Wednesday morning brought a deluge of financial data as Bank of America, Wells Fargo, and Citigroup—three of the nation's largest banking institutions—released their fourth-quarter 2025 earnings reports. Following JPMorgan Chase's mixed results on Tuesday that sent bank stocks tumbling, investors were eager to see whether the broader banking sector could deliver the stability that markets crave heading into 2026.

Bank of America: Navigating the Interest Rate Environment

Bank of America reported its fourth-quarter results before the market opened, with analysts having projected earnings per share of approximately $0.96 on revenue of $27.55 billion. The Charlotte-based banking giant has been carefully managing its massive bond portfolio, which suffered significant paper losses during the Federal Reserve's aggressive rate-hiking campaign in 2022 and 2023.

"The consumer remains resilient despite persistent inflation pressures," Bank of America CEO Brian Moynihan said during the company's earnings call. "We're seeing steady deposit balances and manageable delinquency rates across our credit card and auto lending portfolios."

Net interest income—the difference between what banks earn on loans and pay on deposits—has been a key metric for investors watching Bank of America. As the Fed paused its rate-cutting cycle in December, banks have found some stability in their interest margins after months of uncertainty.

Wells Fargo: Life After the Asset Cap

Wells Fargo's fourth-quarter report marks an important milestone for the San Francisco-based lender: its first full year operating without the Federal Reserve's asset cap, which constrained the bank's growth for nearly seven years following its fake accounts scandal.

Analysts had projected Wells Fargo to report earnings per share of $1.65 to $1.66 on revenue of approximately $21.63 billion. The bank has been working to rebuild its reputation and expand its lending operations, particularly in the commercial real estate and corporate banking sectors.

"The removal of the asset cap represents a new chapter for Wells Fargo," said banking analyst Mike Mayo of Wells Fargo Securities. "They now have the opportunity to compete on equal footing with their peers, though execution risk remains."

Investors are particularly focused on Wells Fargo's mortgage business, which has struggled amid higher interest rates that have dampened home buying activity. With 30-year mortgage rates now hovering near 6%, there are signs that the housing market may begin to thaw in 2026.

Citigroup: Jane Fraser's Transformation Continues

Citigroup entered the earnings season with perhaps the highest expectations among its peers. Analysts projected the bank to report earnings per share of $1.65 to $1.77, representing a potential 21% to 25% year-over-year increase—the strongest growth rate among the major banks.

CEO Jane Fraser's ambitious restructuring plan, which has included the elimination of approximately 20,000 jobs over two years, appears to be bearing fruit. The bank's divestiture strategy, including the sale of its Russian retail operations and the preparation of Mexico's Banamex for a potential IPO in 2026, has streamlined Citigroup's global footprint.

"Citi has made tremendous progress simplifying its business model," noted Gerard Cassidy, an analyst at RBC Capital Markets. "The question now is whether they can translate that simplification into sustained revenue growth."

The Credit Card Elephant in the Room

All three banks face a common challenge: President Trump's proposed 10% cap on credit card interest rates. During Tuesday's earnings call, JPMorgan CFO Jeremy Barnum warned that such a cap could reduce credit availability for consumers who rely on credit cards for everyday expenses.

Credit card lending represents a significant profit center for all major banks, with interest rates on revolving balances often exceeding 20% for consumers with average credit scores. A forced reduction to 10% would fundamentally reshape the economics of consumer lending.

"The irony is that rate caps often hurt the very consumers they're designed to protect," explained Lisa Ellis, a payments analyst at MoffettNathanson. "Banks would simply tighten credit standards, leaving lower-income consumers with fewer options."

Bank of America, Wells Fargo, and Citigroup have all built substantial credit card portfolios. Any regulatory changes to interest rate caps would require significant adjustments to their consumer lending strategies.

What This Means for Investors

The banking sector has been one of the best performers over the past year, with the KBW Bank Index rising approximately 40% in 2025. However, Tuesday's selloff following JPMorgan's results—despite the bank beating earnings expectations—suggests that investors are becoming more discerning.

Key metrics to watch across all three reports include:

  • Net interest income trends: Are banks maintaining their margins as the Fed pauses rate cuts?
  • Credit quality: What do charge-off rates and loan loss provisions reveal about consumer health?
  • Trading and investment banking: How are capital markets revenues holding up amid market volatility?
  • Guidance for 2026: What are management teams expecting for the year ahead?

Looking Ahead

The banking earnings season continues Thursday with Goldman Sachs and Morgan Stanley reporting results. These Wall Street-focused institutions will provide additional insight into the health of capital markets, M&A activity, and wealth management trends.

For everyday Americans, the health of the banking sector directly impacts everything from mortgage rates to credit card terms to small business lending. Today's earnings reports suggest that while challenges remain—particularly around credit card regulation and the uncertain interest rate environment—the nation's largest banks enter 2026 from a position of relative strength.

The next Federal Open Market Committee meeting on January 27-28 will provide additional clarity on the Fed's rate path for 2026. Until then, investors will digest today's earnings data and position themselves for what promises to be another eventful year in financial markets.