Wells Fargo‘s quarterly profits missed Wall Street’s expectations, hit by disappointing results in its lending business and severance costs that soared as the bank laid off 5,600 workers.
The nation’s fourth-largest bank by assets reported net income of $5.4 billion for the fourth quarter, up from $5.1 billion a year earlier, as the bank rode a wave of higher revenue from loans and fees.
The bank spent $612 million on severance, sending expenses to $13.7 billion versus the $13.6 billion predicted by analysts. For the full year, generated $21.3 billion in net income, falling short of analysts’ estimates of $21.6 billion.
Wells Fargo shares sank early 3% in premarket trading to $90.90.
The higher profits will be seen as a win for CEO Charlie Scharf (seen above), who has been forced to operate under the Fed-imposed asset cap that was slapped on the lender in 2018. Getty Images“We have funded significant increased investments in infrastructure and business growth by driving greater savings, Wells Fargo CEO Charlie Scharf said in a statement. “Evidence of increased growth can be seen across the company.”
Scharf, a former CEO of BNY and Visa, pointed to a 20% growth in new credit card accounts, a 19% jump in auto lending balances, 12% loan growth in commercial banking, and a 14% increase in investment banking fees as the main drivers behind the bank’s profits.
“We have built a strong foundation and have made great progress in improving growth and returns, though we have operated with significant constraints. We are excited to now compete on a level playing field and are able to dedicate even more resources with the ability to grow our balance sheet,” he added.
The company made headlines two weeks ago when it came under fire from an 83-year-old Texas grandmother who claimed the bank is refusing to reimburse her $15,000 that was scammed from her by fraudsters.
Billie Young, 83, says Wells Fargo refused to reimburse nearly $15,000 after a check she mailed to pay off her car loan was altered and cashed by someone else. WFAAIn June 2025, the Federal Reserve finally lifted a $1.95 trillion asset cap imposed in 2018 after the Wells Fargo fake accounts scandal, where employees opened millions of unauthorized accounts to hit sales targets.
The results mark continued progress for the 60-year-old Scharf, who has streamlined operations since taking over in 2019.
Looking ahead to 2026, the lender expects net interest income to rise, assuming a couple of Federal Reserve rate cuts and steady long-term rates, with loans and deposits growing in the mid-single digits.
The restrictions had crimped growth, forcing the bank to pay billions in fines and overhaul its risk controls.
Wells Fargo, which has its main HQ in San Francisco, became engulfed in a scandal when it emerged that employees were creating fake accounts to hit sales targets. REUTERSRegulators scrapped the cap after noting the bank had made “substantial progress” in fixing governance and risk management issues, with Scharf calling it a “pivotal milestone in the bank’s transformation.”
In October, after the cap’s removal, Wells Fargo raised its medium-term profitability goal to a 17% to 18% return on tangible common equity — a key metric of how well the bank generates profits from shareholders’ investments — up from 15%,
Wells Fargo, with about $2.1 trillion in assets, ranks among America’s biggest lenders, serving one in three US households.
The price of its shares jumped in early trading on Wednesday, signaling investor optimism about a rebound for the bank.
