It has been about a month since the last earnings report for Wells Fargo (WFC Quick QuoteWFC - Free Report) . Shares have added about 6.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Wells Fargo due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Wells Fargo & Company before we dive into how investors and analysts have reacted as of late.

Wells Fargo Q3 Earnings Beat on Higher NII & Lower Expenses

Wells Fargo reported third-quarter 2026 earnings per share of $1.87, which surpassed the Zacks Consensus Estimate of $1.85. In the prior-year quarter, the company reported EPS of $1.73.

Results benefited from higher net interest income (NII) and lower noninterest expenses. Growth in loan and deposit balances was another positive. However, higher provisions and lower noninterest income were headwinds.

The company’s net income (GAAP basis) was $5.95 billion, representing a 6.5% increase from the prior-year quarter.

Revenues Improve, Expenses Decline

Total revenues were $21.87 billion, which missed the Zacks Consensus Estimate of $22.15 billion. Nevertheless, the top line increased 2.0% from the year-ago quarter.

NII was $12.52 billion, up 4.7% year over year. The increase was driven by higher loan and investment securities balances, fixed-rate asset repricing and growth in the Markets business. These were partially offset by higher deposit costs and the impact of lower interest rates on floating-rate assets.

The net interest margin (on a taxable-equivalent basis) contracted 18 basis points (bps) year over year to 2.43%.

Non-interest income declined 1.4% year over year to $9.35 billion. The decline was due to lower trading gains, reduced mortgage banking income and weaker equity investment gains, along with lower lease income following the sale of the company's rail car leasing business in the first quarter of 2026. These declines were partially offset by higher investment advisory fees, deposit-related fees and investment banking fees.

Non-interest expenses of $13.74 billion decreased nearly 1% year over year. The decrease reflected lower severance costs and continued efficiency initiatives, including an 8% reduction in headcount, partly offset by higher revenue-related compensation and technology expenses.

Wells Fargo's efficiency ratio of 63% was lower than 65% in the year-ago quarter. A decline in the efficiency ratio indicates improvement in profitability.

Loan Balance & Deposits Improve

As of Sept. 30, 2026, total average loans were $1.03 trillion, which increased nearly 1% on a sequential basis. Total average deposits were $1.48 trillion, up 1.2% on a sequential basis.

Credit Quality: Mixed Bag

The provision for credit losses was $1.03 billion, increasing 51.1% from the year-ago quarter. The increase reflected higher allowances for commercial and industrial loans and auto loans, partially offset by lower allowances for commercial real estate loans.

Net loan charge-offs were 0.38% of average loans, down from 0.40% in the prior-year quarter. Non-performing assets declined 6.0% year over year to $7.36 billion, indicating an improvement in asset quality.

Capital Ratio Decline

As of Sept. 30, 2026, the Common Equity Tier 1 ratio under the Standardized Approach was 10.0%, down from 11.0% in the prior-year quarter.

Profitability Ratios Improve

Return on assets was 1.05% compared with 1.10% in the prior-year quarter. Return on equity was 13.8%, up from 12.8% a year ago, while return on average tangible common equity was 16.3%, up from 15.2% in the prior-year quarter.

Outlook

Fourth Quarter 2026

Wells Fargo expects NIM to remain flat in the fourth quarter of 2026 compared with the third quarter, following stabilization in the third quarter. The stabilization is expected to be supported by slower Markets balance-sheet growth, earning-asset expansion and continued repricing of the securities portfolio.

NIM excluding Markets is expected to expand modestly, reflecting loan and deposit growth, fixed-rate asset repricing and higher investment securities balances.

NII is expected to be approximately $13 billion, with the pace of growth projected to accelerate compared with the previous two quarters. Growth is expected to be supported by continued loan and deposit growth, fixed-rate asset repricing and higher investment securities balances. 

NII excluding Markets is expected to benefit from higher interest rates, while Markets NII is likely to face pressure due to its liability-sensitive position. The impact on Markets NII is expected to be largely offset by Markets non-interest income.

Average loan growth is expected to exceed the mid-single-digit increase projected earlier, reflecting stronger commercial, auto and credit card lending.

2026

Wells Fargo expects NII to be approximately $50 billion. NII excluding Markets is projected to be around $48 billion, driven by balance-sheet growth, a favorable loan and deposit mix and continued fixed-asset repricing, partially offset by the impact of expected rate cuts. 

Markets NII is now expected to be approximately $1.8 billion, slightly below the previous expectation of $2 billion. Management expects the shortfall to be offset by higher NII excluding Markets, allowing the company to maintain its full-year NII guidance of approximately $50 billion. The company continues to expect stronger NII growth in the second half of 2026 than in the first half.

Average loan growth is expected to exceed the mid-single-digit increase projected initially, primarily driven by growth in commercial, auto and credit card lending.

Average deposits are expected to increase by mid-single digits across all operating segments.

Non-interest expenses are projected to be around $55.7 billion. Full-year revenue-related expenses are now expected to be approximately $400 million, driven by strong business growth in equity markets. However, additional savings from ongoing efficiency initiatives are expected to offset the higher revenue-related expenses.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Wells Fargo has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Wells Fargo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.