WALTER10K CASE SUMMARY

The Good the strongest evidence Walter found

After seven years, the Federal Reserve’s cap on Wells Fargo’s growth is gone — and the bank grew.

After the Federal Reserve removed Wells Fargo’s asset cap in June 2025, the company ended the year with higher total assets, net income and diluted earnings per share. Total assets grew 11% to $2.15 trillion, net income rose 8% to $21.3 billion, and diluted earnings per share rose 17% to $6.26 (from $5.37). The company repurchased $17.7 billion of its own stock and raised its dividend to $1.70 per share (from $1.50).

The Bad the clearest pressure the company disclosed

The core lending business earned less, even as the bank got bigger.

Net interest income — what a bank earns on loans minus what it pays on deposits — declined to $47.5 billion in 2025 from $47.7 billion in 2024 and $52.4 billion in 2023. The net interest margin fell to 2.64% from 2.73%. The company attributed the decline to lower interest rates on floating-rate assets and deposit mix. Meanwhile, nonperforming assets rose $567 million to $8.5 billion, driven by commercial and industrial nonaccrual loans, and technology expenses rose 14% to $5.2 billion.

The Ugly the most serious risk Walter found

Government inquiries into Wells Fargo’s anti-money-laundering and sanctions programs remain open. Separately, across the legal matters described in its filing, the company estimated up to approximately $1.7 billion in reasonably possible losses beyond amounts already accrued.

The filing discloses ongoing government inquiries into the company’s anti-money-laundering and sanctions programs, alongside a September 2024 formal agreement with the OCC requiring the bank to strengthen those practices. The $1.7 billion figure is the company’s aggregate estimate across the legal matters described in its filing — not an estimate for any single investigation. The company’s legal-actions note lists pending matters including cash-sweep litigation, mortgage-discrimination litigation, and a trial verdict entered against the bank (under appeal) in the Seminole Tribe trustee case. The remaining provisions of the 2018 Federal Reserve consent order are still in place.

• The asset cap came off. The FY2024 10-K said growth “will be limited” until the Fed was satisfied; this filing confirms the cap was removed June 3, 2025.
• Estimated possible legal losses shrank. The high end of Wells Fargo’s estimated range of reasonably possible losses above existing accruals fell to approximately $1.7 billion, from approximately $2.0 billion a year earlier.
• Credit costs fell. Provision for credit losses dropped 16% to $3.7 billion, on lower charge-offs in commercial real estate (office) and consumer portfolios.
• Leadership consolidated. CEO Charles W. Scharf added the Chairman title in October 2025.
• A new legal matter appeared: “Fair Access to Banking Investigations,” under Executive Order 14331.
• Two matters moved toward resolution: preliminary court approval of an $84 million 401(k)-plan settlement (Dec 2025) and an $85 million hiring-practices securities settlement (Nov 2025).