One Wells Fargo Center, Charlotte, North Carolina. Image source: iStock/Thinkstock.

If there was any doubt about Wells Fargo's (NYSE:WFC) competitive strength relative to its competitors, then its performance in the third quarter should put that to rest, as it was the only traditional too-big-to-fail bank to increase revenue in the three months ended Sept. 30.


3Q15 (millions)

3Q14 (millions)

Year-over-Year Change

JPMorgan Chase (NYSE:JPM)




Bank of America (NYSE:BAC)




Citigroup (NYSE:C)




Wells Fargo




Source: Quarterly earnings releases.

Thanks to the persistence of low interest rates and concerns about lagging economic growth in China, all three of the nation's biggest banks by assets reported lower revenue last quarter when compared to the year-ago period.

  • JPMorgan Chase was the hardest hit, reporting a 6.9% drop in quarterly net revenue. It suffered from a $1.5 billion drop in noninterest income, primarily from a decrease in trading income.
  • Citigroup was next, reporting a 5.1% decline in its top line. The New York-based bank was plagued by lower net interest income and depressed gains from trading.
  • Bank of America rounded out the top three biggest banks, with a 2.5% reduction in quarterly revenue, affected by the same forces that weighed on JPMorgan Chase and Citigroup's results.

When compared to its competitors, in turn, Wells Fargo's quarter looked spectacular. For the three-month period, its top line increased on a year-over-year basis by 3.1%.

Wells Fargo's success in this regard was driven by two factors. First, unlike JPMorgan Chase, Bank of America, and Citigroup, Wells Fargo doesn't have substantial trading operations. As a result, the disruption in the credit markets that weighed on its competitors trading revenue didn't have as big of an impact on the more traditionally focused consumer and commercial lending operations of Wells Fargo.

Second, because Wells Fargo wasn't hobbled by the financial crisis, it's been able to grow aggressively in its wake as opposed to the retreating and retrenching strategies adopted by Bank of America and Citigroup. You can see this by looking at the growth in Wells Fargo's earning assets vis-à-vis its competitors.

Average Earning Assets

3Q15 (millions)

3Q14 (millions)

Y-O-Y Change

JPMorgan Chase




Bank of America








Wells Fargo




Source: Quarterly earnings releases.

Since the third quarter of last year, Wells Fargo has expanded its portfolio of interest-earning assets by a remarkable $123 billion. To put that into perspective, only a dozen banks in the country hold more assets than that in total. Thus, even though lower interest rates weighed on the yield of Wells Fargo's assets (primarily loans and fixed-income securities), the additional assets nevertheless allowed it to earn more net interest income compared to the same quarter last year.

Net Interest Income

3Q15 (millions)

3Q14 (millions)

Year-over-Year Change

JPMorgan Chase




Bank of America








Wells Fargo




Source: Quarterly earnings releases.

 As I see it, this is only the tip of the iceberg for Wells Fargo, as competitive advantages like these tend to have a cumulative effect over time. The net result is that investors in the nation's fourth biggest bank by assets can rest easy knowing that their money is both safe and being put to productive use.