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Wells Fargo & Company · WFC

Wells Fargo's capital is down to the floor of its range, and the buyback is what gave

Loans grew 11% and returns rose, but the bank's capital ratio is now at the bottom of its own range, buybacks have fallen, and the 17% to 18% return target leans on events still ahead.

Published · Inve Research Desk

Wells Fargo & Company stock page → More news from Oct 13, 2026

An open bank vault with partly emptied shelves and a painted line on the wall marking the lowest level.
Illustration: Inve Research Desk

10.0%

core capital ratio (CET1, preliminary), floor of its range

A year earlier it was 11.0%. On the chief financial officer's account buybacks are the last piece decided, after growth and risk, and last quarter's $2.5B was less than half of a year ago.

How they did last quarter

Better than guided on the interest margin, worse on markets revenue, and up on the year but down on the quarter for returns, with capital at the floor of its range.

  • Net interest margin
    2.43%, flat on the quarter before and down from 2.61% a year ago
    vs July guidance: "we expect modest net interest margin compression in the third quarter"
    Better than guided: the margin held rather than slipping.
  • Markets revenue
    $1,835M, down 1% on a year ago
    vs September guide: "up mid-single digits year-over-year"
    A miss on a guide given in September, the quarter's last month.
  • Return on tangible common equity
    16.3%, up from 15.2% a year ago, down from 17.7% in the quarter before
    vs the "17% to 18% target"
    Closer than a year ago, but a step back from the quarter before.
  • Core capital ratio (CET1)
    10.0%, down from 10.3% in June and 11.0% a year ago
    vs "we plan to manage capital between 10% and 10.5%"
    At the bottom of the range, with no room left to give.

The cushion has reached the floor of its own range

Wells Fargo ended the September 2026 quarter with a core capital ratio of 10.0% (preliminary), the bottom of the 10% to 10.5% range management set for itself. A year earlier the ratio was 11.0%. Capital is what pays for share buybacks. The bank repurchased $2.5B of stock last quarter, against $6.1B in the same quarter a year ago, when it had just lowered its target to that range from the year-earlier ratio and was buying back stock to work down to it. With the ratio now at the floor, the buyback has less left over.

Over that year the bank grew; average loans rose 11% and returns rose with them. Lending that fast consumes capital, but it was not what took the ratio down last quarter: higher interest rates cut accumulated other comprehensive income, which the bank says alone reduced the ratio by 0.38 points, more than the whole fall. The question for an owner is how much of the buyback the bank will spend to absorb moves in rates. Our reading is that its return target now rests on several things that have not happened yet.

Targets stayed fixed while the buyback gave way

In October 2025 the bank set two targets: a return on tangible common equity (profit as a share of the equity shareholders own, less intangibles) and the capital range above. Neither has changed. Repurchases, though, were lower in each of the last four quarters than in the quarter before, counting quarter on quarter from the third quarter of last year.

An analyst asked about a rating agency's remark that running at the low end of the range would be a negative. The chief financial officer answered, "I think you're overreading the comment." He added that buybacks are the lever used after growth and risk have been weighed. That makes the buyback the residual, and a residual gives first.

The interest income guide now needs a bigger fourth quarter

In January the bank guided to $50B of net interest income for the year, plus or minus, on a plan that assumed two to three Fed rate cuts. The Fed raised rates in September instead, and the guide did not move. Last quarter the margin held at 2.43%, where in July management had guided to a little compression. That part came out better than said.

The bank guided to about $13B, which by our arithmetic is a step of about $480M over last quarter, more than twice the rise in the quarter before. The chief financial officer said where the benefit goes: higher rates help interest income outside the markets business, but they cut the markets business's own interest income, now guided to about $1.8B from about $2B, and he expects markets fees to largely make up that loss. The full-year total holds because the mix has shifted.

Returns rose on the year but stepped back on the quarter

Return on tangible equity was 16.3% last quarter, down from 17.7% in the quarter before but higher than a year ago. The chief executive said it is closer to the bank's target. The path there has leaned on items that are not operating earnings. Tax expense included one-time benefits, after similar benefits in each of the two quarters before. By our arithmetic that is about 6 cents a share. The first half also carried equity gains that have faded.

Tangible common equity fell in the quarter; the chief financial officer said the drop in the capital ratio included a decrease in accumulated other comprehensive income from higher rates. A smaller base lifts the ratio by itself. We cannot strip these items out to an exact underlying return.

The loan reserve moved against the stated outlook

The allowance for loan losses is 1.38% of loans, down from a year ago. The reserve for commercial real estate was lowered, or its coverage fell, on each of the last five calls. Yet the chief financial officer said "rates go up, valuations got to go down, right, all else equal." Commercial charge-offs also rose from the quarter before.

This is a point about direction, not damage. Nonaccrual loans fell, and management called the losses specific to borrowers. But a thinner reserve and a warning about property values sit uneasily together.

What we do not know yet

The markets business also showed the limits of short-range visibility: management guided in September to growth in markets revenue, and the result was a small decline.

We do not know whether the buyback holds near its present pace. More guidance for next year is due with the next results. The bank has kept its targets since October and let the buyback fall. A company that changes the buyback and never the target is showing which of the two it treats as negotiable.

Wells Fargo & Company stock page →

The record: notes, full financial tables

Notes

  1. Impact 4/5 Balance sheet Mixed

    Wells Fargo's CET1 falls to 10.0%, the floor of its range, as buybacks drop to $2.5B

    Wells Fargo's core capital ratio ended the third quarter at 10.0%, down from 10.3% in June and 11.0% a year earlier, and it repurchased $2.5B of stock. In the third quarter of 2025 the bank had bought back $6.1B. Asked about a rating agency's concern over the low end of the 10% to 10.5% range, the chief financial officer disagreed; the bank estimates the proposed Basel III rule, not yet final, could cut its risk-weighted assets by about 7%.

    “I think you're overreading the comment.”— Michael Santomassimo, chief financial officer

  2. Impact 4/5 Guidance Mixed

    Wells Fargo keeps $50B interest income guide, sees Q4 at about $13B, $480M above Q3

    Wells Fargo kept its 2026 net interest income guide at $50B, plus or minus, even though the Fed raised rates in September after the guide assumed cuts. Net interest income was $12,517M last quarter and the bank guided to about $13B for the fourth, a step of about $480M by our arithmetic against $200M added in the third. In July it had guided to a little margin compression; the margin was flat at 2.43%.

    “we still expect net interest income for full year 2026 to be $50 billion, plus or minus.”— Michael Santomassimo, chief financial officer

  3. Impact 3/5 One-off Mixed

    Wells Fargo's ROTCE slips to 16.3% from 17.7% as a $170M tax benefit helps again

    Return on tangible common equity was 16.3% last quarter, up from 15.2% a year ago but down from 17.7% in the quarter before. Income tax expense carried $170M of one-time benefits, after $135M and $132M in the previous two quarters, and equity gains, over $1B in the first half, were modest in the third quarter, the chief financial officer said. The chief executive said the bank is closer to its 17% to 18% target.

    “Our ROTCE continues to increase and is getting closer to our 17% to 18% target.”— Charles Scharf, chief executive

  4. Impact 3/5 Risk Negative

    Wells Fargo's loan reserve falls to 1.38% of loans as commercial charge-offs rise to 0.18%

    The allowance was 1.38% of loans last quarter against 1.52% a year ago, with a lower allowance for commercial real estate offsetting growth elsewhere. Commercial charge-offs rose to 0.18% from 0.10% in the quarter before. The reserve for commercial real estate was lowered, or its coverage fell, on each of the last five calls. Nonaccrual loans fell to $7,060M from $7,643M, and management said losses were specific to borrowers and that it was too early to see stress in the portfolio.

    “rates go up, valuations got to go down, right, all else equal.”— Michael Santomassimo, chief financial officer

  5. Impact 3/5 Demand Negative

    Wells Fargo markets revenue falls 1% against its own guide of mid-single-digit growth

    Total markets revenue was $1,835M last quarter, down 1% on a year ago and 17% from the quarter before. At an industry conference in September the chief financial officer had guided to mid-single-digit growth; taking mid-single digits as 4% to 6%, by our arithmetic the result is $92M to $129M short, about half of one percent of the quarter's $21,870M revenue. The bank blamed sharp rate moves late in the quarter.

    “At an industry conference last month, I indicated that we expected third quarter markets revenue to be up mid-single digits year-over-year.”— Michael Santomassimo, chief financial officer

Financials

Income statement, last 8 quarters

$ million; YoY and margin in %
Quarter endPBTNet profit
Jun 20268,0476,407
Mar 20265,9815,253
Dec 20256,5265,361
Sep 20256,9095,589
Jun 20256,4385,494
Mar 20255,3264,894
Dec 20245,3835,079
Sep 20246,2345,114

Balance sheet

$ million
As ofEquityDebtCashFixed assetsTotal assets
Jun 2026180,190207,307201,46111,6312,282,201
Mar 2026178,396216,223173,27311,4992,205,752
Dec 2025181,117193,035172,59311,3952,148,631
Sep 2025181,154408,422172,51611,0402,062,926

Cash flow

$ million
Year endOperatingInvestingFinancing
Dec 2025−19,001−187,895177,587
Dec 20243,035−15,651−21,534
Dec 202340,35816,04320,494
Dec 202227,048−42,476−59,645