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WFC Closes 5 Regulatory Actions in 2025: Is It Worth Investing in?
WFCWells Fargo(WFC) ZACKS·2025-03-26 15:55

Core Viewpoint - Wells Fargo & Company (WFC) is making significant progress in closing regulatory actions and strengthening its risk management and compliance infrastructure, which is central to its operational strategy in 2025 [1][5][6]. Regulatory Actions and Compliance - WFC has successfully closed five regulatory actions in 2025, including two consent orders from the Federal Reserve and two from the Office of the Comptroller of Currency [1]. - The bank's compliance framework is being enhanced under CEO Charlie Scharf, with improved risk management techniques receiving regulatory approval [5]. Financial Performance - WFC shares have increased by 6.2% year to date, outperforming the industry average of 3.6% and the S&P 500 index decline of 1.8% [2]. - The bank is currently under an asset cap of 1.95trillion,whichhaslimiteditsgrowthpotentialandloangrowth[6][7].InterestIncomeandRateEnvironment−WFC′snetinterestincome(NII)declinedby81.95 trillion, which has limited its growth potential and loan growth [6][7]. Interest Income and Rate Environment - WFC's net interest income (NII) declined by 8% year over year to 47.7 billion in 2024, with the net interest margin (NIM) dropping to 2.73% from 3.06% in 2023 [8]. - Management anticipates a 1-3% growth in NII for 2025 compared to 2024 [10]. Expense Management - WFC is implementing cost-cutting measures, including streamlining its organizational structure and reducing branch numbers by 3% year over year to 4,177 in 2024 [13]. - The company plans to achieve 2.4billioningrossexpensereductionsin2025throughefficiencyinitiatives[15].CapitalPositionandShareholderReturns−AsofDecember31,2024,WFC′slong−termdebtwas2.4 billion in gross expense reductions in 2025 through efficiency initiatives [15]. Capital Position and Shareholder Returns - As of December 31, 2024, WFC's long-term debt was 173.1 billion, with a liquidity coverage ratio of 125%, exceeding the regulatory minimum [16]. - The bank announced a 14% dividend hike to 40 cents per share in July 2024 and has a share repurchase program worth 30billion[17][18].GrowthOutlook−WFC′sprogressinresolvingcomplianceissuesisexpectedtoleadtotheliftingoftheassetcap,allowingforunrestrictedloanofferingsandsupportingtop−lineexpansion[19].−Salesestimatesfor2025areprojectedat30 billion [17][18]. Growth Outlook - WFC's progress in resolving compliance issues is expected to lead to the lifting of the asset cap, allowing for unrestricted loan offerings and supporting top-line expansion [19]. - Sales estimates for 2025 are projected at 85 billion, with a year-over-year growth estimate of 3.29% [21]. Valuation - WFC is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 12.19X, which is below the industry average of 13.14X [24]. - Compared to peers, WFC's P/E is higher than Bank of America's 11.30X but lower than JPMorgan's 13.64X [27].