Wells Fargo: 3 Key Takeaways for Long-Term Investors
Key Points
Headcount declined 30% from its peak through six consecutive years of cuts.
Business banker additions drove new credit card openings, up 61% year-over-year.
Average loans and average deposits both increased 11% year-over-year in 2026.
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On its third quarter of 2026 earnings call, held on Oct. 13, 2026, Wells Fargo (NYSE:WFC) announced that diluted earnings per share increased 13% year-over-year to $1.87. Continuous operational efficiency enables the lender to reinvest cost savings into core growth areas while expanding profitability. Three key insights from management highlight how this execution supports long-term value.
1. Relentless Efficiency Drive Reduces Headcount for Six Straight Years
Management keeps trimming non-revenue overhead to direct capital toward higher-returning units. Reducing staff every single quarter for six years gives the bank structural cost leverage over higher-cost competitors.
Headcount continued to decline, down 2% in the quarter, 8% year-over-year and down 30% from its second quarter 2020 peak and has decreased every quarter for the past 6 years.
-- Charles Scharf, Chief Executive Officer
2. Targeted Banker Hiring Converts Business Clients Into High-Yield Relationships
Adding specialized relationship managers in commercial and business banking expands primary deposit relationships and cross-selling. Paying for dedicated talent directly accelerates account expansion and higher-margin product uptake.
We've been investing in business banking, including adding over 130 business bankers over the past year. We are seeing the initial benefits in our results, including checking account openings up 9% and credit cards opening 61% from a year ago.
-- Charles Scharf, Chief Executive Officer
3. Smart Balance Sheet Optimization Stabilizes Net Interest Margins
Refining institutional funding and netting structures expands earning efficiency across trading operations. Better balance sheet deployment protects net interest margin, which is the gap between what a bank earns on assets and pays on deposits, without requiring excessive risk-taking.
As we continue to grow the markets balance sheet on a gross basis, we are becoming increasingly more efficient in how we deploy it, and we made more progress this quarter than we originally anticipated.
-- Michael Santomassimo, Chief Financial Officer
Looking Ahead
Return on tangible common equity (ROTCE), a key measure of how efficiently a bank generates profit from shareholder capital, is approaching target levels. Expanding commercial banking share, deepening client relationships, and harnessing artificial intelligence tools create durable structural advantages. Management is watching broader credit trends and macroeconomic swings while keeping risk limits tight.
Our progress toward building a growing high-returning company continues. Our ROTCE continues to increase and is getting closer to our 17% to 18% target.
-- Charles Scharf, Chief Executive Officer
Disciplined capital allocation and steady expense control anchor the lender's strategic momentum through changing interest rate cycles.
Though timing is influenced by markets and the credit environment, we are confident this trajectory can continue and ultimately, our targets should be higher.
-- Charles Scharf, Chief Executive Officer
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