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Wells Fargo shares fell despite loan losses that beat forecasts
Wells Fargo earned $5.95 billion in the third quarter with net charge-offs of $983 million, below analyst estimates. Credit is the stronger half of the quarter: the earnings beat was 2 to 3 cents a share and net interest income missed consensus.
The Investor · Invest desk
Key figures: Wells Fargo shares traded at $82.05 in early trading Tuesday after a 1.5% drop. The bank's average repurchase price was about $87 a share. It repurchased $2.5 billion of common stock, 28.6 million shares, during the quarter.
| Figure | Value | Note | Claim |
|---|---|---|---|
| Share price, early trading Tuesday, after a 1.5% drop | $82.05 a share | 13 | |
| Average repurchase price | $87 a share, about | 23 | |
| Common stock repurchased during the quarter | $2.5 billion | 28.6 million shares | 12 |
What happened
- The total provision for credit losses was $1.03 billion, also better than the average estimate in Bloomberg's survey.
- Net interest income of $12.5 billion fell $0.1 billion short of the $12.6 billion consensus, Bloomberg reported.
- Nonperforming assets fell $585 million from the second quarter on lower commercial real estate nonaccrual loans, and their share of total loans slipped to 0.70% from 0.77%.
- Shares dropped 1.5% to $82.05 in early trading Tuesday, after an 11% decline this year through Monday that ranked fourth-worst in the 24-company KBW Bank Index.
Why it matters
- decision Management chose a $2.5 billion repurchase, at an average near $87 a share and about 53 times the quarter's reserve addition, over a larger reserve; that average sits about 6.5% above early Tuesday's price.
- exposure The 660,000 new credit card accounts and the 15% rise in auto originations are balances this quarter's charge-off figures have barely tested.
- constraint Return on tangible common equity of 16.3% is 0.7 to 1.7 points short of the 17% to 18% target, and with the margin flat the gap depends on revenue growth like the 12% in Wealth and Investment Management.
Credit is the part of this quarter the numbers support. Chief Executive Charlie Scharf said in the bank's statement: "While economic uncertainty exists and consumer sentiment remains mixed, our data shows that our consumer and business customers are doing well." [14] The figures fit. Quarterly charge-offs of $983 million [3] against $1.03 trillion of average loans [9] annualize to about 0.38%, our calculation and not a reported ratio [25], and the consumer charge-off rate fell to 0.70% [17]. Every one of those numbers comes from the bank, and the bank is one lender. Neither report gave the analyst estimates for provisions or charge-offs, so the size of the credit beat cannot be measured [4].
The reserve line is thinner. The provision of $1.03 billion [2] exceeded charge-offs by $47 million [20], so the allowance grew by roughly that sum while average loans were 11% higher than a year earlier [9]. That is a bet that losses stay where they are. We think the bet holds for another quarter, and we would be wrong if the consumer charge-off rate climbs back above 0.70% or charge-offs overtake the provision. The counter-thesis is that low loss ratios on a book growing 11% partly reflect new loans that have not had time to default. Scharf himself set AI infrastructure investment, high employment and consistent wage growth against higher interest rates, elevated oil prices and persistent inflation [15].
The earnings beat is small. EPS of $1.87 [1] topped the $1.85 average estimate the AP cited [5] and the $1.84 adjusted estimate in Bloomberg's survey [6], a margin of 2 to 3 cents [21]. Net interest income grew less than half as fast as average loans, 4.7% against 11% [22], and the net interest margin of 2.43% was unchanged from the prior quarter after several periods of erosion [8].
What to watch
- Whether the consumer charge-off rate moves back above 0.70% in the fourth quarter, or charge-offs overtake the provision.
- Whether net interest margin holds at 2.43% and net interest income closes the gap to the $12.6 billion consensus level.
- Charge-off and provision figures from other large US banks, which would show whether this is one lender's book or a wider pattern.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence82
- Adoption
- Insufficient
- Hype gap−10
- Incentives
- Insufficient
- Confidence80
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Wells Fargo reported third-quarter net income of $5.95 billion, or $1.87 per diluted share.
- [2]
Wells Fargo's total provision for credit losses for the third quarter was $1.03 billion.
- [3]
Wells Fargo's net charge-offs, the portion of loans written off as unrecoverable, were $983 million in the third quarter.
- [4]
Both the provision for credit losses and net charge-offs were better than the average estimates of analysts in a Bloomberg survey.
- [5]
Earnings per share of $1.87 topped the average analyst estimate of $1.85 per share.
ReportedSupportedSource: Associated Press, as cited by Quartz2 sources— create a free account to open themView cited source - [6]
Analysts expected adjusted earnings per share of $1.84.
- [7]
Net interest income increased 4.7% to $12.5 billion, shy of the $12.6 billion consensus.
- [8]
Net interest margin of 2.43% was unchanged from the previous quarter, snapping a streak of several periods of erosion.
- [9]
Average loans and average deposits each grew 11% year over year, to $1.03 trillion and $1.48 trillion respectively.
- [10]
Wells Fargo's return on tangible common equity climbed to 16.3% for the quarter, compared with 15.2% a year earlier.
- [11]
Executives have said they are confident the bank can achieve a medium-term return on tangible common equity target of 17% to 18%.
ReportedSupportedSource: Bloomberg, citing executives2 sources— create a free account to open themView cited source - [12]
Wells Fargo repurchased 28.6 million shares, or $2.5 billion, of common stock during the quarter.
- [13]
Shares of Wells Fargo dropped 1.5% to $82.05 in early trading on Tuesday, after declining 11% this year through Monday, the fourth-worst performance in the 24-company KBW Bank Index.
- [14]
Chief Executive Officer Charlie Scharf said in the statement: "While economic uncertainty exists and consumer sentiment remains mixed, our data shows that our consumer and business customers are doing well."
ReportedSupportedSource: Charlie Scharf, Wells Fargo CEO, in the bank's statement2 sources— create a free account to open themView cited source - [15]
Scharf pointed to AI infrastructure investment, high employment levels and consistent wage growth as forces offsetting risks from higher interest rates, elevated oil prices and persistent inflation.
ReportedSupportedSource: Charlie Scharf, as reported by Quartz2 sources— create a free account to open themView cited source - [16]
Nonperforming assets fell by $585 million from the second quarter, driven by lower commercial real estate nonaccrual loans, and nonperforming assets as a percentage of total loans declined to 0.70% from 0.77%.
- [17]
The consumer net loan charge-off rate decreased to 0.70% annualized.
- [18]
Scharf noted that the bank opened more than 660,000 new credit card accounts in the quarter and that auto originations rose 15% from a year ago.
- [19]
Wealth and Investment Management revenue grew 12% from a year ago, against 5% for Consumer Banking and Lending, 6% for Commercial Banking and 3% for Corporate and Investment Banking.
- [20]
The provision exceeded net charge-offs by about $47 million.
- [21]
The EPS beat was $0.02 against the $1.85 estimate and $0.03 against the $1.84 estimate.
- [22]
Net interest income grew about 0.43 times as fast as average loans.
- [23]
The average repurchase price was about $87 a share.
- [24]
The average repurchase price was about 6.5% above the $82.05 early-trading price.
- [25]
Annualized quarterly net charge-offs were about 0.38% of average loans (our calculation, not a reported ratio).
- [26]
The $2.5 billion repurchase was about 53 times the $47 million excess of provision over charge-offs.
- [27]
Return on tangible common equity of 16.3% is 0.7 to 1.7 percentage points below the 17% to 18% target.
Sources
2 independent publishers whose own reporting we read for this story.
- finance.yahoo.comWells Fargo Beats as Strong Customers Keep Lid on Loan Losses
1 article · October 13, 2026
- qz.comWells Fargo earned $5.95 billion in Q3 as loan losses stayed low
1 article · October 13, 2026
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