By Donald Rabbi· Senior ReporterWednesday, January 14, 2026
The dawn of 2026 has proven turbulent for Wall Street’s traditional heavyweights. On Wednesday morning, three of the nation’s largest lenders—Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C)—saw their shares tumble as fourth-quarter earnings reports failed to satisfy investors, despite some headline numbers showing resilience.
The sell-off underscores a growing anxiety in the financial sector regarding the durability of profit growth as the Federal Reserve pivots toward interest rate cuts and political headwinds introduce new regulatory uncertainties.
A Tale of Two Banks: BoA and Wells Fargo
Both Bank of America and Wells Fargo entered the day reporting that their full-year profits for 2025 reached their highest levels in four years. However, the market’s reaction was swift and unforgiving.
Bank of America (BAC)
- Net Income: Reported $7.6 billion (a 12% rise year-over-year).
- EPS: $0.98, surpassing the forecasted $0.96.
- Revenue: $28.4 billion, driven by a 10% surge in Net Interest Income (NII).
- Stock Reaction: Tumbled 4.75% shortly after the open.
Despite the beat, investors focused on the “quality” of the earnings. While CEO Brian Moynihan remained bullish on the U.S. economy for 2026, analysts noted that the peak of high interest rates has likely passed, meaning the lucrative “repricing” of loans that fueled 2025’s success may soon hit a ceiling.
Wells Fargo (WFC)
- Net Income: $5.4 billion, a 6% increase from the prior year.
- Adjusted EPS: $1.76 (beating estimates of $1.66), but GAAP EPS was $1.62.
- Revenue: $21.29 billion, missing the consensus estimate of $21.64 billion.
- Stock Reaction: Slumped 4.61%.
Wells Fargo’s report was muddied by $612 million in severance costs—a 14-cent per-share hit—as the bank continues a massive workforce reduction of roughly 5,600 employees. The revenue miss, combined with a 7.1% rise in non-performing assets, signaled that credit stress may be beginning to creep into the bank’s massive commercial and consumer portfolios.
Citigroup’s Transformation Hurdles
Citigroup (C) fared slightly better in the markets than its peers but reported the most complex set of numbers.
| Metric | Citigroup (C) Reported | Status |
| Net Income | $2.5 Billion | 📉 Down 13% YoY |
| Earnings Per Share | $1.19 | ❌ Missed Forecast ($1.72) |
| Special Items | $1.2 Billion Loss | Russia Unit Divestiture |
| Stock Price | -2.20% | Relative Outperformer |
The bank’s results were heavily impacted by a $1.2 billion pre-tax loss related to the sale of its Russian unit, AO Citibank, to Renaissance Capital. While CEO Jane Fraser’s multi-year restructuring plan is nearing its conclusion, the bank’s traders had a difficult fourth quarter, with market revenues dipping as volatility shifted away from Citi’s core strengths.
The 2026 Outlook: Headwinds and “Trump Caps”
The collective slide in bank stocks isn’t just about the numbers on the page; it’s about the horizon. Several macro factors are Weighing on the sector:
- The “Trump Cap”: The new administration’s proposal to cap credit card interest rates at 10% has sent shockwaves through the industry. Citigroup and JPMorgan Chase, with their massive card portfolios, face significant revenue compression if the policy gains legislative traction.
- Fed Rate Cuts: Forecasts suggest the Fed will cut interest rates by 75 basis points in 2026. While this lowers funding costs, it also narrows the “spread” (the difference between what banks pay depositors and what they charge borrowers), traditionally the primary engine of bank profit.
- Sticky Inflation: Despite signs of a cooling labor market, producer price inflation remains stubborn, complicating the Fed’s path and keeping operating expenses high for the banks themselves.
Conclusion
As the first earnings season of 2026 kicks off, the message from the “Big Three” is clear: the easy gains of the high-interest-rate era are over. To maintain their valuations, Bank of America, Wells Fargo, and Citi must now prove they can grow in a cooling economy while navigating a radical shift in the Washington regulatory landscape.