Wells Fargo & Co (WFC), JPMorgan Chase & Co. (JPM): Seven Charts Show Why This Bank (BAC) Is Best of Breed

Page 1 of 4

Wells Fargo & Co (NYSE:WFC) is by and large considered the best in breed of all the major US banks. Warren Buffett is certainly an outspoken fan of the company. But outside of a few investment managers who periodically sing the bank’s praises, Wells Fargo & Co (NYSE:WFC) tends to stay out of the spotlight (which over the past five years is a definite positive, see here, here, and here for just a few examples).

Wells Fargo & Co (NYSE:WFC)The bank sidesteps the glitz and glam of high flying Wall Street and in the process they somehow outperform the other mega banks, JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corp (NYSE:BAC), and Citigroup Inc (NYSE:C).

To get to the bottom of this, I’ve compiled 7 charts to try and figure out how exactly they do it. In the end, the answer is simpler than you may think.

1. Growth

Wells Fargo & Co (NYSE:WFC) is a big bank, one of only four in the US with total assets greater than $1 trillion (along with JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corp (NYSE:BAC), and Citigroup Inc (NYSE:C)). However, they stand out amongst the big four as having far and away the best top line growth from 2011 to 2012.

Growth is obviously good, but this chart also points out a symptom of another issue with the big banks — troubled balance sheets. Citigroup Inc (NYSE:C) and Bank of America Corp (NYSE:BAC) specifically are still battling to work out assets and businesses that collapsed during the recession. The poor decisions made in 2004-2006 that led to the Financial Crisis are still preventing these two banks from moving forward, even after five years.

It is also worth noting the other strong performers on this chart, U.S. Bancorp (NYSE:USB) and PNC Financial Services (NYSE:PNC). These two banks are considered regionals (even though they are the 9th and 12th largest respectively as of Dec. 31, 2012, with over $650 billion combined assets), and like Wells Fargo & Co (NYSE:WFC), they were very successful working through the recession and rebounding of late. Take note of the regional bank theme, we’ll see it again.

2.  Getting Maximum Bang for your Buck

Where else does Wells Fargo & Co (NYSE:WFC) really stand out? Squeezing every penny out of the assets on the books. In the industry, Wells Fargo & Co (NYSE:WFC) is known as the preeminent cross-selling institution, and this is where that bears fruit.

Compared to the other $1 trillion+ banks, Wells produces nearly a third more dollars of revenue per dollar of assets than second place JPMorgan Chase & Co. (NYSE:JPM).

Before seeing this chart, you may have said, “Maybe overall they squeeze more revenue, but no way Wells competes on fee productivity without being big in investment banking like JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corp (NYSE:BAC), or C!”

But the reality is that Wells is not only able to compete, but once again win. The key is their dominance in the small business and consumer mortgage sectors — driven by robust fee income from mortgage originations and from the “Wells Fargo Advisors” investment management business.

Barlow Research Associates published a report this week detailing market share in the small business and middle market segments. The conclusion? Overall the big banks are losing market share to smaller institutions (like community banks), but Wells Fargo is holding its ground. Wells maintained a constant 10% of the small business market over the past 10 years and currently holds an industry leading 10% market share of the middle markets.

Again, the data indicates that an old-fashioned style of commercial and retail banking is outperforming the glitz and glamour of Wall Street. Just like the regional banks and community banks, Wells’ focus is on cross-selling loan, deposit, and cash management products between the consumer at home, the small business, and the middle market.

It almost seems too simple, but the numbers prove it out. Old-fashion banking is winning in the marketplace today.

Page 1 of 4
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!