JPMorgan beat. Citigroup beat. Goldman beat. Wells Fargo didn't. The bank put up revenue of $21.4 billion on Tuesday. That was about $300 million short of what Wall Street wanted. Earnings per share came in at $1.60 - one penny above the $1.59 call. In a quarter where every other big bank crushed it, a one-cent win feels more like a loss. The stock dropped more than 2% on the news.
The main weak spot was net interest income. That's the money a bank makes from the gap between what it earns on loans and what it pays on deposits. Wells Fargo brought in $12.1 billion. Wall Street had looked for $12.3 billion.
Fee income also missed. The bank pulled in $9.35 billion from things like wealth help, credit cards, and advisory work. The call was $9.5 billion. Why this happened: Wells Fargo makes most of its money from plain old lending. It doesn't have the massive trading floors that power JPMorgan and Citigroup. When markets swing hard and deals boom, those trading-heavy banks cash in. Wells Fargo's setup doesn't work that way. In plain terms: Think of it like this. JPMorgan is a casino and a bank. Wells Fargo is mostly just a bank. In a quarter where the casino side of the business was on fire, the bank-only model fell behind.
It wasn't all bad. Revenue still grew 6% from a year ago. CEO Charlie Scharf said costs are under control. The bank is growing sales faster than it's growing costs. That's a healthy sign. Wells Fargo also shared a new data point that caught Wall Street's eye. The bank has $36.2 billion in loans to private credit firms. That's a fast-growing corner of finance that some people in Washington want to look at more closely. Why it matters: Private credit is one of the hottest areas in finance right now. If Wells Fargo can grow this business, it could help make up for the weak spots in lending. But if those loans go bad, it adds risk to the bank's books.
Here's the scorecard for big-bank earnings so far this week. JPMorgan beat earnings by 50 cents. Citigroup beat by 43 cents. Goldman beat too. Wells Fargo beat by one cent. When you line them up, the gap is clear. The banks that have large trading desks crushed it. The ones that lean on lending came up short. Wells Fargo was the only one of the group that left investors feeling flat.
Bank of America reports on Wednesday. It has both a big lending arm and a growing trading desk. If BofA beats, it could widen the gap between Wells Fargo and its peers. Watch the net interest income number closely - it will tell you whether the lending side of banking is in real trouble or just having a tough quarter.
Wells Fargo is still under a cap from the Fed that limits how much it can grow. That cap has been in place since 2018. Until it gets lifted, the bank can't fully compete with JPMorgan or Citi on size. If the cap comes off this year - which some analysts think could happen - the stock has a lot of room to run. If it stays in place, Wells Fargo will keep playing from behind.
