Wells Fargo shares surged on Tuesday after the bank reported better-than-expected third-quarter results and raised a key financial return target, signaling confidence in the years ahead. Total revenue for the three months ending Sept. 30 increased 5.3% year over year to $21.44 billion, beating analysts’ expectations of $21.15 billion, according to market data provider LSEG. Earnings per share (EPS) of $1.66 exceeded Wall Street’s consensus estimate of $1.55 per share, LSEG data showed. EPS excludes a 7-cent per share headwind associated with severance expense. Bottom line What a difference a quarter can make. Back in July, when Wells Fargo reported its second-quarter results, the narrative was that Wall Street’s financial projections were too rosy after a cut to its net interest income (NII) outlook, and that management wasn’t moving fast enough to create opportunities following the removal of its Federal Reserve-imposed asset cap. The stock fell more than 5% to $78.86 that day, and we quickly said buy the pullback due to our longstanding faith in CEO Charlie Scharf. Since taking over in 2019, Scharf has transformed the bank from a “sleepy mortgage-issuing bank” to “one of the majors” with a big investment bank, as Jim Cramer put it Tuesday. Fast-forward to today, and shares are up more than 7% and trading near their all-time high in reaction to a strong quarter. The results weren’t perfect — for the third quarter in a row, Wells Fargo missed the consensus estimate for NII, a crucial revenue source for traditional banks. However, investors let out a sigh of relief when management left the full-year outlook unchanged and provided a fourth-quarter NII guide that was above the Street. That made the market feel encouraged about 2026. Even better, the company’s earnings presentation featured several slides detailing the business changes it has made since 2019 in pursuit of more durable growth with higher returns, along with a reduced expense base. Ultimately, these changes have increased the bank’s earnings power. The removal of the asset in cap in June has also provided additional opportunities for growth, especially in commercial banking and its corporate and investment bank. What it all resulted in was a positive update to the firm’s medium-term financial targets. The bank is now targeting a 17% to 18% return on tangible common equity (ROTCE), up from its prior target of 15%. This is one of the most important profitability metrics for banks. For perspective, Wells Fargo’s year-to-date ROTCE is 15%, so the bank is setting a path toward generating even higher returns in the future. To get there, Wells Fargo plans to realize returns on its investments and capitalize on revenue growth opportunities across the company; drive additional efficiencies across all businesses and functions; further simplify its home-lending business; improve profitability across its operating segments; and optimize its capital structure. Wells Fargo’s $30 billion in excess capital provides the firm significant flexibility to both invest in and grow the business, while also returning capital to shareholders. We really like how analyst at Piper Sandler summed up the quarter in their first look note. “In our view, management is acting with a newer urgency and addressing concerns that WFC is not moving fast enough from defense to offense,” the analyst said. “Taken together: a nice beat, and the reaffirmed NII guide + new [medium-term] targets should help to reinvigorate the story.” We are nudging up our price target to $92 from $90 and maintaining our hold-equivalent 2 rating. Commentary Third-quarter net interest income totaled $11.95 billion, an increase of 2% from both the third quarter last year and second quarter of 2025. Still, that missed the NII consensus estimate of about $12 billion. Some drivers of the increase in NII from last year include fixed asset repricing, improved results in its markets business, and higher investment securities and loan balances. Deposit mix changes were a headwind. The bank’s net interest margin, which measures the difference in what the bank receives in interest on loans and pays out on deposits, was 2.61%, below estimates of 2.70%. Wells Fargo’s period-end loan growth accelerated to 4% growth from last year and 2% from the second quarter of 2025. Total deposits increased 11% from the third quarter of 2024 and 2% from the second quarter of 2025. Non-interest income increased 9% year over year to about $9.5 billion, beating the consensus estimate of $9 billion. Drivers of the big increase in fee growth were higher investment advisor fees and brokerage commissions, investment banking fees, and an increase in card fees. Investment banking, in particular, saw fees grow 25% year over year, a sign its hiring spree in this division is paying off. Non-interest expense increased 6% year over year to about $13.8 billion, more than $13.4 billion anticipated. One driver in the increase in expense was higher revenue-related compensation expense, which we never view as a bad thing because it means stronger topline growth. Non-personal expense also increased due to things like higher investments in technology and equipment, advertising and promotion, and professional and outside services expense. The company’s ongoing efficiency initiatives partially offset the increase. As we expected, Wells Fargo stepped up the buyback program. The company repurchased 74.6 million shares, or $6.1 billion of common stock. That’s a big increase from the $3 billion stock Wells bought back in the second quarter. Provisions for credit losses were $681million, which was much lower than $1.16 billion expected. The bank’s allowance for credit losses for loans declined from the second quarter of 2025 and third quarter of 2024. 2025 guidance The company continues to expect 2025 net interest income to be roughly in line with 2024 NII of $47.7 billion. Even though the outlook was unchanged, it’s being viewed positively by the market because a cut was feared. As proof, the consensus estimate heading into earnings was $47.5 billion. For the fourth quarter, Wells expects NII to be about $12.4 billion to $12.5 billion, which is higher than the consensus of $12.2 billion. On non-interest expense, Wells Fargo raised its full-year outlook by about $400 million to $54.2 billion. The increase was driven by higher severance expenses and higher revenue-related compensation expenses. For the fourth quarter, the company expects non-interest expense to be $13.5 billion, which is roughly in line with the consensus. (Jim Cramer’s Charitable Trust is long WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.