10 Best Bank Stocks To Invest In For the Long Term

4. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Investors In Q3 2024: 72

Wells Fargo & Company (NYSE:WFC) is a well-known American consumer bank with a presence all over America. As a result, it has had to balance its interest income and expenses throughout 2024 to account for higher deposit costs. Additionally, higher rates have also forced Wells Fargo & Company (NYSE:WFC) to increase its loan loss provisions to protect against loan defaults in a high-rate environment. In a trend that’s present across nearly all mega bank balance sheets, Wells Fargo & Company (NYSE:WFC)’s interest income growth is outpaced by its interest expenses. For the first nine months of 2024, the bank’s interest income grew by 10.2% while its interest expense grew by 45%. Consequently, Wells Fargo & Company (NYSE:WFC)’s net interest income dropped by 9.6% annually. However, on a positive note and as a sign of a potential turnaround, the bank’s credit loss provision dropped by 11% in Q3 to allow it to beat analyst profit estimates. Additionally, 32% of Wells Fargo & Company (NYSE:WFC)’s nine-month revenue came from activities such as investment banking and card fees which do well in a lower rate economy to add potential tailwinds to its future. However, the risk of regulations remains.

Wells Fargo & Company (NYSE:WFC)’s management shared key insights into its risk management strategies during the Q3 2024 earnings call. Here is what they said:

“Now let me update you on our strategic priorities, starting with our risk and control work, which remains our top priority. We continue to move forward with confidence and believe we have the right culture, team, discipline, and sense of urgency to complete the work that’s required. That includes what is required under the recent formal agreement we entered with the Office — of the Control of the Currency. We are also continuing to execute our other strategic priorities. We continue to build our credit card business and this past quarter, we launched two new co-branded credit cards with Expedia, which provide our customers a unique travel rewards program with instant discounts, enhanced perks and accelerated rewards. Our broader set of credit card products continue to be well received by both existing customers and customers new to Wells Fargo with nearly 2 million new credit cards accounts this year.”