For the first time since 2018, Wells Fargo & Co. is operating without the Federal Reserve's punitive asset cap—and the third-largest U.S. bank by assets isn't wasting any time charting its course for aggressive growth in 2026.

When CEO Charles Scharf takes the stage tomorrow morning to announce fourth-quarter 2025 results, he'll be presenting the first full earnings report that reflects the bank's newfound freedom. The Fed officially lifted the $1.95 trillion asset restriction in June 2025, ending one of the most consequential regulatory penalties in American banking history.

The Long Road to Freedom

The asset cap was imposed in February 2018 after the bank admitted to creating millions of fake customer accounts to meet aggressive sales targets. The scandal, which ultimately affected an estimated 3.5 million accounts, resulted in billions in fines, congressional hearings, and the departure of two CEOs.

"Removal of the asset cap represents successful remediation to the required standard based on focused management leadership, strong board oversight, and strict supervision holding the firm accountable," Federal Reserve Governor Michael Barr said in announcing the cap's termination.

The remediation required the bank to overhaul its risk management systems, reform its incentive structures, and demonstrate sustained improvement across all business lines. Throughout the process, competitors like JPMorgan Chase and Bank of America were able to grow their balance sheets while Wells Fargo remained artificially constrained.

Ambitious 2026 Agenda

With assets now exceeding $2 trillion, Scharf has outlined an aggressive expansion strategy that includes:

  • Investment Banking Push: Management's stated ambition is to crack the top five global investment banks, a dramatic leap from Wells Fargo's historically commercial and retail focus.
  • Options Clearing Entry: The bank plans to enter the options clearing market in 2026, directly challenging dominant players Bank of America and Goldman Sachs.
  • Talent Acquisition: Scharf has been recruiting senior bankers from competitors including JPMorgan Chase and Morgan Stanley, building out capabilities across trading, M&A advisory, and capital markets.
  • Capital Returns: The bank has authorized a staggering $40 billion share repurchase program, signaling confidence in its future earnings power.

Tomorrow's Earnings: What to Watch

Wells Fargo will report Q4 2025 results tomorrow, January 14, at approximately 7:00 a.m. Eastern time. Analysts are focused on several key metrics:

Net Interest Income: With the federal funds rate currently in the 3.50% to 3.75% range after three consecutive 25-basis-point cuts, the bank must demonstrate its ability to maintain margins in a normalizing rate environment.

Loan Growth: This will be the first quarter to show whether the asset cap removal is translating into meaningful balance sheet expansion. Commercial and industrial lending volumes will be closely scrutinized.

Expense Management: Scharf has maintained strict cost discipline throughout the remediation period. Investors will want to see that expansion investments aren't eroding the efficiency gains achieved over the past several years.

Stock Performance Tells the Story

Throughout 2025, Wells Fargo shares climbed approximately 34 percent—handily outpacing the U.S. bank ETF, which returned 22 percent over the same period. The outperformance reflects investor optimism that the bank's growth runway is substantially longer than peers who weren't operating under restrictions.

"Wells Fargo is entering its first full year without the asset cap that has constrained it since 2018. Now in expansion mode, Wells Fargo has authorized a staggering $40 billion share repurchase plan, signaling a pivot from restructuring to aggressive capital return."

— Bank analyst research note

Risks Remain

Despite the optimistic outlook, challenges persist. The investment banking push requires significant upfront investment with uncertain returns. Competition for talent is intense, and the bank's brand still carries some legacy reputational damage from the scandals.

Additionally, the broader interest rate environment creates uncertainty. If the Fed continues cutting rates more aggressively than expected, net interest margins could compress faster than loan growth can compensate.

The Bottom Line

Wells Fargo's seven-year journey from scandal to redemption culminates in a pivotal moment. Tomorrow's earnings will provide the first real data on whether the bank can translate regulatory freedom into business growth. For long-term investors, the question isn't whether Wells Fargo has been rehabilitated—the Fed answered that in June—but whether Scharf's ambitious vision can be executed in an increasingly competitive banking landscape.

The bank celebrated the asset cap removal by awarding all full-time employees a special $2,000 bonus. Now it's time to deliver for shareholders, too.