Wells Fargo is on the verge of being the most valuable U.S. bank of all time, as its stock-market value approaches the record set by Citigroup in 2001, The Wall Street Journal reports.
San Francisco-based Wells Fargo, whose East Coast headquarters is in Charlotte, has a stock market value of about $269 billion. That's about $13 billion shy of Citigroup's record of $282.75 billion, according to the newspaper.
A rally in Wells Fargo's stock has been boosting its stock-market value, or market capitalization, which is calculated by multiplying the number of outstanding common shares by the current market price of a share.
Shares of Wells Fargo, the fourth-largest U.S. bank by assets, closed at $51.09 on Monday, up about 12% for the year. Larger rivals JPMorgan Chase & Co., Bank of America Corp. and Citigroup are all down in 2014.
Tough rules on risk-taking and a slowdown in trading are weighing on profits at investment banks, the newspaper reports. But Wells Fargo, which has never been a big trading firm, has focused on generating revenue from its bread-and-butter businesses of commercial and consumer lending and mortgages as rivals pulled away after the financial crisis, the paper says.
Here's an excerpt from the story:
All told, Wells Fargo made $36 billion worth of mortgage loans in the first quarter, with an industry-leading 16% market share, according to data provider Inside Mortgage Finance. It has about 6,200 branches, the most among U.S. lenders, and is the third-largest bank by deposits, one spot ahead of Citigroup.
In the past six years, Wells Fargo has added about 104,000 jobs, largely through its acquisition of Wachovia Corp., while Citigroup has cut about 120,000 as it eliminates businesses. The other megabanks have added smaller numbers of jobs over the same period.As the story points out, Wells Fargo also faces numerous lawsuits -- which, as we all know, is not unusual for large banks these days.
For example, the bank is battling a civil case filed by the Federal Housing Administration lawsuit over home mortgage loans.
The bank is also defending itself in a lawsuit brought by the city of Los Angeles, which has accused it and other banks, including Bank of America, of giving minorities home loans they couldn't afford, causing a flood of foreclosures and a reduced tax base.