Citigroup Inc (C): Is the Sun Finally Shining on This Bank?

The only stock that is behind Citi is Bank of America Corp (NYSE:BAC).  Bank of America Corp (NYSE:BAC) seems to still have a hangover from its Countrywide merger half a decade ago. Countrywide has cost Bank of America over $40 billion in legal fees, and real estate losses have continued to mount over the years. All said and done, Countrywide cost $44 billion to the bank.

In a comedic turn of events, Bank of America must not have read all of the fine print when they purchased the sub-prime king. Looking at Bank of America’s gross profit margin, it continues to be depressed due to legal fees and the threat of litigation. Bank of America’s brand name has been tarnished, and they are already seeing other lenders continue to gobble up market share in the mortgage origination market. The task for Bank of America will be uphill going forward.

Bottom line

Wells Fargo was able to take advantage of the other big bank’s hangovers and steal their mortgage origination business, while they were reducing risk. Citigroup Inc (NYSE:C)’s balance sheet may not have shrunk by over $400 billion since its high, but it reduced a lot of fat and is a much leaner company.

Citi comes with the upside of being a truly global bank, while still having a depressed valuation without the legal trouble still facing Bank of America. If you are looking for exposure to the large banks, Wells Fargo will let you sleep well at night, but Citi can potentially offer much more upside.

Wes Patoka has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup Inc , and Wells Fargo.