Although the American banking sector is now healthier than at any point during the past half-decade, it remains hamstrung by a number of secular issues. In particular, the country's largest retail and commercial banks have yet to shake the stigma of the "bailout era." Many investors are skeptical that major institutions like Bank of America Corp (NYSE:BAC) and Citigroup Inc. (NYSE:C) are as healthy as they claim to be. Five years after the onset of the financial crisis, many market-watchers believe that these banks still teeter on the brink of insolvency.
While these suspicions are almost certainly misguided, it is incontrovertible that some banks are healthier than others. Whereas Bank of America Corp (NYSE:BAC) and Citigroup have yet to recover in full from the ravages of the recent recession, another major American bank appears to be powering ahead of its once-larger rivals. In fact, Wells Fargo & Co (NYSE:WFC) has attracted the attention of Warren Buffett's holding company Berkshire Hathaway Inc. (NYSE:BRK.A) once again and looks poised to deliver growth for years to come. While owning large-cap bank stocks is not every investor's cup of tea, those who wish to make tentative inroads into the space would do well to make a side-by-side comparison of WFC, Bank of America Corp (NYSE:BAC) and Citigroup Inc. (NYSE:C).
About Wells Fargo, Bank of America and Citigroup
San Francisco-based Wells Fargo is a diversified bank that serves retail and business customers in around three dozen countries. In addition to a full suite of deposit account and wealth management services, the company offers home loans, refinancing vehicles and credit services to American consumers. In particular, its mortgage refinancing operations have driven its profits in recent years. Wells Fargo & Co (NYSE:WFC) employs around 270,000 people and earned about $18 billion on $79.5 billion in gross 2012 revenues.
New York-based Citigroup offers many of the same products and services as Wells Fargo. The company is particularly well-known for its credit card services and formerly operated a lucrative investment banking arm. These days, the company is more consumer-focused and offers lending, advisory and support services in 40 countries. Citigroup Inc. (NYSE:C) employs about 260,000 people and earned $7.5 billion on $59.3 billion in gross 2012 revenues.
Charlotte-based Bank of America provides wealth management, deposit account and credit card services for American consumers and business owners. In addition, it provides commercial and mortgage loans to customers in North America and elsewhere. Although its international operations are more limited than those of its competitors, it does maintain a presence in certain overseas markets. Bank of America Corp (NYSE:BAC) employs 267,000 people and earned $2.8 billion on $75.2 billion in gross 2012 revenues.
What Makes WFC Different
Simply put, Wells Fargo & Co (NYSE:WFC) is no longer consigned to playing catch-up with Bank of America Corp (NYSE:BAC) and Citigroup Inc. (NYSE:C). With once-proud rivals like Wachovia out of the picture, the company finds itself in an enviable strategic position. What's more, its market capitalization of more than $200 billion makes it one of the largest retail financial institutions in the United States. By comparison, Citigroup and Bank of America enjoy market caps of less than $150 billion.