Wells Fargo has officially passed Citigroup as the nation’s third largest bank by assets. The company officially secured the ranking Friday when it reported assets of $1.79 trillion as of the end of 2015. That figure is higher than Citigroup’s reported $1.73 trillion in assets. The announcement was surprising to few, as Wells Fargo has been inching up on Citigroup for months.
The two banks have adopted the divergent strategies since the financial crisis began in 2008. Wells Fargo has been building its loans and buying other banks to grow profits. Citigroup has been cutting costs and selling assets to appease regulators afraid that the bank was too big to fail. As a result, Wells is reporting strong growth in loan revenue, while Citi reported earnings results that were mainly due to one-time cost cutting measures.
Wells Fargo announced that its total loans as of the end of December were up $13.3 billion from the end of September, rising to $916.6 billion. The company also reported that its loan costs did not rise in the fourth quarter. Many banks are facing loan concerns over the dropping price of oil. Banks that bankrolled the latest oil boom are facing worsening quality of in those loans, which could increase costs and cut in future earnings. Energy loans make up 2 percent of Wells’ loan portfolio, compared to 36 percent of loans in residential real estate.
The San Francisco-based bank’s top fee-generating business, which offers mutual funds and other investment products were hammered by choppy markets in the fourth quarter. The issues were said to be responsible for a 5 percent decrease in revenue for the unit. Since the financial crisis, Wells Fargo and other banks have turned increasingly to wealth management to boost returns. However, while the bank has about 11 percent of U.S. deposits, it has just 1 to 2 percent of the wealth.