What sets Wells Fargo apart from its peers?
Wells Fargo is the largest mortgage lender in the United States, operating primarily as a retail and commercial bank (XLF). Wells Fargo is one of the few large banks that engages in minimal trading and investment banking operations. Its income is primarily derived from the traditional loan-making business. It is also Warren Buffett’s (BRK.A) largest holding.
In the past ten years, Wells Fargo’s (WFC) book value has grown twice that of JPMorgan Chase (JPM) and ten times that of Bank of America (BAC). It has been one of the most profitable banks in the United States, generating ~1.2% return on assets in 2016.
Focus on traditional banking
Wells Fargo’s operations and investments are more centered on the United States than its large-cap peers, making it much less sensitive to global events.
In 4Q15, WFC’s non-US exposure accounted for 4.4% of its total assets. In contrast, for Citigroup, JPMorgan Chase, and Bank of America, this ratio stood at 52.3%, 11.4%, and 10.9%, respectively.