After comparing one important bit of the balance sheet at Citigroup (C -1.88%) to peers like Bank of America (BAC 0.45%), Wells Fargo (WFC 0.89%), and JPMorgan Chase (JPM 0.06%), 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.
