Surprisingly, Citigroup Inc Is Growing Just Fine

At first glance it looked as though Citigroup trailed peers Bank of America, Wells Fargo, and JPMorgan Chase in a big way. But a little digging shows an important thing to see.

Jul 22, 2014 at 5:58PM

After comparing one important bit of the balance sheet at Citigroup (NYSE:C) to peers like Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), and JPMorgan Chase (NYSE:JPM), I was ready to once again write it off. But a dive beneath the surface reveals that looks can be deceiving.

Diving into deposits
One of the metrics I always like to gauge at the banks is deposits. While the growth won't grab headlines, this is one of the most important elements of a bank's ability to function. After all, deposits allow banks to write loans, and they're a wildly inexpensive way to borrow.

In addition, one of the easiest ways to start a relationship is to have a customer open up a banking account where they park their money.

And quick glance at the topline deposit growth over the last year at the Big Four reveals a number of surprising trends:

Source: Company Investor Relations

First, one of the most eye-opening realities is the massive growth at both JPMorgan Chase and Wells Fargo. Each bank saw its deposits rise by nearly 10% over the last year. Wells Fargo added nearly $100 billion more in deposits, and JPMorgan Chase was up by $120 billion.

Bank of America and Citigroup, however, told a bit of a different story. As you can see, each bank saw its deposits sit essentially unmoved between the first and second quarter.

And as shown below, both the total deposit growth and the rate at which those deposits grew over the last year for both Bank of America and Citigroup far lagged peers Wells Fargo and JPMorgan Chase:

Source: Company Investor Relations

With all that in mind, I was almost ready to write Citigroup off and cite another example of failed operations.

But then I looked at Citigroup's Citigcorp (its good bank) and Citi Holdings (its bad bank).

Source: Company Investor Relations

As you can see, its core operations displayed growth that was in line with the other banks. And somewhat optimistically, it continued to unwind its Citi Holdings positions.

For Citigroup investors, it's encouraging to know the bank's deposit base is growing at roughly the same rate of its better esteemed peers, and even ahead of Bank of America.

And more generally speaking, this is a pointed example why investors who are reviewing the results of companies in the midst of repositioning and changing, like Citigroup, must always dive beneath the broader numbers to determine the true quarterly results of a company, whether for better or for worse.

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Patrick Morris owns shares of Apple and Bank of America. The Motley Fool recommends Apple, Bank of America, and Wells Fargo. The Motley Fool owns shares of Apple, Bank of America, Citigroup, JPMorgan Chase, and 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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