Wells Fargo reported its net interest income slid yet again in the second quarter, as higher payouts to depositors continue weighing on profits.

The bank's efforts to trim noninterest expenses and grow its fee revenue helped ease some of that pressure, with its overall profitability rising to $4.9 billion between April and June, up from $4.6 billion in the first quarter.

But the megabank underperformed analyst expectations on its net interest income, which fell below $12 billion for the first time since 2022.

Wells Fargo's stock price was down more than 5% in pre-market trading, since an improvement in interest income was "part of the investor bull thesis" ahead of the quarterly earnings season, Citi analyst Keith Horowitz wrote in a note to clients.

One driver was the "tepid" pace of loan growth that Wells Fargo executives said they were seeing, as that gave it a smaller pool of loans on which to collect interest. But the bank was also forced to shell out more interest to keep depositors happy, as consumers switched to higher-yielding certificates of deposit rather than earn little for their cash.

"We've seen continued migration into higher-yielding alternatives in the consumer business," Mike Santomassimo, Wells Fargo's chief financial officer, told reporters Friday.

One positive is that the pace of that migration "has slowed and continues to slow," Santomassimo said. Interest expenses climbed 3.3% during the quarter, compared to 5.4% in the first quarter and 12% a quarter before.

The bank stuck to its prior guidance that net interest income would fall between 7% to 9% in all of 2024, though it did say Friday it expects to be on the upper end of that range.