Wells Fargo Reports Q2 Earnings Tuesday Morning. Here's the Number That Matters Most.

Wells Fargo (NYSE: WFC) reports its second-quarter results at about 7 a.m. ET on Tuesday, July 14, with a conference call to follow at 10 a.m. For most big banks, a quarterly report is mainly a read on loan demand, credit costs, and trading. For Wells Fargo, this one carries a question investors have asked for years: Can the bank finally grow again?

That question exists because of a penalty that shaped the last seven years. In 2018, following its fake-accounts scandal, the Federal Reserve capped Wells Fargo's assets at $1.95 trillion, effectively freezing the size of the balance sheet. The Fed lifted that cap in June 2025. For the first time since 2018, the balance sheet can grow with the business without the asset-growth restriction.

So when the results land Tuesday morning, the line to watch isn't earnings per share. It's net interest income.

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Why net interest income matters most

Net interest income (the gap between what a bank earns on its loans and pays on deposits) is the closest thing Wells Fargo has to a single gauge of growth. Under the asset cap, it went nowhere. Net interest income was about $47.5 billion in 2025, essentially flat with 2024. A bank that can't grow its balance sheet can't easily grow the income that comes off it.

The 2026 guidance is where that changes. Management has told investors to expect about $50 billion in net interest income this year -- which would mark a return to mid-single-digit growth after a down year and a flat one. The early read supports it: in the first quarter of 2026, net interest income rose 5% year over year, though it slipped $235 million, or 2%, from the fourth quarter on two fewer days and slightly lower rates.

That sequential dip is the catch, and it's why Tuesday matters. The full-year target leans on this income building through the year as loans and deposits grow -- the very activity the asset cap used to block. The deposits Wells Fargo is now free to gather tend to be higher-cost than the ones it leaned on under the cap, so growth and margin will work against each other as it rebuilds. If second-quarter net interest income steps up and management holds or raises the $50 billion target, the growth case is intact. If the number stalls and the guide comes down, the main reason to own the stock instead of a cheap index fund gets much harder to make.

There's a rates wrinkle, too. Like any bank, Wells Fargo earns more on its loans when rates stay higher for longer, so the path of Federal Reserve policy will shape this income alongside the bank's own growth. Fewer rate cuts than the market expects would actually work in its favor here.

A cheap stock with a new lever

Net interest income is the headline, but two other figures round out the picture.

The first is the efficiency ratio (the share of revenue a bank spends to run itself, with lower ratios being better). Wells Fargo's improved to 67% in the first quarter from 69% a year earlier, extending a multiyear cost-cutting push under CEO Charlie Scharf. Having spent years shrinking, the bank now has to spend to grow, so investors will want costs to stay contained even as the balance sheet expands.

The second is capital return, where Wells Fargo has been aggressive. It repurchased $17.7 billion of its own stock in 2025 and still has about $26 billion left on a $40 billion buyback authorization. After clearing the Fed's 2026 stress test, management said it plans to raise the quarterly dividend 11%, to $0.50 a share. Buybacks on this scale lift earnings per share even when net income grows slowly, a genuine support for the stock while that plays out.

Then there's the price. Around $87 a share, Wells Fargo trades at about 13 times earnings -- a discount to the S&P 500 at around 25 times, and cheap for a bank that just got a growth lever back.

That mix of a low multiple and a newly unfrozen balance sheet makes Wells Fargo a rare value stock among the big banks.

And with the dividend on its way up, you get paid to wait while the growth case plays out.

Put it together, and I think Wells Fargo is one of the more reasonably priced ways to own a large bank right now, and I'd lean toward buying. But the case rests on that one line. Before getting too excited, I'd want to see second-quarter net interest income move higher on Tuesday and management stand behind its $50 billion guide for the year. That's the number that should define the reaction -- and, more importantly, the investment.

Wells Fargo is an advertising partner of Motley Fool Money. Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.