10 Shocking and Overlooked Comparisons (in Graphs!)

Investors often view the financial sector is as a black hole of sorts. Banks, mortgage lenders, insurers, and hedge funds are constantly lumped together and referred to as if they were one overly complex and unintelligible mass.

While many of these entities are interconnected and dabble in similar areas, it's important to investors to understand the vast differences and the quick changes that can occur, seemingly in the blink of an eye.

With that in mind, here are 10 graphical representations of some astonishing and overlooked comparisons involving banks, insurers, real estate, and more.

1. Unforeseen circumstances

Source: Bank of America annual reports.

In 2006, pre-Countrywide acquisition, Bank of America (NYSE: BAC  ) was considered one of nation's strongest financial institutions. Little did management and shareholders know that the Countrywide acquisition would ultimately lead to massive legal settlements and liquidity uncertainty as a result of "representations and warranties" made on the droves of questionable mortgages Countrywide had written for years.

2. Sign of commitment

*Includes legacy companies acquired via merger or acquisition.

If you have dreams of running one of the nation's largest banks one day, you'd better be working for one of them now. All of the executives steering the biggest banking ships have vast experience in the industry and at their specific company.

3. From footnote to flat-out scary

Source: AIG annual reports

Much like Bank of America shareholders, those holding AIG (NYSE: AIG  ) stock were blindsided by an issue seldom covered in years prior. AIG shareholders were crushed by the massive losses incurred as a result of the company's risky credit default swap portfolio.

4. From hero to zero

Source: S&P Capital IQ. Graph in millions.

The 2008 collapse of Lehman Brother is well documented. But a few details are often overlooked -- for the full 2007 fiscal year, Lehman Brothers reported its highest ever net income of more than $4 billion.

5. Vast opportunity


To the average American, having plastic in one's wallet and purse is nothing new, but internationally, the story looks much different. While the U.S. continues to move away from a cash-centric society, other countries, such as India, have yet to follow suit and offer enormous, long-term potential for the likes of MasterCard and Visa.

6. Big 4 with big differences

Source: Company earnings reports.

The largest four U.S. banks are continually lumped together and referred to as if they were all identical businesses. However, the differences between them can be vast. In the most recent quarterly results, only 43% of revenue at Citicorp (Citigroup's (NYSE: C  ) core operations, excluding Citi Holdings) was booked in North America. On the other hand, Wells Fargo (NYSE: WFC  ) didn't call out any international revenue.

7. Real estate prices only go up, right?

Source: Robert Shiller.

Yes, you're reading that chart right -- it says 1894. These readings are based on index data from Yale professor and housing market guru Robert Shiller. "Real" prices take into account inflation. Based on this index, real home prices are actually lower than when Grover Cleveland was running the country.

8. Location, location, location

Source: Wells Fargo presentation and BofI 10-K.

BofI Holding (NASDAQ: BOFI  ) , the parent company to Bank of Internet, is trying to change the way people bank by conducting its business over -- you guessed it -- the Internet. The bank has just one physical location -- its headquarters in San Diego. In contrast, Wells Fargo has more physical locations than Minnesota Vikings star running back Adrian Peterson has career yards (8,849).

9. Weathering the hard times

Source: S&P Capital IQ.

No bank escaped the wrath of the financial crisis, but some banks weathered the storm better than others. Wells Fargo and JPMorgan Chase have each only reported one quarterly net loss since 2003.

10. Market retreat

Source: Bipartisan Policy center tabulations of data from Inside Mortgage Finance, "Mortgage and Asset Securities Issuance," Inside MBS & ABS.

As a result of the financial crisis, the term "mortgage-backed security" conjures up images of massive losses and financial panic in the minds of many investors. However, not all MBSes are created equally. MBSes backed by agencies, such as Fannie Mae and Freddie Mac, are considered ultra-safe. On the other hand, non-agency MBSes are backed by private insurance and caused many of the losses during the financial crisis. In 2006, non-agency MBSes held a dominant position in the MBS-univserse, but today, supply has wilted as demand has evaporated.

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Read/Post Comments (5) | Recommend This Article (45)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 05, 2013, at 12:44 PM, michaelkm88 wrote:

    Please correct the former presidents name to GROVER CLEVELAND. Thank you.

  • Report this Comment On August 07, 2013, at 1:37 PM, edus wrote:

    Dear editors,

    I wonder how INBK, an internet bank has missed your radar screen so far-- I simply cannot find in the search section!


  • Report this Comment On August 09, 2013, at 5:19 PM, SkepikI wrote:

    Well, this is easily the most fun and interesting article I've read for over a month.

    It ought to be (in Gasps!) as several of the graphs re banks got my (gasp) attention.. ;-)

    But I certainly need to be a critic of your, or maybe Shiller's under-evaluated data? for 1894. I'd have to bet a whole lot of housing was not measured or even priced in 1894. I know of at least ONE that was left out, my great grandfathers self-build semi log cabin in N. Wisconsin, and that was par for the course rather than an exception.... As a longstanding critic of unevaluated numbers masquerading as "data" I certainly have to object to charts of unreliable, not comparable "numbers" being presented as data.

    hmm I wonder what a "soddy" in Nebraska went for in 1894? Well, no matter, the rest of the article was a good read and a hoot to boot...

  • Report this Comment On August 15, 2013, at 12:03 PM, NeuroProf wrote:

    Hi David -

    On your note about the use of cash/checks around the world, countries like India may just skip mastercard and visa and move directly to internet transfer of funds. In some parts of the modern world this is already the norm. We pay our bills in NZ by internet transfer of funds - no cash, no check, no plastic.

  • Report this Comment On August 15, 2013, at 2:24 PM, CluckChicken wrote:

    "We pay our bills in NZ by internet transfer of funds - no cash, no check, no plastic."

    But how do you make retail purchases. The chart is for retail purchases not bill paying.

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