Q4 2025 Wells Fargo & Co Earnings Call

January 14, 2026

Speaker #1: After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press *1.

Speaker #1: If you would like to withdraw your question, press star 2. Please note that today's call is being recorded. I would now like to turn the call over to John Campbell, Director of Investor Relations.

Speaker #1: Sir, you may begin the conference.

John Campbell: Good morning, everyone. Thank you for joining our call today, where our CEO, Charlie Scharf, and our CFO, Mike Santomassimo, will discuss Q4 results and answer your questions. This call is being recorded.

Speaker #2: Good morning, everyone. Thank you for joining our call today. We have our CEO, Charlie Scharf, and our CFO, Mike Santomassimo. We'll discuss Q4 results and answer your questions.

Speaker #2: This call is being recorded. Before we get started, I would like to remind you that our Q4 earnings materials—including the release, financial supplement, and presentation deck—are available on our website at wellsfargo.com.

Operator: Before we get started, I would like to remind you that our Q4 earnings materials, including the release, financial supplement, and presentation deck, are available on our website at wellsfargo.com. I'd also like to caution you that we may make forward-looking statements during today's call that are subject to risks and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form 8-K filed today containing our earnings materials. Information about any non-GAAP financial measures reference, including a reconciliation of those measures to GAAP measures, can be found in our SEC filings and the earnings materials available on our website. I will now turn the call over to Charlie. Thanks, John. I'm going to provide an overview of our 2025 results and update you on our priorities.

Before we get started, I would like to remind you that our Q4 earnings materials, including the release, financial supplement, and presentation deck, are available on our website at wellsfargo.com. I'd also like to caution you that we may make forward-looking statements during today's call that are subject to risks and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form 8-K filed today containing our earnings materials. Information about any non-GAAP financial measures reference, including a reconciliation of those measures to GAAP measures, can be found in our SEC filings and the earnings materials available on our website. I will now turn the call over to Charlie.

Q4 2025 Wells Fargo & Co Earnings Call

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Wells Fargo & Co

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Q4 2025 Wells Fargo & Co Earnings Call

WFC

Wednesday, January 14th, 2026 at 3:00 PM

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Operator: I'll then turn the call over to Mike to review Q4 results, as well as our net interest income and expense expectations for 2026 before we take your questions. Let me start with our 2025 highlights. Our strong financial results reflected the significant momentum we're building across the company. Our net income increased to $21.3 billion, and our diluted earnings per share grew 17% from a year ago. Our continued investments in our business helped drive revenue growth, with fee-based revenue up 5% from a year ago. This growth was broad-based, with increases in both our consumer and commercial businesses. Much of the investments we have been making have been funded by our disciplined approach to managing expenses. We had positive operating leverage in 2025, and we continue to have opportunities to generate efficiencies.

Operator: Our ongoing focus has resulted in 22 consecutive quarters of headcount reductions, with headcount down over 25% since Q2 2020. Since the lifting of the Asset Cap, we've been growing our balance sheet, and our assets grew 11% from a year ago, including broad-based loan growth and higher trading assets to help support our markets' businesses. We also grew deposits with higher balances in both our commercial and consumer businesses. Credit performance was strong, and Net Charge-offs declined 16% from a year ago. The economy and our customers remain resilient, but we continue to closely monitor our portfolios for signs of weakness. In addition to tracking credit metrics in our loan portfolios, such as early-stage delinquencies, we also monitor consumer behavior more broadly to help us understand consumer health.

Our ongoing focus has resulted in 22 consecutive quarters of headcount reductions, with headcount down over 25% since Q2 2020. Since the lifting of the Asset Cap, we've been growing our balance sheet, and our assets grew 11% from a year ago, including broad-based loan growth and higher trading assets to help support our markets' businesses. We also grew deposits with higher balances in both our commercial and consumer businesses. Credit performance was strong, and Net Charge-offs declined 16% from a year ago. The economy and our customers remain resilient, but we continue to closely monitor our portfolios for signs of weakness. In addition to tracking credit metrics in our loan portfolios, such as early-stage delinquencies, we also monitor consumer behavior more broadly to help us understand consumer health.

Operator: For example, we look at things like checking accounts with unemployment flows, direct deposit amounts, overdraft activity, and payment outflows, and we've not observed meaningful shifts in trends. Our capital levels remain strong, while returning $23 billion of excess capital to shareholders. During 2025, we increased our common stock dividend per share by 13% and repurchased $18 billion of common stock. Given we have many opportunities to grow organically, we currently expect share repurchases to be lower in 2026. We will continue to focus on optimizing our capital levels as we manage to a CET1 ratio of approximately 10% to 10.5%. Let me turn to the progress we've made throughout the past year on our strategic priorities. The removal of the asset cap by the Federal Reserve was a pivotal moment for the company.

For example, we look at things like checking accounts with unemployment flows, direct deposit amounts, overdraft activity, and payment outflows, and we've not observed meaningful shifts in trends. Our capital levels remain strong, while returning $23 billion of excess capital to shareholders. During 2025, we increased our common stock dividend per share by 13% and repurchased $18 billion of common stock. Given we have many opportunities to grow organically, we currently expect share repurchases to be lower in 2026. We will continue to focus on optimizing our capital levels as we manage to a CET1 ratio of approximately 10% to 10.5%. Let me turn to the progress we've made throughout the past year on our strategic priorities. The removal of the asset cap by the Federal Reserve was a pivotal moment for the company.

Operator: This milestone, combined with successfully closing 13 regulatory orders since 2019, underscores the significant progress we've made in transforming the organization. We are incredibly proud of our success and understand the importance of continuing to build on that work and sustain the culture that supports it. While executing on our risk and control initiatives, we simultaneously worked to position the company for stronger growth and improved returns. Let me walk you through how these actions are improving our business drivers, beginning with our consumer business. We have been investing in our credit card business since I joined Wells Fargo, and our focus has been driving strong outcomes. We opened nearly three million new credit card accounts in 2025, up 21% from a year ago. Credit card balances were up 6% from a year ago, and importantly, we've maintained our credit standards.

This milestone, combined with successfully closing 13 regulatory orders since 2019, underscores the significant progress we've made in transforming the organization. We are incredibly proud of our success and understand the importance of continuing to build on that work and sustain the culture that supports it. While executing on our risk and control initiatives, we simultaneously worked to position the company for stronger growth and improved returns. Let me walk you through how these actions are improving our business drivers, beginning with our consumer business. We have been investing in our credit card business since I joined Wells Fargo, and our focus has been driving strong outcomes. We opened nearly three million new credit card accounts in 2025, up 21% from a year ago. Credit card balances were up 6% from a year ago, and importantly, we've maintained our credit standards.

Operator: After two to three years of absorbing the upfront costs of our new products, we are beginning to see the early vintages contributing to profitability. Our auto business returned to growth in 2025, with stronger origination volumes and 19% growth in loan balances from a year ago. Our results reflected growth across our portfolio, including benefiting from becoming the preferred financing provider for Volkswagen and Audi brands in the United States in the spring of last year. The auto business goes through cycles, and we have intentionally scaled back growth in recent years. With the investments we have made to improve our capabilities, we are now well-positioned to methodically return to broad-spectrum lending. Importantly, we're focused on making sure we have the right level of profitability in this business, not just growth. We have made good progress in transforming and simplifying the home lending business.

After two to three years of absorbing the upfront costs of our new products, we are beginning to see the early vintages contributing to profitability. Our auto business returned to growth in 2025, with stronger origination volumes and 19% growth in loan balances from a year ago. Our results reflected growth across our portfolio, including benefiting from becoming the preferred financing provider for Volkswagen and Audi brands in the United States in the spring of last year. The auto business goes through cycles, and we have intentionally scaled back growth in recent years. With the investments we have made to improve our capabilities, we are now well-positioned to methodically return to broad-spectrum lending. Importantly, we're focused on making sure we have the right level of profitability in this business, not just growth. We have made good progress in transforming and simplifying the home lending business.

Operator: Over the past three years, we've reduced headcount by over 50% and the amount of third-party mortgage loans serviced by over 40%, including reducing the servicing portfolio by $90 billion in 2025 alone. We are continuing to reduce the size of this business while focusing on serving our bank and wealth management customers, which will help improve profitability. Within consumer, small, and business banking, we had stronger growth in net checking accounts in 2025 than last year, driven by digital account openings and an increase in marketing. We continue to refurbish our branches, completing approximately 700 branches in 2025. Over half of our network is now refurbished, and we are on track to complete the remaining branches over the next few years.

Over the past three years, we've reduced headcount by over 50% and the amount of third-party mortgage loans serviced by over 40%, including reducing the servicing portfolio by $90 billion in 2025 alone. We are continuing to reduce the size of this business while focusing on serving our bank and wealth management customers, which will help improve profitability. Within consumer, small, and business banking, we had stronger growth in net checking accounts in 2025 than last year, driven by digital account openings and an increase in marketing. We continue to refurbish our branches, completing approximately 700 branches in 2025. Over half of our network is now refurbished, and we are on track to complete the remaining branches over the next few years.

Operator: We continue to make enhancements to our mobile app, including making it significantly easier to open accounts, and in 2025, 50% of our consumer checking accounts were opened digitally. We grew mobile active customers by 1.4 million in 2025, up 4% from a year ago. Wells Premier, our offering to serve our affluent clients, continued to build momentum in 2025. We increased the number of licensed bankers and grew branch-based financial advisors by 12% from a year ago, with a focus on increasing the number of bankers and advisors in the locations where we have the most opportunities. Premier deposit and investment balances grew 14% during 2025. This remains a significant area of opportunity for us. We also had continued momentum in our wealth and investment management business, with total hires increasing, attrition declining, and net asset flows accelerating in the second half of 2025. Turning to our commercial businesses.

We continue to make enhancements to our mobile app, including making it significantly easier to open accounts, and in 2025, 50% of our consumer checking accounts were opened digitally. We grew mobile active customers by 1.4 million in 2025, up 4% from a year ago. Wells Premier, our offering to serve our affluent clients, continued to build momentum in 2025. We increased the number of licensed bankers and grew branch-based financial advisors by 12% from a year ago, with a focus on increasing the number of bankers and advisors in the locations where we have the most opportunities. Premier deposit and investment balances grew 14% during 2025. This remains a significant area of opportunity for us. We also had continued momentum in our wealth and investment management business, with total hires increasing, attrition declining, and net asset flows accelerating in the second half of 2025. Turning to our commercial businesses.

Operator: In the commercial bank, while we are the market leader with strong returns, we still have plenty of opportunities for growth. We have hired 185 covered bankers over the last two years, with over 60% of the bankers hired in 2025. We are starting to see early signs of success from these hires, with higher new client acquisition as well as loan and deposit growth. We also continue to be focused on providing investment banking and markets capabilities, with fees from providing these capabilities to our commercial banking clients growing over 25% in 2025. Overland Advantage, our strategic partnership with Centerbridge Partners, has enabled us to better serve our commercial banking customers with a direct lending product, and since inception, we have helped our clients raise approximately $7 billion in financing. As I highlighted on our last call, our goal is to be a top five US investment bank.

In the commercial bank, while we are the market leader with strong returns, we still have plenty of opportunities for growth. We have hired 185 covered bankers over the last two years, with over 60% of the bankers hired in 2025. We are starting to see early signs of success from these hires, with higher new client acquisition as well as loan and deposit growth. We also continue to be focused on providing investment banking and markets capabilities, with fees from providing these capabilities to our commercial banking clients growing over 25% in 2025. Overland Advantage, our strategic partnership with Centerbridge Partners, has enabled us to better serve our commercial banking customers with a direct lending product, and since inception, we have helped our clients raise approximately $7 billion in financing. As I highlighted on our last call, our goal is to be a top five US investment bank.

Operator: We grew our share in 2025, and we're confident that we can continue to make progress over time by using our competitive advantages, including our long and deep relationships with large corporate and middle-market companies, a complete product set, significant existing credit exposure, strong risk discipline, and the capacity to support our clients through cycles. In M&A, we're winning increasingly bigger and more complex assignments. We advised on two of the largest M&A deals of 2025, increasing our announced US M&A ranking to eighth in 2025, up from twelfth in 2024. We entered 2026 with our deal pipeline meaningfully greater than it has been at any point in the last five years, although market conditions can always change.

Operator: With the lifting of the asset cap, we've been able to utilize our balance sheet to accelerate growth in our trading businesses, including increasing trading-related assets by 50% in 2025 to accommodate customer trading flows and financing activities. While many of the assets have been added recently are lower margin, they also have lower risk and are less capital-intensive. Our ability to support this client activity increases engagement and should lead to more business. In summary, our strong performance in 2025 reflects the meaningful progress we've made to transform Wells Fargo, and our actions position us for continued higher growth and returns. Our ROTCE increased to 15% in 2025. To put this in perspective, when we first started talking about increasing our returns in Q4 2020, our ROTCE was 8%, and we set a goal of reaching 10%.

With the lifting of the asset cap, we've been able to utilize our balance sheet to accelerate growth in our trading businesses, including increasing trading-related assets by 50% in 2025 to accommodate customer trading flows and financing activities. While many of the assets have been added recently are lower margin, they also have lower risk and are less capital-intensive. Our ability to support this client activity increases engagement and should lead to more business. In summary, our strong performance in 2025 reflects the meaningful progress we've made to transform Wells Fargo, and our actions position us for continued higher growth and returns. Our ROTCE increased to 15% in 2025. To put this in perspective, when we first started talking about increasing our returns in Q4 2020, our ROTCE was 8%, and we set a goal of reaching 10%.

Operator: Once we established that goal, we raised our target to 15%. As we discussed on last quarter's call, we have a new medium-term ROTCE target of 17% to 18%. While both the path and the timing to achieve our target is dependent on a variety of factors, including interest rates, the broader macroeconomic environment, and the regulatory environment, we are confident that we can reach this goal by maintaining our expense discipline, realizing the benefits of our investments to drive stronger revenue growth, and further optimizing our capital levels. As a reminder, 17% to 18% is not our final goal, but another stop along the way to achieving best-in-class returns by business, and ultimately, our returns should be higher than this target. I want to end by thanking everyone who works at Wells Fargo for their hard work and dedication last year.

Once we established that goal, we raised our target to 15%. As we discussed on last quarter's call, we have a new medium-term ROTCE target of 17% to 18%. While both the path and the timing to achieve our target is dependent on a variety of factors, including interest rates, the broader macroeconomic environment, and the regulatory environment, we are confident that we can reach this goal by maintaining our expense discipline, realizing the benefits of our investments to drive stronger revenue growth, and further optimizing our capital levels. As a reminder, 17% to 18% is not our final goal, but another stop along the way to achieving best-in-class returns by business, and ultimately, our returns should be higher than this target. I want to end by thanking everyone who works at Wells Fargo for their hard work and dedication last year.

Operator: Their unwavering commitment to our customers and to our transformation is what positions us to become a best-in-class company. I'm excited about our momentum and look forward to building on our success as we enter the new year from a position of strength. I will now turn the call over to Mike. Thank you, Charlie, and good morning, everyone. We earned $5.4 billion in the Q4, up 6% from a year ago. Diluted earnings per common share was $1.62, up 13% year over year, and excluding the severance expense, our diluted earnings per share was $1.76. Q4 included $612 million of severance expense, primarily for actions we will take throughout 2026. We also had severance expense in the Q3 for a total of $908 million in the second half of 2025.

Operator: As Charlie highlighted, we have reduced headcount every quarter since the Q3 of 2020, and we continue to have opportunities to further streamline the company and become more efficient. Turning to slide four, net interest income increased $381 million, or 3%, from the Q3, driven by higher market NII. Net interest income, excluding markets, increased $167 million from higher loan and deposit balances, as well as fixed asset repricing, partially offset by changes in deposit mix. I will update you on our expectations for 2026 net interest income later in the call. Moving to slide five, we had strong loan growth, with both average and period-end loans increasing from the Q3 and from a year ago. Period-end loans grew 5% from the Q4, the strongest linked-quarter growth since the Q1 of 2020 when we had COVID-related growth.

As Charlie highlighted, we have reduced headcount every quarter since the Q3 of 2020, and we continue to have opportunities to further streamline the company and become more efficient. Turning to slide four, net interest income increased $381 million, or 3%, from the Q3, driven by higher market NII. Net interest income, excluding markets, increased $167 million from higher loan and deposit balances, as well as fixed asset repricing, partially offset by changes in deposit mix. I will update you on our expectations for 2026 net interest income later in the call. Moving to slide five, we had strong loan growth, with both average and period-end loans increasing from the Q3 and from a year ago. Period-end loans grew 5% from the Q4, the strongest linked-quarter growth since the Q1 of 2020 when we had COVID-related growth.

Operator: The biggest piece of this category, as well as the driver of most of the growth, is from our fund finance group, which is largely subscription or capital call facilities for alternative asset managers, targeting larger funds with strong investment track records, where we have long-standing strategic relationships and that are generally backed by a diversified pool of limited partner commitments to the fund. Within commercial finance, the biggest piece is our corporate debt finance business, which is secured lending to asset managers and private equity funds that is typically backed by middle market and broadly syndicated loans. We underwrite, approve, and monitor the performance of each underlying loan. Consumer finance, the smallest category, lends to clients engaged in auto lending, credit card issuers, and other types of consumer lending.

The biggest piece of this category, as well as the driver of most of the growth, is from our fund finance group, which is largely subscription or capital call facilities for alternative asset managers, targeting larger funds with strong investment track records, where we have long-standing strategic relationships and that are generally backed by a diversified pool of limited partner commitments to the fund. Within commercial finance, the biggest piece is our corporate debt finance business, which is secured lending to asset managers and private equity funds that is typically backed by middle market and broadly syndicated loans. We underwrite, approve, and monitor the performance of each underlying loan. Consumer finance, the smallest category, lends to clients engaged in auto lending, credit card issuers, and other types of consumer lending.

Operator: Finally, the real estate finance portfolio includes both secured lending to mortgage REITs and private equity funds that originate or purchase commercial real estate mortgage loans, and secured lending to asset managers and specialty finance companies backed by agency residential mortgage loans and residential mortgage-backed securities. Since this portfolio has been growing, we are now providing this additional detail by category earnings rather than just in our 10-Q filings, as we've done in the past. While this type of lending has picked up across the industry recently, we have made these kinds of loans for many years. They are generally secured and have features to help manage credit risk, such as structural credit enhancements and collateral eligibility requirements, as well as collateral advance rates that generally get us to the equivalent of investment-grade risk.

Finally, the real estate finance portfolio includes both secured lending to mortgage REITs and private equity funds that originate or purchase commercial real estate mortgage loans, and secured lending to asset managers and specialty finance companies backed by agency residential mortgage loans and residential mortgage-backed securities. Since this portfolio has been growing, we are now providing this additional detail by category earnings rather than just in our 10-Q filings, as we've done in the past. While this type of lending has picked up across the industry recently, we have made these kinds of loans for many years. They are generally secured and have features to help manage credit risk, such as structural credit enhancements and collateral eligibility requirements, as well as collateral advance rates that generally get us to the equivalent of investment-grade risk.

Operator: Given these features and our experience underwriting these loans, as well as the collateral that supports them, we have found this type of lending to offer an attractive risk return. Now turning to consumer loans, which also grew from a year ago, with growth in auto, securities-based lending, wealth and investment management, and credit cards. While residential mortgage loans continued to decline, driven by our strategy to primarily focus on our bank and wealth management customers, the rate of decline slowed. Turning to deposits on slide six, average deposits increased $23.9 billion from a year ago, as growth in consumer and commercial deposits more than offset declines in higher-cost corporate treasury deposits. We achieved this growth while reducing average deposit costs by 29 basis points from a year ago, with lower interest-bearing deposit yields across all of our businesses.

Given these features and our experience underwriting these loans, as well as the collateral that supports them, we have found this type of lending to offer an attractive risk return. Now turning to consumer loans, which also grew from a year ago, with growth in auto, securities-based lending, wealth and investment management, and credit cards. While residential mortgage loans continued to decline, driven by our strategy to primarily focus on our bank and wealth management customers, the rate of decline slowed. Turning to deposits on slide six, average deposits increased $23.9 billion from a year ago, as growth in consumer and commercial deposits more than offset declines in higher-cost corporate treasury deposits. We achieved this growth while reducing average deposit costs by 29 basis points from a year ago, with lower interest-bearing deposit yields across all of our businesses.

Operator: Turning to slide seven, net interest income increased $419 million, or 5%, from a year ago. Our results a year ago included losses from the repositioning of the investment securities portfolio, as well as strong results from our venture capital investments. We grew fee-based revenue across most of our business-related fee categories, including 8% growth in investment advisory fees, and brokerage commissions, our largest category, driven by growth in asset-based fees reflecting higher market valuations in wealth and investment management. Turning to expenses on slide eight, net interest expense declined $174 million from a year ago. Let me highlight the primary drivers. We had lower FDIC assessment expense, lower operating losses, and we benefited from the impact of efficiency initiatives. Partially offsetting these declines was higher revenue-related compensation expense, primarily in wealth and investment management, driven by strong market performance.

Turning to slide seven, net interest income increased $419 million, or 5%, from a year ago. Our results a year ago included losses from the repositioning of the investment securities portfolio, as well as strong results from our venture capital investments. We grew fee-based revenue across most of our business-related fee categories, including 8% growth in investment advisory fees, and brokerage commissions, our largest category, driven by growth in asset-based fees reflecting higher market valuations in wealth and investment management. Turning to expenses on slide eight, net interest expense declined $174 million from a year ago. Let me highlight the primary drivers. We had lower FDIC assessment expense, lower operating losses, and we benefited from the impact of efficiency initiatives. Partially offsetting these declines was higher revenue-related compensation expense, primarily in wealth and investment management, driven by strong market performance.

Operator: We also had higher advertising and technology expense, driven by the investments we were making in our businesses to generate growth. I would note that while our Q4 2025 expenses included the $612 million of severance expense I highlighted earlier in the call, severance expense was slightly lower than a year ago. Turning to credit quality on slide nine, credit performance remained strong. Our net loan charge-off ratio declined 10 basis points from a year ago and increased three basis points from the Q4. Commercial net loan charge-offs increased four basis points from the Q4, driven by higher commercial real estate losses, predominantly in the office portfolio. Office valuations continue to stabilize, and although we expect additional losses, which could be lumpy, they should be well within our expectations.

We also had higher advertising and technology expense, driven by the investments we were making in our businesses to generate growth. I would note that while our Q4 2025 expenses included the $612 million of severance expense I highlighted earlier in the call, severance expense was slightly lower than a year ago. Turning to credit quality on slide nine, credit performance remained strong. Our net loan charge-off ratio declined 10 basis points from a year ago and increased three basis points from the Q4. Commercial net loan charge-offs increased four basis points from the Q4, driven by higher commercial real estate losses, predominantly in the office portfolio. Office valuations continue to stabilize, and although we expect additional losses, which could be lumpy, they should be well within our expectations.

Operator: Consumer net loan charge-offs increased modestly from the Q4 to 75 basis points of average loans, with higher losses in credit card, and auto. Since there is seasonality in these portfolios, I would note that both credit card and auto losses were lower than a year ago. As Charlie highlighted, we closely monitor our portfolios for signs of weakness, and consumers continue to be resilient as income growth has generally kept pace with increases in inflation and debt levels. Our non-performing asset ratio declined modestly from a year ago and increased 3 basis points from the Q4, driven by higher commercial real estate, and commercial and industrial non-accrual loans. The drivers of this increase were borrower-specific, and we did not see any signs of systemic weakness across the portfolio. Moving to slide 10, our allowance for credit losses for loans was relatively stable from the Q4.

Consumer net loan charge-offs increased modestly from the Q4 to 75 basis points of average loans, with higher losses in credit card, and auto. Since there is seasonality in these portfolios, I would note that both credit card and auto losses were lower than a year ago. As Charlie highlighted, we closely monitor our portfolios for signs of weakness, and consumers continue to be resilient as income growth has generally kept pace with increases in inflation and debt levels. Our non-performing asset ratio declined modestly from a year ago and increased 3 basis points from the Q4, driven by higher commercial real estate, and commercial and industrial non-accrual loans. The drivers of this increase were borrower-specific, and we did not see any signs of systemic weakness across the portfolio. Moving to slide 10, our allowance for credit losses for loans was relatively stable from the Q4.

Operator: Our allowance coverage ratio was down modestly and included a decline in the coverage ratio for our corporate investment banking commercial real estate office portfolio to 10.1% in the Q4. Turning to capital and liquidity on slide 11, our capital levels remained strong, with our CET1 ratio at 10.6%, down from the Q4, but well above our CET1 regulatory minimum plus buffers of 8.5%. We added approximately 45 basis points from earnings, which was more than offset by approximately 40 basis points reduction from common stock repurchases and an approximately 45 basis points decline from risk-weighted asset growth. We repurchased $5 billion of common stock in the Q4. Average common shares outstanding were down 6% from a year ago and have declined 26% over the past six years.

Our allowance coverage ratio was down modestly and included a decline in the coverage ratio for our corporate investment banking commercial real estate office portfolio to 10.1% in the Q4. Turning to capital and liquidity on slide 11, our capital levels remained strong, with our CET1 ratio at 10.6%, down from the Q4, but well above our CET1 regulatory minimum plus buffers of 8.5%. We added approximately 45 basis points from earnings, which was more than offset by approximately 40 basis points reduction from common stock repurchases and an approximately 45 basis points decline from risk-weighted asset growth. We repurchased $5 billion of common stock in the Q4. Average common shares outstanding were down 6% from a year ago and have declined 26% over the past six years.

Operator: Moving to our operating segment, starting with Consumer Banking and Lending on slide twelve, Consumer, Small and Business Banking revenue increased 9% from a year ago, driven by lower deposit pricing and higher deposit and loan balances. Home lending revenue declined 6% from a year ago due to lower Net Interest Income from lower loan balances. Credit card revenue grew 7% from a year ago from higher loan balances and an increase in card fees. Our new account growth has been strong, and approximately 50% of our loan balances are now from the new products we've launched since 2021. Auto revenue increased 7% from a year ago due to the higher loan balances, with auto originations more than doubling from a year ago. The decline in personal lending revenue from a year ago was driven by lower loan balances and loan spread compression.

Moving to our operating segment, starting with Consumer Banking and Lending on slide twelve, Consumer, Small and Business Banking revenue increased 9% from a year ago, driven by lower deposit pricing and higher deposit and loan balances. Home lending revenue declined 6% from a year ago due to lower Net Interest Income from lower loan balances. Credit card revenue grew 7% from a year ago from higher loan balances and an increase in card fees. Our new account growth has been strong, and approximately 50% of our loan balances are now from the new products we've launched since 2021. Auto revenue increased 7% from a year ago due to the higher loan balances, with auto originations more than doubling from a year ago. The decline in personal lending revenue from a year ago was driven by lower loan balances and loan spread compression.

Operator: Turning to commercial banking results on slide 13, revenue was down 3% from a year ago, as lower net interest income was partially offset by growth in non-interest income driven by higher revenue from tax credit investments and equity investments. Average loan balances in the Q4 grew $4.6 billion, or 2%, from the Q4, driven by higher client activity. Turning to corporate investment banking on slide 14, banking revenue declined 4% from a year ago, driven by lower investment banking revenue and the impact of lower interest rates. I would note that while investment banking revenue declined in the Q4, it was up 11% for the full year. Investment banking revenue will vary from quarter to quarter based on the timing of when deals close, so looking at it over a longer time frame is a more meaningful way to see the momentum we are generating in this business.

Turning to commercial banking results on slide 13, revenue was down 3% from a year ago, as lower net interest income was partially offset by growth in non-interest income driven by higher revenue from tax credit investments and equity investments. Average loan balances in the Q4 grew $4.6 billion, or 2%, from the Q4, driven by higher client activity. Turning to corporate investment banking on slide 14, banking revenue declined 4% from a year ago, driven by lower investment banking revenue and the impact of lower interest rates. I would note that while investment banking revenue declined in the Q4, it was up 11% for the full year. Investment banking revenue will vary from quarter to quarter based on the timing of when deals close, so looking at it over a longer time frame is a more meaningful way to see the momentum we are generating in this business.

Operator: On slide 15, Wealth and Investment Management revenue increased 10% from a year ago, driven by growth in asset-based fees from increased market valuations, as well as higher net interest income due to lower deposit pricing and the growth in deposit and loan balances. Underlying business drivers continued to show momentum in the Q4, with growth in loan and deposit balances, as well as growth in total client assets, which benefited from the market valuations, as well as net asset flows. As a reminder, the majority of WIM advisory assets are priced at the beginning of the quarter, so Q1 results will reflect the higher January 1 market valuations. Turning to our 2026 outlook on slide 17, we provide our expectations for net interest income.

On slide 15, Wealth and Investment Management revenue increased 10% from a year ago, driven by growth in asset-based fees from increased market valuations, as well as higher net interest income due to lower deposit pricing and the growth in deposit and loan balances. Underlying business drivers continued to show momentum in the Q4, with growth in loan and deposit balances, as well as growth in total client assets, which benefited from the market valuations, as well as net asset flows. As a reminder, the majority of WIM advisory assets are priced at the beginning of the quarter, so Q1 results will reflect the higher January 1 market valuations. Turning to our 2026 outlook on slide 17, we provide our expectations for net interest income.

Operator: As you know, we've been investing in the markets business, and while it is still a relatively small contributor to our total net interest income, its contribution has grown, and it can cause volatility in our NII outlook given changes in interest rates and other market factors. We currently expect markets NII to grow to approximately $2 billion in 2026, driven by lower short-term funding costs and balance sheet growth, including increased client financing activities, which, as Charlie highlighted, tend to be lower margin and lower risk assets but are accretive to net interest income. As a reminder, while markets NII is expected to be higher, this growth is expected to be partially offset by lower non-interest income. Our focus is on growing markets revenue, which we expect to increase in 2026.

As you know, we've been investing in the markets business, and while it is still a relatively small contributor to our total net interest income, its contribution has grown, and it can cause volatility in our NII outlook given changes in interest rates and other market factors. We currently expect markets NII to grow to approximately $2 billion in 2026, driven by lower short-term funding costs and balance sheet growth, including increased client financing activities, which, as Charlie highlighted, tend to be lower margin and lower risk assets but are accretive to net interest income. As a reminder, while markets NII is expected to be higher, this growth is expected to be partially offset by lower non-interest income. Our focus is on growing markets revenue, which we expect to increase in 2026.

Operator: Net interest income excluding markets was $46.7 billion in 2025, and we currently expect NII excluding markets to be approximately $48 billion in 2026. Key assumptions used for our expectations include two to three rate cuts by the Federal Reserve in 2026, with 10-year Treasury rates remaining relatively stable throughout the year, which would be a modest headwind to NII. However, this expected headwind should be more than offset by loan and deposit growth, as well as continued fixed asset repricing. Average loans are expected to grow mid-single digits from Q4 2025 to Q4 2026, driven by growth in commercial, auto, and credit card loans. All else equal, our provision expense would increase in 2026 as we set aside reserves to support this expected loan growth.

Net interest income excluding markets was $46.7 billion in 2025, and we currently expect NII excluding markets to be approximately $48 billion in 2026. Key assumptions used for our expectations include two to three rate cuts by the Federal Reserve in 2026, with 10-year Treasury rates remaining relatively stable throughout the year, which would be a modest headwind to NII. However, this expected headwind should be more than offset by loan and deposit growth, as well as continued fixed asset repricing. Average loans are expected to grow mid-single digits from Q4 2025 to Q4 2026, driven by growth in commercial, auto, and credit card loans. All else equal, our provision expense would increase in 2026 as we set aside reserves to support this expected loan growth.

Operator: Average deposits are also expected to grow mid-single digits over this period, with growth in all of our operating segments, with stronger growth in interest-bearing versus non-interest-bearing deposits. We currently expect net interest income excluding markets to decline in Q1 due to the impact of two fewer days. Ultimately, the amount of net interest income we earn in 2026 will depend on a variety of factors, many of which are uncertain, including the absolute level of interest rates, the shape of the yield curve, deposit balances, mix and pricing, loan demand, and the ultimate mix of activity and volatility in markets. Turning to our 2026 expense expectations on slide 18, we continue to focus on efficiency as we simplify the company for our customers and employees while at the same time investing for the future.

Average deposits are also expected to grow mid-single digits over this period, with growth in all of our operating segments, with stronger growth in interest-bearing versus non-interest-bearing deposits. We currently expect net interest income excluding markets to decline in Q1 due to the impact of two fewer days. Ultimately, the amount of net interest income we earn in 2026 will depend on a variety of factors, many of which are uncertain, including the absolute level of interest rates, the shape of the yield curve, deposit balances, mix and pricing, loan demand, and the ultimate mix of activity and volatility in markets. Turning to our 2026 expense expectations on slide 18, we continue to focus on efficiency as we simplify the company for our customers and employees while at the same time investing for the future.

Operator: Following the waterfall on the slide from left to right, our non-interest expense in 2025 was $54.8 billion. Looking at the next bar, our assumptions do not include significant additional severance for 2026, which would result in an approximately $700 million decline in severance expense. We expect revenue-related expenses in 2026 to increase by approximately $800 million in our Wealth and Investment Management business. As a reminder, this is a good thing, as these expenses are more than offset by higher non-interest income. Actual revenue-related expenses will be a function of market levels, with the biggest driver being the equity markets. Our outlook assumes the S&P 500 will be up modestly from current levels, but clearly, the ultimate performance of the market is uncertain.

Following the waterfall on the slide from left to right, our non-interest expense in 2025 was $54.8 billion. Looking at the next bar, our assumptions do not include significant additional severance for 2026, which would result in an approximately $700 million decline in severance expense. We expect revenue-related expenses in 2026 to increase by approximately $800 million in our Wealth and Investment Management business. As a reminder, this is a good thing, as these expenses are more than offset by higher non-interest income. Actual revenue-related expenses will be a function of market levels, with the biggest driver being the equity markets. Our outlook assumes the S&P 500 will be up modestly from current levels, but clearly, the ultimate performance of the market is uncertain.

Operator: We expect our FDIC assessment expense to increase by approximately $400 million in 2026, driven by expected deposit growth and the absence of the approximately $200 million special assessment credit that reduced FDIC expense in the Q4. We expect all other expenses to increase approximately $300 million in 2026, with the impact of efficiency initiatives more than offset by higher investments and other expenses. We expect approximately $2.4 billion of gross expense reductions in 2026 due to efficiency initiatives. We've successfully delivered approximately $15 billion of gross expense saved since we started focusing on efficiency initiatives five years ago, and we continue to believe we have opportunities to get more efficient across the company. There are three primary expense drivers that we expect will more than offset the gross expense saved in 2026. First, we expect approximately $1.1 billion of incremental technology expense, including investments in infrastructure and business capabilities.

We expect our FDIC assessment expense to increase by approximately $400 million in 2026, driven by expected deposit growth and the absence of the approximately $200 million special assessment credit that reduced FDIC expense in the Q4. We expect all other expenses to increase approximately $300 million in 2026, with the impact of efficiency initiatives more than offset by higher investments and other expenses. We expect approximately $2.4 billion of gross expense reductions in 2026 due to efficiency initiatives. We've successfully delivered approximately $15 billion of gross expense saved since we started focusing on efficiency initiatives five years ago, and we continue to believe we have opportunities to get more efficient across the company. There are three primary expense drivers that we expect will more than offset the gross expense saved in 2026. First, we expect approximately $1.1 billion of incremental technology expense, including investments in infrastructure and business capabilities.

Operator: Second, we expect approximately $800 million of incremental other investments, including in the specific areas highlighted on the next slide. Finally, we expect other expenses to increase by approximately $800 million, including expected merit, and benefit increases, as well as performance-based discretionary compensation. Additionally, other expenses reflect approximately $400 million of lower expense following the sale of our railcar leasing business in the Q1 of 2026. However, this benefit will be offset by a reduction in non-interest income. Putting this all together, we currently expect non-interest expense to be approximately $55.7 billion in 2026. As a reminder, the Q1 personnel expenses are seasonally higher and are expected to be approximately $700 million. On slide 19, we provide our key areas of focus for our 2026 investments across the company. In summary, our results in 2025 reflected continued momentum in improving our financial performance.

Second, we expect approximately $800 million of incremental other investments, including in the specific areas highlighted on the next slide. Finally, we expect other expenses to increase by approximately $800 million, including expected merit, and benefit increases, as well as performance-based discretionary compensation. Additionally, other expenses reflect approximately $400 million of lower expense following the sale of our railcar leasing business in the Q1 of 2026. However, this benefit will be offset by a reduction in non-interest income. Putting this all together, we currently expect non-interest expense to be approximately $55.7 billion in 2026. As a reminder, the Q1 personnel expenses are seasonally higher and are expected to be approximately $700 million. On slide 19, we provide our key areas of focus for our 2026 investments across the company. In summary, our results in 2025 reflected continued momentum in improving our financial performance.

Operator: We generated strong fee-based revenue growth, maintained strong expense and credit discipline, grew our balance sheet, returned significant amounts of capital to shareholders, retained our strong capital position, and increased our return on tangible common equity. I'm excited about the opportunities ahead as we build on our momentum and further improve our results. We will now take your questions. At this time, we will now begin the question and answer session. If you would like to ask a question, please first unmute your phone and then press Star One. Please record your name at the prompt. If you would like to withdraw your question, you may press Star Two to remove yourself from the question queue. Once again, please press Star One and record your name if you would like to ask a question at this time. One moment for our first question.

Operator: The first question will come from Scott Seifers of Piper Sandler. Your line is open. Good morning, everyone. Thank you for taking the question. Mike, I was hoping you could just expand a little on your thoughts on NII, particularly ex-markets. It looks like 2026 should be basically flat with the Q4 annualized level, despite the outlook for pretty good loan growth. It sounds like, from what you said, that's mostly going to be a function of the rate outlook, but would just love to hear your expanded thoughts on sort of the puts and takes. Yeah, sure, Scott. Thanks for the question. You do need to adjust for day count. I mean, it's a little bit up from when you annualized the Q4. But as you said, you really got three things going on. You got rates coming down, which will be a headwind for NII ex-markets.

Operator: And then I guess, to the extent that you can, given how new this issue is, I was hoping you could at least please maybe address sort of this increased volume around credit card rate caps, how you're thinking about this newer issue. It doesn't sound like it's affected your appetite for growth here at all, but would just love to hear how you're sort of framing that internally. Well, I think, listen, I think, first of all, I think we all agree that just the underlying issue of focusing on affordability, which people have been experiencing for some time, which we've pointed out multiple times when we look at those who have less savings with us than others, is a real issue. And so what the right response to that is, is something that we do think should be carefully considered.

Operator: One of the debates is on how much you're going to continue to be able to or desire to grow the lower NIM, lower spread type of assets and RWA growth vis-à-vis your buyback opportunities and your use of CET1 capital. Can you just kind of help us understand how you're thinking through those trade-offs and what's the balancing act between the types of balance sheet growth that you're aspiring to as you think through the overall balance sheet mix? Yeah. Sure. And I'll take a shot at that because there's a few pieces that I'll try to disaggregate for you. When you look at what's happening in the markets business and adding some of the lower ROA financing repo trades, I think those don't attract a lot of capital or RWA because of the collateral that sits behind them, right?

Operator: And so I think as we look at the opportunity there, we want to be able to support clients across the broad spectrum of businesses we have. We're going to continue to focus on the consumer side in the card space and in the auto space where we think we within our risk appetite there. And then I think on the commercial side, we'll continue to be very thoughtful about what we go after. But just to point out something we've said a lot is our risk appetite really hasn't changed. And we're not looking to change that in a significant way. But now that the Asset Cap's gone, we've got more opportunity to continue to do more with clients. And that should create this good virtuous circle where they do more fee-based business with us as well. Let me just add a couple of things, if I can.

Operator: I mean, look, we gave a range kind of 10, 10.5, and so that would mean we're comfortable operating in the range, right? So. Okay. Thanks a lot, guys. The next question will come from Ibrahim Punawalla of Bank of America. Your line is open. Good morning. I just want to follow up. I so completely appreciate what you're saying in terms of focus on profitability while you're growing the businesses. We heard JPMorgan talk about investing in businesses and investing capital where their returns are probably sub 17%. I think maybe, Mike, Charlie, to the extent I think that's one concern that you hear persistently over the last few months is how do you grow the business while improving the ROTCE, capital leverage aside? Maybe if you don't mind double-clicking on some of the expense and the efficiency initiatives you laid out on slide 18.

Operator: I think you mentioned that even beyond 2026, you see that just trying to get a better sense of the outsized efficiency opportunity that Wells has to achieve that ROTCE while delivering superior growth. Thank you. Yeah. Let me just start out, Mike, and then I'll hand it over to you for some real facts. Just what we have been doing I mean, what we're talking about doing is a continuation of what we have been doing, right, which is we believe that we continue to have opportunities going forward. And if you look at what we've been able to do, we've cut $15 billion of expenses out of the company. As we've said, a couple of years ago, we had increased our regulatory expenses by $2 to 2.5 billion on an annual basis. And our expenses have come down.

Operator: And so if you look at what that difference in all that is, that is a significant amount of money that we've been able to use to reinvest, to position ourselves for growth. And that's very much of the way that we continue to think about what we want to accomplish here, which is we think we have more tools on a going-forward basis to get more efficient than we've ever had, especially with AI. And we're going to continue to figure out what we think the right trade-off is to reinvest those savings into driving growth inside the company as we've done in the past. But as we think about what we've done to be able to increase the returns of the company, it is, what we've done is we've reduced the expense base of the company while we've grown revenues.

And so if you look at what that difference in all that is, that is a significant amount of money that we've been able to use to reinvest, to position ourselves for growth. And that's very much of the way that we continue to think about what we want to accomplish here, which is we think we have more tools on a going-forward basis to get more efficient than we've ever had, especially with AI. And we're going to continue to figure out what we think the right trade-off is to reinvest those savings into driving growth inside the company as we've done in the past. But as we think about what we've done to be able to increase the returns of the company, it is, what we've done is we've reduced the expense base of the company while we've grown revenues.

Operator: And so there's not a lot of rocket scientists to what we're trying to accomplish here. It's more the same. And we feel like we're in a great position to both use the benefits that we get by driving increased efficiency to contain any expense growth at this point and to see the benefits of those investments come through to increase revenue growth. And Ibrahim, maybe I'll just point out some things we saw in 2025 that sort of go at what Charlie said. The credit card business, new accounts up 20% year on year. Auto lending balances up 19%. Loans in the commercial side up 12%. Growth in investment banking, 12% investment banking fee growth. WIM fees up significantly. And then if you look at it over a slightly longer time period, you also see trading up substantially. Trading up, banking up. Yeah.

Operator: And so a lot of what Charlie talked about is coming through in the results while we're getting more efficient. I think, as we've said a number of times, but also in sort of the prepared remarks, is that we're just getting started in terms of really realizing the opportunity we have across each of the businesses. That is helpful. I guess maybe just a separate question on capital. M&A comes up a lot in the context of Wells Fargo, rightly or wrongly now. I appreciate you're going to be disciplined, and you should be looking for sort of strategic opportunities. But just remind us when we think about M&A, either wealth management or bank M&A, just how you're thinking about it, what do you think makes strategic sense where it would not be a distraction from what you're trying to achieve organically? Thank you. Yeah.

Operator: I mean, I'll start with probably the most important thing, which is we feel no pressure to do any M&A whatsoever in any of our businesses because we feel so good about the quality and the completeness of our franchise and the opportunities that we have. And not everyone's in that position, and we feel blessed to be in that position. But as you point out, it's wrong not to say we would never think about something. We, of course, would think about anything that made sense. But I would just say the bar would be high for us, both in terms of what we would expect financially, and it should be something that would have some kind of material make us materially more attractive for investors. So we're not just looking to buy things for the sake of buying things. In fact, it's just the opposite.

Charlie Scharf: I mean, I'll start with probably the most important thing, which is we feel no pressure to do any M&A whatsoever in any of our businesses because we feel so good about the quality and the completeness of our franchise and the opportunities that we have. And not everyone's in that position, and we feel blessed to be in that position. But as you point out, it's wrong not to say we would never think about something. We, of course, would think about anything that made sense. But I would just say the bar would be high for us, both in terms of what we would expect financially, and it should be something that would have some kind of material make us materially more attractive for investors. So we're not just looking to buy things for the sake of buying things. In fact, it's just the opposite.

Operator: So we would encourage everyone to look at that disclosure and as you project forward to think about that number as opposed to just the pieces because the mix will change depending on the rate environment. Yeah. Maybe just pulling back then, just thinking about total revenues, you've got the NII growing maybe about 5% this year. Are you thinking about total revenue growth also in kind of that mid-single-digit kind of growth category? And you've got 1% to 2% expense growth and a couple hundred basis points of operating leverage this year? That's not a number we guide to, John. Obviously, in the markets business, it's going to be a function of what we see throughout the year in terms of the opportunity that's there, the volatility, and all the right caveats that go there.

Operator: But we would expect the overall to be up, and we'll see by exactly how much. Yeah. And just listen, we're not trying to be coy and not give you something that we think we should be giving you. But it's just the reality is a significant number of the items that are embedded in non-interest income are highly dependent on the world and on the markets, which, as we know, can be very, very volatile, whether it is the trading numbers or the revenue items related to our WIM business. And so we're long-term believers that the underlying business grows, that we can take share. And so we would expect to see growth in those numbers. We just want to be really careful about providing any kind of guidance in any way, shape, or form that boxes any of us in relative to our inability to predict that.

Operator: Okay. Great. Fair enough. And Mike, one quick follow-up on the commercial non-performers. It did move up. You mentioned it in the opening comments. Any more color on just what drove that? It's off a low base, but lost content or any thoughts about the drivers there? Yeah. A couple of thoughts. I mean, if you look at it over a long time period, the number can be quite volatile, period to period. So I wouldn't read too much into that. There's really nothing systemic that we're seeing come through. And when you really look back at non-performing assets, they're actually not a very good predictor of loss. And the vast majority of them are performing both on principal and interest. And so it's some individual names that sort of move it around quarter to quarter, but nothing systemic as you sort of look at it that we can see.

Operator: Thanks. The next question will come from Betsy Graseck of Morgan Stanley. Your line is open. Hi. Good morning. A couple of questions, follow-ups here. One is just on the markets commentary that we were discussing earlier around it's a lower ROA business. Can you talk to us about how you're thinking about the impact on ROTCE? And is there a limit to which you would go? Because if it's diluted to ROA, it's diluted to ROTCE too, I realize that regulatory capital is low, but GAAP capital is still there. So help us understand how you're navigating that. How large are you okay with it becoming? Thanks. Yeah. Betsy, I don't anticipate it's going to have any kind of negative impact on where we think returns go. The returns, given the nature of it, the returns are fine.

Operator: It's not going to be diluted relative to the overall returns of either the segment or the overall company. And as Charlie mentioned, the financing opportunity that you get through doing this, kind of the additional opportunity you get by providing financing capacity to clients, should start to build more meaningfully over time as well. That sort of builds up kind of the fuller set of revenues for each of those clients. And Betsy, if I can just add a couple of things. Just number one is we are not going to grow our trading business in any kind of outsized way, which would have a negative impact on our ability to produce the kind of returns that we want, and you would expect. So there's nothing outsized in our minds about where that goes. I think we're starting from a low base.

Operator: What we're focused on is getting stronger in geographies where we have more opportunity, where there are more opportunities to grow, and grow with the clients and the rest of our business. So, there it is more of a market share game than any kind of change in where we're looking in terms of what the credit opportunity is. On the CIB side, we have done more to support our corporate client base, but again, very, very focused on not taking risks that go beyond the way we've thought about risk appetite as a company. So very, very consistent there. When we look at our consumer businesses, I put it in two: there are different phases. There's the way we operated historically, where we were very, very good at credit in different businesses.

Operator: In places like the auto business, in order to get the right returns, being a full-spectrum lender is helpful, but we're not going to do it in a way that creates a tail of risk in our lending book, which is not consistent with how we think about our risk appetite. Okay. Thank you. The next question will come from Erica Najarian of UBS. Your line is open. Hi. Just one follow-up question. You mentioned $800 million in higher revenue-related expenses for the year, and considering the S&P up a little, I'm just wondering in the spirit of what Charlie mentioned, not putting you in a box, is the expense number of $55.7 billion contemplating a pretty robust capital markets environment that the investors are expecting? Erica, the $800 million is exclusively in our wealth management business.

Operator: And that is based primarily on sort of where the overall equity market will land. And we do expect it to be up modestly from where it is today. I think more broadly, we do include in that, in the bottom of our expense expectation slide, in the other category, there is performance-based compensation included there. And that would include anything we expect for the market. And we do expect to have a pretty active market this year. Perfect. Thanks. The next question will come from Steven Chubak of Wolfe Research. Your line is open. Hi. Good morning. And thanks for taking my questions. So wanted to ask on the assumptions underpinning the 2026 NII guidance, specifically around loan and deposit growth. You guys saw a really nice acceleration in some of the balance sheet KPIs to close out the year. Lending and deposit growth both grew mid-single digits sequentially.

Operator: That's essentially the level of growth that you guys are contemplating for the full year for 2026. So it does imply a pretty meaningful deceleration. I recognize mid-single digit growth is nothing to scoff at. But just what informs the slowdown? Is that a function of conservatism, other sources of lending strength in the fourth quarter, or something else? Yeah. Steve, I think you got to be careful to extrapolate from one quarter. You can see quite some seasonality that's in there. So in our commercial bank, as an example, there's some trade finance-type loans that are seasonally. They're at the year-end, so that'll roll down a bit in the first quarter. So there are some elements that sort of offset it. It can be pretty volatile quarter to quarter in terms of the growth you see there.

Operator: But what I would say is what we're not, and I try to get this across in the remarks, what we're not assuming is some big broad-based increase in utilization across the commercial bank. So there could be more loan growth if we start to see utilization rates tick up. There's lots of factors that could drive it higher from what we have there. But I think as we sit here today, we think this is an appropriate place to be based on all of what we're seeing. Okay. Great. And then for my follow-up, Charlie, I did want to ask on the 17% to 18% ROTCE target. So it's pretty clear based on our investor conversations that no one's really questioning the potential for the franchise to get to the 17% to 18%. You even noted that's not the extent of your longer-term ambitions.

Operator: And so as you see the underlying growth metrics that we pointed out in our remarks, that you'll be able to tie that to the underlying revenue captions and look through the impact of volatility. And so as we grow accounts, as we grow balances, as we grow market share, you see it coming through revenue. You see control of expenses. It'll be. Life isn't a straight line in these businesses, which is why we want to stay away from putting any specific timeframe on it. But we've also been trying to be helpful in saying it's not, you know, what's midterm, meaning it's not tomorrow, but it's also not over an extended period of time. And we know that we should be able to show you that we're making progress to get there, and you should feel like it's possible.

And so as you see the underlying growth metrics that we pointed out in our remarks, that you'll be able to tie that to the underlying revenue captions and look through the impact of volatility. And so as we grow accounts, as we grow balances, as we grow market share, you see it coming through revenue. You see control of expenses. It'll be. Life isn't a straight line in these businesses, which is why we want to stay away from putting any specific timeframe on it. But we've also been trying to be helpful in saying it's not, you know, what's midterm, meaning it's not tomorrow, but it's also not over an extended period of time. And we know that we should be able to show you that we're making progress to get there, and you should feel like it's possible.

Operator: And we've shown up till this point that we've been able to do that. And hopefully, you'll see that in the underlying results. And you'll have the confidence that we'll have the confidence that it continues. But you'll either see it in the results or you won't. All right. Well, Charlie, your peers do provide a timeline. So I don't think it's an unreasonable expectation for us to ask for that. If I understand your perspective, there is a lot of uncertainty. If I could just squeeze in one more, just you listed various sources of efficiency initiatives in the slides. You're making good progress there. You didn't explicitly mention how much of that reduction in the excess regulatory cost of two to two and a half is contributing to some of those efficiency gains.

Operator: So just wanted to understand how much relief should come from that this year, if that should also drive incremental efficiency gains beyond 2026, which informs that improvement in returns you just alluded to. It's like, yeah, we continue to work to streamline and bring better technology to some of what we've implemented over the last number of years. So I'd say there's a little bit of impact from that in the efficiency work this year. But that'll likely continue to come over a slightly longer period of time. And I would just kind of also reinforce just on the efficiency stuff. It's like there's no new silver bullet here. It's continuing to peel back the onion and eat each of the areas, drive better automation, reduce real estate costs, and reduce third-party spend.

Operator: So there's hundreds of things that happen across the company in any given quarter to sort of help drive that. But we would expect to be able to continue to optimize some of that over a slightly longer time period. But there is a little bit of impact this year. That's great. Thanks so much for the call. I really appreciate it. Yep. Thanks, Steve. The next question will come from John Pancari of Evercore ISI. Your line is open, sir. Thanks. Yeah. Mike, just on the margin dynamics for the fourth quarter, I know your loan yields declined by about 19 basis points linked quarter. Can you maybe give us a little more color of the driver? How much of that was, I know you cited the trade finance dynamic, maybe securities lending, and the markets business. Curious what really were the bigger drivers behind that.

Operator: And maybe if you can kind of dovetail that into how you think about the underlying margin trajectory as you look at 2026 given these dynamics. Thanks. Yeah. No, on the loan side, the biggest driver is rates coming down, right? So you got a big, you got a big variable rate portfolio there on the commercial side. So that's going to be the biggest driver. In some of the areas, it's very competitive. And so you see a little bit of spread compression across some of the commercial book as well. But the biggest driver in the sequential quarters is going to be rates. And then when you just look over the, over as you come into next year, as we said, you'll be growing a little bit of some of the lower ROA exposures. So that'll have an impact on overall margin.

Operator: And then you'll also have rates coming down again this year if the forward rates materialize. And then that'll be offset by new activity that we put onto the books and some of the fixed asset repricing, particularly in the securities portfolio. Got it. Okay. Then one follow-up just related to that on the deposit side. Maybe if you could help us update us on your deposit gathering strategy overall. I know you cited mid-single digit deposit growth for 2026. Maybe can you talk about the mix shift that you would expect between interest-bearing and non-interest-bearing? And what businesses do you see driving the bulk of growth? It looks like you saw a pretty good leg up in your deposit volume through the wealth management business, for example, this quarter.

Operator: So I just want to see if we can get some color there in terms of the businesses that are driving the growth. Yeah. No, it's going to be a bit of each of them. And I'll kind of go through each. But on the wealth management side, it's continuing to focus the lending and banking products, bringing focus to those across the advisor base that we've got. And we're seeing good uptake there. And so that'll continue to grow. Won't be a straight line, but we do expect to see some growth in the wealth business. Now that we can compete more effectively with the asset cap gone on the commercial side, you're seeing good loan growth there. And on the commercial side, those are going to be mostly interest-bearing, even though there'll be some non-interest-bearing component of it with it.

Operator: And so that's why in my remarks I said you'll see a little bit more interest-bearing than non-interest-bearing because you'll see more growth on the commercial side. And then on the consumer side, it's just continuing to see better execution across both our digital marketing and branch channels to drive more checking account growth and deposit growth there. So it's really going to be a function of executing across each of the businesses there. Got it. All right. Thanks, Mike. Yep. The next question will come from Matt O'Connor of Deutsche Bank. Your line is open. Hi. Thanks for squeezing me in. I was wondering if you could just talk about the environment for commercial real estate, broadly speaking. I mean, you mentioned on credit, obviously past the worst, have a lot of reserves, could have some lumpy losses.

Operator: But the industry and you grew loans for the first time in a really long time this quarter. And there's just been a lot of anecdotal kind of articles out there in the media talking about parts of CRE kind of coming back. So just wondering how meaningful a recovery you guys think this could be and how well-levered you are to that. Sure. I'll take a shot. And if you look at the commercial real estate book, excluding office for a second, just put that aside and I'll come back to it. There's been good demand there for a while across a lot of different sectors, whether it's multifamily, industrial, data centers, on and on. And so the fundamentals there haven't shifted that much as we go into this year. So we do expect to see some continued demand come through in some of those subsectors.

Operator: I think when you look at office, I think there's where you've definitely seen stabilization in valuations. But you do have a bifurcation there between really good office space, kind of newer class A or better space in vibrant cities that are doing really well, and demand is up substantially. And you can see that just even through some of the CMBS market executions that have happened over the last number of months. And then I think on the older inventory and older stock, I think things have stabilized there. And we continue to work through that portfolio. But I think overall, if you look at everything other than kind of the older office stock, there seems to be good demand and activity levels. Okay. Thank you. That's it for me. The next question will come from Saul Martinez of HSBC. Your line is open. Hi.

Operator: Thanks for squeezing me in. I just have one as well. Totally get the reluctance to give specific revenue guidance. And as you indicated, a number of the fee line items are tied to market conditions and can vary. But I'm curious if you can just give us some color on what your expectations directionally are for some of the major fee lines, deposit fees, investment advisory, card fees, and trading IP. And part of the reason I ask is that if you do look at some of these lines, deposits, advisory, and cards, they're tracking at mid- to high-single-digit growth. Banking, there's reasons obviously for optimism there. And you mentioned trading, you expect to grow even with some of the headwinds from the offsets to trading-related NII. So it does feel like there is reason to be optimistic here.

Saul Martinez: Thanks for squeezing me in. I just have one as well. Totally get the reluctance to give specific revenue guidance. And as you indicated, a number of the fee line items are tied to market conditions and can vary. But I'm curious if you can just give us some color on what your expectations directionally are for some of the major fee lines, deposit fees, investment advisory, card fees, and trading IP. And part of the reason I ask is that if you do look at some of these lines, deposits, advisory, and cards, they're tracking at mid- to high-single-digit growth. Banking, there's reasons obviously for optimism there. And you mentioned trading, you expect to grow even with some of the headwinds from the offsets to trading-related NII. So it does feel like there is reason to be optimistic here.

Operator: And then I think investment banking fees, it appears like I think everybody thinks that we're going to have a pretty active deal market both on the M&A side, but also sort of the maybe even more active equity capital markets outlook as well. And then the debt market, I think, has been holding up quite well over the last couple of years. And so assuming that's the case, and given our investments, we should be able to continue to grind out share gains as we go over time. And then the last one I'll sort of maybe highlight is just trading. Again, we talked about it earlier. But you will have an impact if rates come down; you'll have higher NII in the markets business, lower fees. But we should continue to be able to grow overall revenues in the markets business.

And then I think investment banking fees, it appears like I think everybody thinks that we're going to have a pretty active deal market both on the M&A side, but also sort of the maybe even more active equity capital markets outlook as well. And then the debt market, I think, has been holding up quite well over the last couple of years. And so assuming that's the case, and given our investments, we should be able to continue to grind out share gains as we go over time. And then the last one I'll sort of maybe highlight is just trading. Again, we talked about it earlier. But you will have an impact if rates come down; you'll have higher NII in the markets business, lower fees. But we should continue to be able to grow overall revenues in the markets business.

Operator: So I think as long as the kind of macro picture sort of holds, then it should be quite constructive for a lot of the fee lines as we look at them. Got it. Thanks a lot. The next question will come from Chris McGratty of KBW. Your line is open. Oh, great. Thanks for putting me in. Mike, on the consumer deposit growth, just to follow back on the prior question, it was about 1% year on year. I'm interested now that rates have come down and excess liquidity has kind of been pulled. Is this a GDP or GDP plus opportunity for deposit growth over the medium term? Yeah. I mean, look, I think for us, it's now that we're able to kind of more aggressively, in a much more front-footed way, deploy marketing and get our branch system to be more productive.

Operator: Hopefully, over time, we'll be able to see outsized growth there. But I do expect that will not be kind of a linear path up. But I do expect us to see some growth in the consumer deposit base. And I think you'll start to see that relationship between deposits and GDP start to move in sync again, hopefully, over time. It's been a little bit broken there. Just to be clear, remember, we believe based upon what the franchise is and the benefits that we bring, that we should be able to grow faster than the market over time. And we're working hard to reinvigorate the business, which was really hard hit by all the issues that we've gone through, not just the actual cap itself, but how it limited the things that we could do internally.

Operator: And so that's something that you build up over a period of time. But we think the opportunity is to be able to, over time, grow faster than the market and to take share in a profitable way. Great. Thank you for that. And then, just coming back to the, I think you said, 185 coverage bankers over the past two years. Is the pace of the opportunities for hiring in 2026 greater or less? Is it slowing? Any coverage kind of company question there. It's about the same for a year. Which, again, I would just say, as we think about it, these efforts that we have underway, these are multi-year plans where we've looked at whether it's geographies, industry coverage within our CIB, is what you want to accomplish in a year. You want to see the payoff, and then we'll keep going.

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Q4 2025 Wells Fargo & Co Earnings Call

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