across each of the underlying portfolios.

Overall, Wells Fargo's credit quality was stable in the first quarter, with net charge-offs of bad loans totaling $1.1 billion, in line with analysts' estimates. Loan-loss provisions, the money set aside in case of payment failures in the future, rose 22% to $1.14 billion.

Elevated market volatility fueled another quarter of trading windfalls for the biggest banks, with Wells Fargo benefiting from it at a smaller scale. Its net gains from trading activities increased by 38% to $1.35 billion in the first quarter. The company's markets business expansion led to a rise in trading in the net interest income mix, providing $481 million for the first quarter.

In other earnings, investment advisory fees and brokerage commissions grew 10% to $3.49 billion, reflecting higher market valuations, higher retail brokerage commissions, and higher transactional activity. The company's shares have been lingering at the bottom of the KBW Bank Index this year, with investors shifting their focus toward its execution on growth after it was released from a federal asset cap last June.