Wells Fargo & Company
Wells Fargo & Company, a financial services company, provides diversified banking, investment, mortgage, and consumer and commercial finance products and services in the United States and internationally. It operates through four segments: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management. The company's financial products and services includes checking and savings accounts, and credit and debit cards, as well as home, auto, personal, and small business lending services. It also provides personalized wealth management, brokerage, financial planning, lending, private banking, trust and fiduciary products and services; and financial solutions to private, family owned and public companies through products and services including banking and credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management. In addition, it offers a suite of capital markets, banking, and financial products and services, such as corporate banking, investment banking, treasury management, commercial real estate lending and servicing, equity, and fixed income solutions, as well as sales, trading, and research capabilities services to corporate, commercial real estate, government, and institutional clients. Wells Fargo & Company was founded in 1852 and is headquartered in San Francisco, California.
What does it do?
Wells Fargo is one of America's four biggest banks, serving around 70 million customers across the US. It does the everyday banking stuff you'd recognize — checking accounts, mortgages, car loans, and credit cards. But it also works with big businesses, helping them manage cash, get loans, and invest. Think of it as a financial superstore: whether you're buying your first home or a corporation needs to raise billions, Wells Fargo has a product for you.
Wells Fargo is coming out of a years-long punishment period — the Federal Reserve has had a cap on how big the bank can grow since 2018, a consequence of a massive fake accounts scandal. Investors are watching closely because if that cap gets lifted, Wells Fargo could suddenly unleash a wave of growth that rivals JPMorgan and Bank of America. The timing matters because rising interest rates in recent years have already made banks more profitable, and Wells Fargo is seen as having the most untapped upside of the big four.
How does it make money?
Wells Fargo makes most of its money from net interest income — the difference between what it charges borrowers on loans and what it pays savers on deposits. With $83.7 billion in revenue and $20.3 billion in net profit, it keeps roughly 24 cents of every dollar it earns, which is a solid margin for a bank. It also earns fees from things like wealth management (helping rich clients invest), investment banking (advising companies on big deals), and credit card charges. Revenue grew from $82.3 billion to $83.7 billion year-over-year, a modest but steady climb.
Why do investors care?
The big story is the potential removal of the Federal Reserve's asset cap — a hard limit on how much Wells Fargo is allowed to grow its balance sheet. Once that's gone, the bank could expand lending and take on more business it currently has to turn away. CEO Charlie Scharf, who joined in 2019, has been cutting costs aggressively and rebuilding the bank's reputation with regulators. If he pulls it off, investors believe the stock is still priced cheaply relative to what it could earn as a fully unleashed major bank.
Deep Dive
MemberA full investor briefing on Wells Fargo & Company — history, leadership, risks, and outlook.