Citigroup Inc. (C), JPMorgan Chase & Co. (JPM), Wells Fargo & Co (WFC): Banking On, Well, Banking

One of the great turnaround stories that’s still taking shape is Citigroup Inc. (NYSE:C). With all the talk surrounding the mixed results of the housing market and the auto industry in full-fledged rebound mode, much of the spotlight has been taken off the financials. I plan to re-aim this spotlight.

Before the financial crisis, Citigroup Inc. (NYSE:C) traded at a premium to both JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corp (NYSE:BAC) on a price-to-book basis; now the company trades at a steep discount to JPMorgan Chase & Co. (NYSE:JPM) and inline with Bank of America Corp (NYSE:BAC).

I think Citigroup Inc. (NYSE:C) is still in full turnaround mode and presents investors the best upside of all the major banks. The bank should trade more inline with JPMorgan and other top banks over the long term.

JPMorgan Chase & Co. (NYSE:JPM) is one of the top-three banks by assets. In March, the Fed approved the company’s capital deployment plan. JPMorgan now has a $6 billion stock- repurchase program in place.

JPMorgan Chase & Co. (NYSE:JPM) is also slashing jobs to boost profitability. The bank will eliminate 19,000 jobs by the end of 2014. With the help of job cuts, the bank is calling for net income of $27.5 billion in 2014.

Revenue is expected to be up 2% in 2013, after flat revenue growth in 2012. The top line is expected to be weak due to lower trading revenue. Earlier this month, the bank posted 2Q EPS of $1.60 versus $1.21 for the same period last year. Yet, total loans remained flat year-over-year, with the net interest margin falling. So, the bank is still seeing modest growth, but not enough to justify a premium to Citi.

The mortgage bank

Wells Fargo & Co (NYSE:WFC) is still the U.S.’ leading bank for mortgages. The company got a nice uptick in earnings and loan volume related to mortgage refinancing, but as this market cools, so should Wells Fargo.

Wells Fargo & Co (NYSE:WFC) has a target return on assets of 1.3% to 1.6% and return on equity of 12% to 15%. As well, the bank is looking to international markets to help boost its business model, specifically in the asset management sector.