The Stunning Way Wells Fargo & Co Beat Its 7 Biggest Peers

Wells Fargo is known for its top-tier mortgage unit relative to peers Bank of America and JPMorgan Chase, but it turns out its lead is even more commanding than you think.

May 26, 2014 at 11:02AM


Wfc

Wells Fargo (NYSE:WFC) is widely known for its commanding position in the $1.7 trillion mortgage market, but the degree in which it completely crushes its peers will surprise you.

Massive size
In 2013 alone it had $8.8 billion in revenue delivered from its mortgage banking operations, which was nearly as much as the revenue of Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM) combined:

Bank

Mortgage Banking Revenue

Total Net Revenue

% of Total Revenue

Wells Fargo

$8.8

$83.8

10.5%

JPMorgan Chase

$5.2

$96.6

5.4%

Bank of America

$3.9

$89.8

4.3%

Source: Company SEC Filings

A recent presentation revealed just how much of a commanding grip it has on the entire mortgage industry itself.

Commanding lead
At the latest annual meeting, Wells Fargo showed that it issued more mortgages in 2013 for the purposes of buying homes than the next seven companies combined

Images
Source: Company Investor Relations.

An important point to note is that this volume is based on purchase money mortgages, not refinances. Although Wells Fargo held a commanding lead there as well, this is a shrinking market, at least for the near term: the Mortgage Bankers Association (MBA) predicts refinancing volume will fall to $425 billion this year, a decline of more than $1 trillion from the $1.5 trillion seen in 2012.

Images
Source: Mortgage Bankers Association 

On the other hand, MBA notes the purchase volume may take a slight dip in 2014, it still expected to rise in the coming years.

Since JPMorgan Chase and Bank of America saw significant gains from mortgage refinancing, they've seen much steeper declines in the total mortgage revenue through the first quarter of 2014:

Images
Source: Company Investor Relations

While the revenue from mortgages has fallen by 46% at Wells Fargo, the tumble at both JPMorgan Chase and Bank of America stands above 65%.

All too often, we think the businesses at the biggest banks are all the same. Yet as Wells Fargo shows here, its commanding lead in the mortgage space will continue to be one more way it stands above its peers.

Big banking's little $20.8 trillion secret
While Wells Fargo, Bank of America, and JPMorgan Chase are the three biggest banks, they're all afraid of the brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

Patrick Morris owns shares of Bank of America. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo and has the following options: short June 2014 $50 calls on Wells Fargo and short June 2014 $48 puts on Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers