Mike Santomassimo, Wells Fargo CFO, says the bank saw strong loan momentum this quarter. He tells Romaine Bostick and David Gura on "The Close" that the president's proposal would pull credit at a critical time, reducing access for consumers across the credit card spectrum. ...

Core Viewpoint - Wells Fargo reported earnings that fell short of expectations, with a slight increase in year-over-year earnings per share but challenges in net interest margin and non-performing assets [1][2][3]. Financial Performance - The company disclosed an earnings per share (EPS) of $1.62, adjusted EPS of $1.76, and revenue of $21.29 billion, missing forecasts of $1.66 EPS and $21.65 billion in revenue [1]. - Net income for the quarter was reported at $5.36 billion, an increase from $5.08 billion in the previous year, with a potential adjusted net income of $5.8 billion excluding severance charges [4]. - The net interest income (NII) increased by 4% year-over-year to $12.33 billion, although the net interest margin contracted by 10 basis points to 2.6%, below the expected 2.7% [2][5]. Operational Challenges - The company faced a 7.1% year-over-year increase in non-performing assets, which negatively impacted overall results [3]. - Wells Fargo managed to reduce expenses by 1%, but the efficiency ratio worsened to 64%, exceeding the predicted 62.7% [3][5]. - The bank incurred $612 million in severance expenses due to workforce reductions affecting approximately 5,600 employees [3]. Growth Metrics - Average loans reached $955.8 billion, and average deposits hit $1.38 trillion, indicating growth in these key areas [4].

Core Viewpoint - Major banks oppose President Trump's proposal to cap credit card interest rates at 10%, arguing it could limit consumer access to credit and negatively impact economic growth [1][4]. Group 1: Financial Impact on Banks - Profits in the credit card segment are four times the banking industry average, with lenders earning interest on $1.23 trillion in outstanding U.S. credit card debt at an average annual interest rate of 21% [2]. - Executives from major banks, including JPMorgan Chase and Citigroup, expressed concerns that a cap on interest rates would severely restrict access to credit for consumers, particularly those who need it most, potentially leading to negative consequences for the economy [5]. Group 2: Market Reactions - Shares of major financial service firms declined following the announcement of the proposed interest rate cap, indicating investor concern over the potential impact on profitability [4]. - Some analysts view the drop in share prices as a potential buying opportunity for investors [4]. Group 3: Shift in Consumer Behavior - Experts suggest that if an interest rate cap is enacted, consumers may shift their focus to other financial products, such as personal loans, which could benefit companies like LendingTree [3][5]. - The proposed cap could disrupt the credit card rewards and points system, leading to broader changes in consumer behavior and spending patterns [3].

Market Performance - The S&P 500 fell 0.53% to 6,926.60, failing to hold the 7,000 mark [1] - The Nasdaq Composite slid 1.00% to 23,471.75, driven by weakness in tech stocks [1] - The Dow Jones Industrial Average edged down 0.09% to 49,149.63 in a risk-off session [1] Company-Specific Movements - Nvidia dropped 1.44% to $183.14, while Microsoft decreased by 2.40% to $459.38, contributing to the tech sector's decline [2] - Wells Fargo experienced a decline due to mixed earnings and regulatory concerns [2] - Exxon Mobil outperformed the market after its CEO labeled Venezuela as "uninvestable" [2] Investor Sentiment - Investors withdrew from tech and AI stocks, leading to the Nasdaq's largest decline in a month, amid fears of overvaluation and geopolitical shifts [3] - Despite strong earnings from Bank of America, bank stocks fell due to concerns over potential caps on credit card rates affecting revenue [3] - Wells Fargo missed revenue estimates, further impacting investor confidence [3] Economic and Regulatory Factors - Uncertainty regarding Federal Reserve independence has increased, influenced by a Department of Justice investigation into budget overruns [4] - Recent inflation data was lower than expected, raising questions about the pace of future rate cuts and reducing appetite for riskier investments [4] - Gold and silver prices are rising due to increased demand for safe-haven assets [4]

CONCLUDED 1 day ago Big Banks' Bad Day: Bank of America, Wells Fargo, Citi Sink Most in Months By Rebecca Ungarino Shares of some of the largest U.S. banks logged their steepest declines in several months after the lenders reported fourth-quarter earnings that fell short of investors' high expectations. Investors found things to like about the reports from Citigroup, Bank of America, and Wells Fargo, such as solid measures of credit quality and positive commentary from executives across the three firms abou ...

Core Viewpoint - The proposal by President Trump to impose a 10% cap on credit card interest rates has been met with significant opposition from major banking executives, who warn that it could restrict credit access for consumers and negatively impact the economy [1][3][17]. Group 1: Industry Reactions - Bank of America CEO Brian Moynihan expressed concerns that capping interest rates could lead to a credit crunch, limiting credit card availability for consumers [1][2]. - Citigroup's outgoing CFO Mark Mason highlighted the potential "unintended consequences" of the cap, suggesting it could slow down the economy and affect various sectors [4][5]. - Wells Fargo's CFO Mike Santomassimo echoed these sentiments, stating that a cap could hinder economic growth and negatively impact credit availability [8][9]. Group 2: Financial Implications - The average credit card interest rate was reported at 20.97% in November, indicating the high returns banks generate from credit card loans [12]. - Research from Vanderbilt University suggested that a 10% cap could save Americans $100 billion annually, with only a modest impact on rewards and accounts [15]. - JPMorgan CEO Jamie Dimon noted that banks would need to adjust their models to account for the added risk and price controls, indicating that the changes would be significant [15]. Group 3: Market Impact - Following Trump's announcement, banking shares experienced a decline of 5% to 8% as investors assessed the potential impact on financial institutions [3]. - The enforcement of the proposed cap remains uncertain, with questions about whether it would be implemented through executive order, voluntary compliance from banks, or legislative action [17].

Group 1 - No relevant content available in the provided documents [1][2][3][4][5][6]

Core Viewpoint - Wells Fargo reported adjusted earnings that exceeded analyst expectations, but the stock price declined due to missed revenue estimates Financial Performance - Adjusted earnings per share were $1.76, surpassing the consensus forecast of $1.66 [1] - Revenue totaled $21.29 billion, below the expected $21.64 billion, but up 4% from $20.38 billion a year earlier [1] - Net income for the quarter was $5.4 billion, or $1.62 per diluted share, including a $612 million severance charge; adjusted net income was $5.8 billion excluding this charge [2] - Net interest income rose 4% year over year to $12.33 billion, while noninterest income increased 5% to $8.96 billion [2] - Average loans grew 5% year over year to $955.8 billion, and average deposits increased 2% to $1.38 trillion [2] - Credit performance improved with net charge-offs declining 13% from a year earlier to $1.03 billion [2] Capital and Shareholder Actions - The Common Equity Tier 1 capital ratio was reported at 10.6%, down from 11.1% a year earlier [3] - The bank repurchased 58.2 million shares for a total of $5.0 billion during the quarter [3]

Core Viewpoint - The fourth quarter earnings season has commenced, with significant reports from Delta Air Lines and JPMorgan Chase, and additional bank earnings expected later in the week [1]. Group 1: Earnings Expectations - Wall Street analysts project an 8.3% earnings per share growth rate for S&P 500 companies in Q4, marking the 10th consecutive quarter of annual earnings growth if realized [2]. - Prior to the reporting period, analysts had increased earnings expectations, particularly for tech companies, with the consensus estimate for S&P 500 Q4 earnings growth at 7.2% as of September 30 [3]. Group 2: Market Influences - The earnings season will assess the improved stock market breadth observed at the start of 2026, with ongoing themes from 2025, such as artificial intelligence and economic policies, continuing to influence investor sentiment [4]. Group 3: Upcoming Earnings Reports - Major financial companies scheduled to report earnings this week include Bank of New York Mellon, Bank of America, Citigroup, Wells Fargo, BlackRock, Goldman Sachs, and Morgan Stanley, alongside Delta and JPMorgan [5].

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