Wells Fargo’s earnings-per-share growth came with a little extra lift this quarter. The bank reported a 13% increase in diluted EPS, while company-wide net income rose 6%. Both numbers belong in the story. They just tell you different things about how much the business earned and how that profit was divided among shareholders.
For investors reading Wells Fargo’s October 13 results, the interesting question is how those two growth rates fit together. A smaller share count explains much of the difference. A tax benefit also helped the quarter’s profit. So did genuine business growth, with average loans and deposits both up 11% from a year earlier. There’s more here than the headline can comfortably carry.
Why $1.87 per share grew faster than profit
Wells Fargo’s third-quarter release showed $5.951 billion in net income, compared with $5.589 billion a year earlier. Diluted earnings per share rose to $1.87 from $1.66. Revenue increased 2% to $21.870 billion.
The share-count detail helps explain the gap. Earnings available to common shareholders, after preferred dividends and other adjustments, rose about 7% to $5.703 billion. Meanwhile, diluted weighted-average shares fell about 5.3%, to 3.052 billion from 3.224 billion.
Here’s a simple calculation using the bank’s more precise figures: divide this quarter’s common earnings by last year’s diluted share count, and you get roughly $1.77 per share. The reported figure was $1.87. That’s an illustration holding the denominator fixed, not a company-adjusted earnings number or a measurement of what this quarter’s buybacks alone contributed.
Wells Fargo repurchased $2.5 billion of common stock during the quarter. Buybacks can leave continuing shareholders with a larger slice of earnings, although whether the price paid was attractive is a separate question. The slice got bigger here; the whole pie grew, too.
A tax assist, plus operating progress
The quarter included a $170 million discrete tax benefit from resolving prior-period matters. That’s useful context for anyone trying to estimate repeatable earnings: a benefit from resolving prior-period tax matters isn’t the same thing as earning more from customers every quarter.
Still, dismissing the result as buybacks and taxes would miss something important. Revenue rose while noninterest expenses declined 1%. Revenue minus those expenses, before credit-loss provisions and taxes, increased 7% to $8.127 billion. Pretax income, after provisions, increased about 3%.
There’s a wrinkle in the expense comparison, too. Last year’s third quarter included $296 million in severance expense. Wells Fargo cited efficiency initiatives and lower severance among the reasons costs fell, while revenue-related compensation and technology costs increased. The expense line improved, but it doesn’t all represent fresh, recurring savings.
That’s where reading an earnings report beyond headline EPS becomes useful. The numerator, denominator and tax line each deserve a look before one growth rate becomes the entire investment argument.
More interest income, a narrower margin
Net interest income increased 5% to $12.517 billion. Average loans reached about $1.033 trillion and average deposits about $1.483 trillion, both up 11%. Those larger balances matter.
But the bank’s taxable-equivalent net interest margin was 2.43%, down from 2.61% a year earlier. That’s an 18-basis-point decline. It was unchanged from the second quarter, so this wasn’t a new sequential slide.
Wells Fargo attributed net-interest-income growth to factors including higher loan and securities balances and fixed-rate asset repricing. Higher deposit costs and lower rates on floating-rate assets were among the offsets.
The investor presentation adds another helpful distinction. Net interest income excluding Markets rose about 2%. That’s a non-GAAP measure, with a reconciliation in the presentation. Markets supplied approximately half of the dollar increase in total net interest income, based on the disclosed figures. Its contribution is real, but separating it helps show how the rest of the bank performed.
The next quarter has a few moving parts
Credit deserves a balanced reading. The provision for credit losses increased to $1.029 billion from $681 million, partly against a year-earlier allowance release. Yet the annualized net loan charge-off rate was 0.38%, below last year’s 0.40% and above the second quarter’s 0.34%. Provision expense and realized loan losses aren’t interchangeable.
Management kept its full-year net interest income forecast at approximately $50 billion and its expense forecast at approximately $55.7 billion. It expects roughly $13 billion of net interest income in the fourth quarter. Those are forecasts, sensitive to rates, deposit mix and pricing, and loan demand.
My takeaway: Wells Fargo delivered operating growth, with additional per-share help from a smaller share count and a favorable tax item. The next useful test is whether growing balances continue to translate into earnings after funding costs and credit expenses. The EPS headline is encouraging, but I’d keep the other pages open.
Results cover the quarter ended September 30, 2026. Wells Fargo describes them as preliminary and says final figures in its Form 10-Q may differ materially. This analysis uses the October 13 earnings materials available by 8:30 a.m. Central and excludes the later earnings call.