The financial services industry is one of the most important parts of the U.S. economy. The sector includes insurance, investment, and real estate firms, and, more importantly, banks. According to the Federal Reserve, there are 1,836 banks in the United States alone, ranging from nationally chartered to state-chartered firms. One of those names is Wells Fargo, which ranks as the third-largest bank in the country. It achieves this position by the size of its market capitalization as well as the total amount of domestic assets it holds. This short article outlines some of the key facts about Wells Fargo and its main competitors in the U.S.
- Wells Fargo is among the largest banks in the U.S. by market capitalization and by total assets.
- JPMorgan Chase is the largest bank in the country and among the ten largest banks in the world.
- Bank of America reached its size through a series of mergers and acquisitions including NationsBank and Fleet Boston Financial.
- Citigroup, which was once the largest company and bank worldwide, ranks as fourth-largest bank in the country, after Wells Fargo.
Wells Fargo: An Overview
Wells Fargo (WFC) was founded in 1852 by Henry Wells and William G. Fargo. It holds the distinction of operating under the very first national bank charter granted in the U.S. Headquartered in San Francisco, Wells Fargo offers a wide range of banking and financial services through more than 50 business lines and operates in more than 35 countries worldwide. The bank had more than 5,300 retail branches in the United States as of the end of the fourth quarter of 2019.
Wells Fargo reported net income of $19.5 billion and revenue of $86.4 billion at the end of its 2019 fiscal year. The company's return-on-asset (ROA) ratio was 1.02% and its return-on-equity (ROE) ratio was 10.23% for the same period.
The bank suffered several crises after being slapped with fines following a series of violations. In 2018, the bank agreed to pay $1 billion in fines for charging mortgage and loan customers extra fees. It also paid $185 million in penalties after acknowledging that it opened 3.5 million unauthorized bank accounts and credit cards going back to 2016. The bank also agreed to issue refunds to affected customers.
Despite this, Wells Fargo remains one of the country's top banks by market capitalization—$117.4 billion as of March 31, 2020. As of Dec. 31, 2019, the bank held about $1.7 trillion in domestic assets. In 2018, It was also recognized as the world's third most valuable bank brand name behind ICBC and China Construction Bank in a Brand Finance study of more than 500 banks.
The main competitors of Wells Fargo are three of the other big four major U.S. banks—JPMorgan Chase, Bank of America, and Citigroup. Combined, these four banks together hold between 40% to 45% of all bank deposits in the country and serve the majority of personal and commercial accounts in the United States.
The four largest banks in the United States hold between 40% to 45% of all bank deposits and serve the majority of the country's personal and commercial accounts.
- Market Capitalization (as of March 31, 2020): $274.3 billion
- Domestic Assets (as of Dec. 31, 2019): $1.8 trillion
JPMorgan Chase (JPM) as we know it today was formed through the merger of JP Morgan Bank and Chase Manhattan Bank in 2000. It is the largest bank in the United States by market capitalization and total assets held in the country and is among the top ten banks in the world by total assets.
Headquartered in New York, the bank operates across the entire spectrum of banking and financial services in more than 100 countries through four divisions. They include asset management, corporate and investment banking, consumer and community banking, and commercial banking. The bank has engaged in a number of mergers and acquisitions (M&A) including Bank One, the Bank of Chicago, and Bear Stearns.
The company reported net income of $36.4 billion and revenue of $115.6 billion for the 2019 fiscal year. Its ROA ratio was 1.29% and its ROE ratio was 13.26% for the same period.
Bank of America
- Market Capitalization (as of March 31, 2020): $185.2 billion
- Domestic Assets (as of Dec. 31, 2019): $1.7 trillion
Bank of America Corporation (BAC) is headquartered in Charlotte, North Carolina, but has a vast retail banking presence with more than 4,500 retail operations in all 50 states, serving more than 50 million consumer and business accounts.
It is the second-largest bank in the United States by market capitalization and by total assets. It achieved its current size through a series of mergers and acquisitions, including NationsBank in 1998—the biggest bank merger at that time—and Fleet Boston Financial. Bank of America's 2008 acquisition of Merrill Lynch transformed it into one of the largest investment banking operations worldwide, boosting it to one of the largest wealth management companies in the world.
For the full year of 2019, Bank of America reported revenue of $91.2 billion. Net income came in at $27.4 billion. As of Dec. 31, 2019, Bank of America's full-year TTM ROA ratio was 1.21%, while its ROE was 10.36%.
- Market Capitalization (as of March 31, 2020): $88.4 billion
- Domestic Assets (as of Dec. 31, 2019): $854 billion
Like its peers, Citigroup (C) is a multinational banking and financial services company. Headquartered in New York, the bank was formed through one of the largest mergers in history, that of Citicorp and the financial services firm, Travelers Group. The bank falls in fourth place, behind Wells Fargo. However, when looking strictly at assets held, Wells Fargo and Citigroup tend to vacillate between third and fourth place at any given time.
Prior to the Great Recession, Citigroup was ranked as the largest company and the largest bank worldwide, but the company suffered massive losses during the financial crisis, dropping all the way down to the last position among the big four.
Citigroup's TTM ROA was 1% and its ROE ratio was 10.04% for the full year of 2019. For the 2019 fiscal year, Citigroup reported net income of $19.4 billion on revenue of $74.3 billion.