Correction, 21 September 2026: We corrected the financial interpretation and, where applicable, translated amounts in this report. The relevant filing is linked below. This note is not a claim that every statement has been independently re-audited. SEC 10-Q
One year after the Federal Reserve lifted its $1.95 trillion asset cap, Wells Fargo is finally growing — but the growth is not coming from the core bank. Diluted earnings per share rose 25% to $2.00 and return on tangible common equity reached 17.7%, up from 15.2% a year ago. Yet net interest margin, net interest income expressed as a percentage of average earning assets, fell to 2.43% from 2.68% a year ago. The gap between those two facts is the whole story of this quarter: earnings are being driven by fee income, expense discipline and a shrinking share count, while the balance sheet expands into low-spread markets business that dilutes margin.
All figures below are drawn from Wells Fargo's Form 10-Q for the quarter ended June 30, 2026, and the company's second-quarter 2026 earnings release (July 14, 2026), unless otherwise noted.
1. Consolidated Balance Sheet
1-1. Principal Asset Items
| Item | Dec 31, 2025 ($M) | Jun 30, 2026 ($M) | Change % |
|---|---|---|---|
| Total assets | 2,148,631 | 2,282,201 | +6.2% |
| Total loans | 986,167 | 1,031,115 | +4.6% |
| Commercial loans | 599,895 | 636,299 | +6.1% |
| Consumer loans | 386,272 | 394,816 | +2.2% |
| AFS debt securities (amortized cost, net) | 215,775 | 253,593 | +17.5% |
| HTM debt securities (amortized cost, net) | 208,023 | 198,573 | −4.5% |
Total assets grew $133.6 billion in six months. Measured against the year-ago quarter, average assets rose from $1,933.4 billion to $2,227.9 billion — roughly 15%. For a bank that was frozen near $1.95 trillion for seven years, that is the clearest evidence yet that the regulatory constraint is gone.
The composition matters more than the total. Commercial and industrial loans led the increase, rising to $487,630 million from $452,068 million on higher originations and loan draws. Auto lending grew 12.8% to $56,924 million and other consumer loans grew 13.7% to $38,724 million. Against that, residential mortgage slipped to $240,774 million from $242,190 million and credit card balances fell to $58,394 million from $59,540 million. Wells Fargo is adding commercial and secured consumer credit while letting mortgage and card run off.
The securities book tells a similar redeployment story. Available-for-sale holdings grew 17.5% in amortized cost terms while held-to-maturity holdings shrank 4.5%. Combined unrealized losses widened to $35,675 million from $34,428 million as rates moved. Of that, $32,408 million sits in the held-to-maturity book, per the 10-Q's investment securities schedule, where it is not marked against equity. That figure equals about 23% of tangible common equity of $139,703 million. It is not a loss today, and the 10-Q states that 99% of the combined AFS and HTM portfolio was rated AA− or above at June 30, 2026, but it is the reason a bank's book value can overstate its liquidation value.
1-2. Funding Structure
| Item | Dec 31, 2025 ($M) | Jun 30, 2026 ($M) | Change % |
|---|---|---|---|
| Noninterest-bearing deposits | 365,368 | 370,116 | +1.3% |
| Interest-bearing deposits | 1,060,839 | 1,131,289 | +6.6% |
| Total deposits | 1,426,207 | 1,501,405 | +5.3% |
| Total long-term debt | 174,712 | 182,139 | +4.3% |
Deposits funded most of the balance sheet growth, but the mix deteriorated. Free funding — deposits paying no interest — fell to 24.7% of the total from 25.6%. Average deposit cost rose to 1.51% in the second quarter of 2026 from 1.44% in the fourth quarter of 2025. Growth in commercial deposits and issuance of certificates of deposit by corporate treasury drove the increase. Wells Fargo is buying its deposit growth, and that is one of the two reasons margin compressed.
1-3. Capital Structure
Total equity was $182,323 million at June 30, 2026, essentially flat against $182,954 million a year earlier, because buybacks offset retained earnings. Common stockholders' equity was $164,981 million. (The per-share figures that follow are year-over-year comparisons, not comparisons against the December 31, 2025 balance sheet used in the tables above.) Book value per common share rose 6.6% year over year to $54.48 and tangible book value per share rose 6.8% to $46.13 — both grew faster than equity itself, since the share count fell about 6%.
2. Consolidated Income Statement
2-1. Core Earnings Metrics
| Item | Q2 2025 ($M) | Q1 2026 ($M) | Q2 2026 ($M) | YoY % |
|---|---|---|---|---|
| Total revenue | 20,822 | 21,446 | 22,622 | +8.6% |
| Net interest income | 11,708 | 12,096 | 12,317 | +5.2% |
| Noninterest income | 9,114 | 9,350 | 10,305 | +13.1% |
| Noninterest expense | 13,379 | 14,330 | 13,661 | +2.1% |
| Pre-tax pre-provision profit | 7,443 | 7,116 | 8,961 | +20.4% |
| Provision for credit losses | 1,005 | 1,135 | 914 | −9.1% |
| Net income | 5,494 | 5,253 | 6,407 | +16.6% |
| Diluted EPS ($) | 1.60 | 1.60 | 2.00 | +25.0% |
| Efficiency ratio (%) | 64 | 67 | 60 | — |
| Net interest margin (%) | 2.68 | 2.47 | 2.43 | — |
Revenue grew 8.6% while expenses grew 2.1%. That is operating leverage — each 1% of revenue growth translated into roughly 2.4% growth in pre-provision profit. The efficiency ratio, which measures how many cents of expense it takes to earn a dollar of revenue, improved to 60% from 64%.
Two adjustments are needed before crediting all of that to the franchise. First, net gains from equity securities swung to $847 million from $119 million, on stronger venture capital marks. That single line contributed $728 million of the $1,191 million rise in fee income. Strip it out and noninterest income grew 5.1%, revenue grew 5.2%, and pre-provision profit grew 10.8% rather than 20.4%. Venture capital marks are real earnings but they do not repeat on command.
Second, and more important, Wells Fargo publishes its own breakdown of where net interest income came from. Markets-related net interest income rose to $501 million from $104 million. Excluding Markets, net interest income was $11,816 million against $11,604 million — growth of just 1.8%. Nearly two-thirds of the $609 million increase came from the trading balance sheet. Average federal funds sold and resale agreements jumped roughly 80% to $191,176 million at a yield of 3.64%. This is high-volume, thin-spread business, and the company itself says margin fell because of "growth in lower-yielding assets in our Markets business as well as growth in interest-bearing deposits." Margin dilution here is a deliberate choice, not an accident, and the associated revenue flows through net interest income, diluting the reported margin further.
A third item sits below the operating lines, and it cuts the other way. Pre-tax income grew 25.0% — $8,047 million against $6,438 million — while net income grew 16.6%. The difference is tax. The effective income tax rate was 20.4% in the quarter, including $132 million of discrete benefits related to the resolution of prior-period tax matters, worth roughly $0.04 per share. That discrete benefit was smaller than the one booked a year ago, so the effective rate rose year over year. Tax was a significant headwind to this comparison, not the tailwind that some earnings coverage suggested — and the $132 million is not a recurring item in either direction.
Earnings per share grew 25% while net income grew 16.6%. The difference is the buyback: diluted average shares fell to 3,074.6 million from 3,267.0 million, a 5.9% reduction. Net income applicable to common stock grew 17.6%; the remaining 7.4 points of EPS growth — just under 30% of the total — came from the smaller share count rather than from profit.
2-2. Expense Composition
| Item | Q2 2025 ($M) | Q2 2026 ($M) | Change % |
|---|---|---|---|
| Personnel | 8,709 | 8,851 | +2% |
| Technology, telecom and equipment | 1,287 | 1,457 | +13% |
| Occupancy | 766 | 803 | +5% |
| Professional and outside services | 1,089 | 1,109 | +2% |
| Advertising and promotion | 266 | 361 | +36% |
| Other | 1,262 | 1,080 | −14% |
| Total | 13,379 | 13,661 | +2% |
Personnel costs are 65% of the expense base and rose only 2%, even as revenue-related compensation climbed in the wealth business. Efficiency initiatives absorbed the rest. Branch count fell to 4,079 from 4,135 while digital active customers rose to 38.0 million from 36.6 million. The two fastest-growing lines — technology at +13% and advertising at +36% — are the discretionary spend of a bank that is now allowed to compete for customers again.
2-3. Segment Results
| Segment (Q2) | Revenue 2025 ($M) | Revenue 2026 ($M) | Net income 2025 ($M) | Net income 2026 ($M) |
|---|---|---|---|---|
| Consumer Banking and Lending | 9,688 | 10,288 | 1,923 | 2,290 |
| Commercial Banking | 2,933 | 3,118 | 1,086 | 1,176 |
| Corporate and Investment Banking | 4,673 | 5,425 | 1,737 | 2,329 |
| Wealth and Investment Management | 3,438 | 3,892 | 420 | 537 |
(The four reportable segments do not sum to the consolidated totals; a Corporate line, not shown, carries the residual.)
Corporate and Investment Banking was the engine, with net income up 34%. Company-wide investment banking fees rose 35% to $939 million on stronger debt and equity underwriting, and segment net interest income rose 25%. Notably, the segment's provision for credit losses was a release of $181 million against a $103 million charge a year ago, which flattered the comparison. Trading revenue was roughly flat year over year, so the segment's gain came from underwriting and balance sheet, not from markets performance.
Wealth and Investment Management grew revenue 13%, driven by advisory assets of $1,225 billion against $1,042 billion — an 18% increase that reflects market appreciation as much as new money. Consumer Banking improved its efficiency ratio to 61% from 64%, with segment provisions flat at $945 million — a figure larger than the $914 million company-wide provision, because Corporate and Investment Banking booked a release against it.
3. Consolidated Cash Flows
| Item (six months) | H1 2025 ($M) | H1 2026 ($M) |
|---|---|---|
| Operating activities | (22,253) | 15,918 |
| Investing activities | (19,460) | (85,437) |
| Financing activities | 32,944 | 98,387 |
| Net change in cash | (8,769) | 28,868 |
| Cash at end of period | 193,133 | 201,461 |
Free cash flow is not a meaningful measure for a bank, since deposit-taking and lending are operating activities rather than discretionary investment. The useful reading here is the shape. Financing inflows of $98.4 billion — of which deposits contributed $75.2 billion — funded investing outflows of $85.4 billion in securities purchases and loan growth. This is a balance sheet being deliberately expanded, financed by deposits rather than by wholesale borrowing.
Operating cash flow swung to a positive $15.9 billion from negative $22.3 billion, largely a function of trading asset movements rather than a change in earnings quality. Cash paid for interest was $20,609 million against $19,729 million, consistent with the higher deposit cost.
For a bank, capital return capacity is governed by regulatory capital, not cash flow. On that measure Wells Fargo distributed heavily: $7.1 billion of buybacks (84 million shares) and $2,757 million of common dividends in the first half, against $11,160 million of net income applicable to common stock — a payout of roughly 88%.
4. Additional Analysis
Credit quality improved on every headline measure. Nonaccrual loans — loans on which the bank has stopped accruing interest — fell to $7,643 million from $8,201 million, or 0.74% of total loans against 0.83%. Net charge-offs on average commercial loans dropped to 0.10% from 0.18%, and consumer to 0.74% from 0.81%. The allowance for credit losses was $14,407 million, up marginally from $14,337 million, but coverage fell to 1.40% of loans from 1.45% because loans grew faster than reserves. The lower coverage ratio does not establish a reserve release. Note 3, Table 3.5 reconciles the first-half allowance: $14,337 million opening balance + $2,050 million provision - $1,976 million net charge-offs - $4 million other movements = $14,407 million. The $70 million net increase is not the provision expense; loan growth reduced the ratio.
One credit signal moved the wrong way. Criticized commercial and industrial loans rose to $16.9 billion at June 30, 2026 from $15.9 billion at December 31, 2025, driven, the 10-Q says, by loans in technology, telecom and media and industrials.
The 25% EPS gain thus reflects expense discipline, fee income and a lower share count operating against a compressed lending margin and a higher effective tax rate — the balance sheet has expanded, but the spread on that balance sheet has not.