If you were to drive through the streets of Sioux Falls, South Dakota, the last thing you would think is that it's home to two of the nation's richest bank branches. Yet, that is indeed the case.

According to deposit data compiled by ValuePenguin.com, the biggest bank branch in the country is operated by Citibank, a wholly owned banking subsidiary of New York-based Citigroup (NYSE:C), and located in the outskirts of this otherwise nondescript city. To top things off, Sioux Falls also boasts the sixth largest bank branch by total deposits. It's owned by a subsidiary of Wells Fargo (NYSE:WFC).




Citibank, National Association

Sioux Falls, SD


JPMorgan Chase Bank, National Association

New York, NY


Bank of America, National Association

Charlotte, NC


FIA Card Services, National Association

Wilmington, DE


The Bank of New York Mellon

New York, NY


Wells Fargo Bank, National Association

Sioux Falls, SD


Source: ValuePenguin.com.

Now, I know what you're thinking. The reason these banks decided to set up shop in South Dakota is obvious; they wanted to be close to Mount Rushmore.

Growing up in Wyoming, and spending many a summer weekend at the monument, I can certainly appreciate the sentiment. But, for the record, anybody who knows anything about the area knows that being near Mount Rushmore has less to do with patriotism than it does with the Rushmore Mountain Taffy Shop located in nearby Keystone.

Yet, it turns out that neither the grandeur of Mount Rushmore nor the guilty pleasure of conspicuously stretched taffy appears to have had any impact on these banks' decisions to both locate large branches in South Dakota and stuff them full of deposits.

I say this for two reasons.

In the first case, Mount Rushmore is all the way across the state. Scurry over to Google Maps and see for yourself; it takes more than five hours to drive from Citicorp's address in Sioux Falls to the taffy shop in Keystone -- if you choose to make a side trip to the monument itself, plan for an additional five minutes in the car.

And in the second case, South Dakota is one of only three states in the country that doesn't have a corporate income tax, according to the Tax Foundation. Although it's impossible to be certain, it seems likely that this may exert even more of an attraction than the said freshly made taffy.

It's for this reason that many large employers, and particularly those in the financial services industry including Citigroup and Wells Fargo, have set up shop in Sioux Falls. New York and California, by comparison, boast corporate tax rates of 7.1% and 8.8%, respectively. Suffice it to say, that could take a huge additional chunk out of after-tax earnings for companies like these.

At the end of the day, I say most of these things in jest. However, there's an important lesson for investors to learn here.

That is, when you look at a bank, one of the most valuable assets they can hold is a massive and inexpensive deposit franchise. Wells Fargo is among the nation's best in this regard, and while Citigroup is far behind its too-big-to-fail brethren, the same principal holds true for it as well.

Consequently, anything that potentially increases the carrying cost of this asset is abhorrent to its very existence and should be avoided.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.