Oil Hit $104 Over the Weekend. One Bank Earns More Every Day It Stays There.

Research Desk · October 12, 2026

Wells Fargo & Company logo.

The weekend did investors no favors. Houthi strikes on Riyadh's main airport sent Brent crude as high as $105 a barrel overnight before it settled back near $104.

That keeps the inflation scare alive heading into Wednesday's September consumer price report. Last week the 10-year Treasury yield pushed toward 5.4%, its highest level since 2002, and the Federal Reserve already raised rates in September for the first time since 2023.

For most of the market, that combination is poison. Higher borrowing costs squeeze growth stocks, homebuilders, and anyone carrying debt.

But there is one kind of business that has always done its best work when money gets more expensive. It takes in deposits, lends them back out, and keeps the difference.

And on Tuesday morning, one of the largest of them opens its books.

Why Higher Rates Can Be a Raise

Wells Fargo (NYSE: WFC) is the fourth-largest bank in the country, holding roughly $1.47 trillion in customer deposits.

Think of it like a landlord. The bank "rents" money from depositors and pays them interest, then "rents" that same money out as mortgages, auto loans, and business credit at a higher rate.

The gap between the two is called net interest income, and it is the engine of the whole company. When rates rise, the rent the bank charges borrowers tends to climb faster than what it pays savers.

Wells Fargo's own chief financial officer said in September that a quarter-point Fed hike would give its banking book a small lift. One day later, the Fed delivered exactly that.

The Handcuffs Came Off

For seven years Wells Fargo operated under an unusual penalty. After its fake-accounts scandal, regulators capped the bank's total assets at about $1.95 trillion.

Picture a busy restaurant told it cannot add a single table, no matter how long the line out the door gets. That was Wells Fargo from 2018 until regulators lifted the cap last year.

The results since then read like a bank making up for lost time. Average loans jumped 12% last quarter to $1.03 trillion, and loans to large corporate and investment banking clients rose 26%.

Net income climbed 17% to $6.4 billion, or $2.00 a share. Net interest income grew for a fourth straight quarter to $12.3 billion, and fee income rose 13%.

Management held its full-year net interest income target of roughly $50 billion. It also said fourth-quarter loan growth would likely beat the pace it planned back in January.

A Raise for Shareholders, Too

For income investors, the most telling number is the dividend. Wells Fargo lifted its quarterly payout 11% this summer, to $0.50 a share.

That works out to about $2.00 a year, a yield near 2.5% at today's price. More importantly, the bank pays out only about 28% of its earnings, which leaves plenty of room for future increases.

It also bought back about $3 billion of its own stock last quarter. Fewer shares means each remaining share owns a bigger slice of the profits.

Credit quality, the thing that sinks banks in a downturn, is holding up. Net loan losses fell to 0.34% of loans last quarter, down from a year earlier.

The Headline That Spooked the Stock

Honesty requires naming the blemish. Last Wednesday, the Department of Housing and Urban Development opened an investigation into Wells Fargo's past mortgage programs aimed at Black homebuyers, questioning whether they ran afoul of the Fair Housing Act.

The bank has declined to comment, and the probe is in its earliest stage. Wells Fargo has also been shrinking its mortgage business since 2023, which limits how much of today's company the issue touches.

Still, it adds another regulatory overhang to a bank that spent years climbing out from under one. Combined with the rate scare, it helps explain why the shares have dropped roughly 13% in a month.

What the Discount Is Pricing In

At around $80 a share, Wells Fargo trades near 11 times earnings. Many of its large-bank peers fetch 12 to 14 times.

Its return on tangible equity, a key profitability gauge for banks, rose to 17.7% last quarter from 15.2% a year earlier. That is the kind of improvement that usually earns a higher multiple, not a lower one.

The median analyst price target sits near $100, roughly 25% above the current price.

The bear case has a number too. Management has warned that its net interest margin will shrink slightly this quarter, and Wells Fargo shares fell more than 5% after a disappointing report back in April.

A similar letdown on Tuesday could send the stock back toward its May low near $77. That is the downside investors are weighing against the upside.

The Bottom Line

Wells Fargo enters earnings with the market braced for bad news. Oil is above $100, yields are at two-decade highs, and a fresh federal probe is in the headlines.

Yet the business underneath is growing loans at double digits, raising its dividend, and earning more on every dollar it lends while rates stay high.

Tuesday morning will show whether the selloff was a warning or an opening. For patient, income-minded investors, a growing bank at a discount price is worth watching closely.