Why I’m buying as its comeback gains momentum
I like to invest in quality companies that have fallen out of favor but have a catalyst that could turn things around. That’s exactly what I see in Wells Fargo . After moving past years of regulatory restrictions, we’re finally starting to see the benefits. The San Francisco-based bank is one of the country’s largest lenders, offering everything from consumer checking accounts and credit cards to mortgages and business loans. Key points The lifting of Wells Fargo’s asset cap gives the bank room to invest, expand lending and win market share. Third-quarter average loan growth of 11% suggests the bank’s growth strategy is starting to pay off. Improving net interest income and margins are encouraging signs that profitability can continue to strengthen. The six biggest U.S. bank just reported generally solid earnings, with improving net interest income and margins, resilient consumer activity and stable credit quality. But Wells Fargo stands out to me because its turnaround still appears to be gaining momentum. Why I’m buying The bank can finally focus on growth For seven years, Wells Fargo operated under a Federal Reserve-imposed asset cap that limited its total assets to roughly $1.95 trillion. The restriction was lifted on June 3, 2025 , marking a major turning point for the bank. This is a big deal. With the cap in place, Wells Fargo couldn’t expand its balance sheet the way other major banks could, making it harder to compete for new business and grow market share. Now management has more freedom to invest in the business, make loans and pursue opportunities that were previously out of reach. Loan growth is picking up I was encouraged by Wells Fargo’s third-quarter results. Average loans grew 11% year over year, driven by growth in commercial and industrial lending, credit cards and auto loans. To me, that’s some of the clearest evidence yet that the bank is taking advantage of its newfound flexibility. WFC YTD mountain Wells Fargo, YTD Lending profitability is improving Loan growth alone isn’t enough. I also want to see Wells Fargo making more money from its lending business. Third-quarter net interest income, or the difference between interest earned and interest paid, rose 5% year over year to $12.5 billion. The bank also maintained its full-year outlook of approximately $50 billion . Wells Fargo reported a return on tangible common equity of 16.3% in the quarter. I believe the bank can eventually reach 17% to 18%, leaving room for further improvement in profitability. Why now? Despite signs of progress, Wells Fargo shares are trading around $83, roughly 15% below their 52-week high. At about 10.9 times earnings and 1.5 times book value, I see quality on sale. As the bank’s turnaround gains momentum, I believe the stock has room to catch up with its peers. Bottom line I give CEO Charlie Scharf a lot of credit for steering Wells Fargo through years of regulatory challenges and putting the bank back on a path to growth. Under his leadership, Wells Fargo is finally shifting from defense to offense, and I believe the best of its turnaround is still ahead. Stephanie Link is the Chief Investment Strategist at Hightower Advisors, where her division manages $8.5 billion in assets (as of June 4, 2026). She has 35 years of experience managing money and serves on KKR’s investment council. She earned a B.S. in finance from Boston College. Disclosures: Link owns in Hightower Advisors. All opinions expressed by the [CNBC Pro contributors] are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. This content is provided as part of our editorial output for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to buy any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above content might not be suitable for your particular circumstances. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer
