Wells Fargo & Co. exceeded Citigroup Inc. in market value yesterday to become the third-most-valuable U.S. bank, Bloomberg reported.

Though Citigroup remains the biggest bank in terms of assets, shares of Wells Fargo rose $2.36 to $33.56 yesterday on the New York Stock Exchange, giving it a market value of $111 billion, compared with Citigroup’s $110.6 billion.

Citigroup’s market value used to be more than $240 billion, double Wells Fargo’s valuation, but Citigroup shares have plummeted 58 percent over the past two years, compared with Wells Fargo’s 4.1 percent drop.

Even as financial institutions have faced a total of more than $500 billion in losses and credit write-downs, led by $55 billion at Citigroup, Wells Fargo has maintained a profit after avoiding the riskiest types of loans. Wells Fargo has reported more than $5 billion in profits over the past three quarters, while Citigroup has posted a $17.4 billion loss due to write-downs for subprime-related assets, leveraged loans and bond insurance contracts.

In addition, Wells Fargo has made at least 10 acquisitions this year and raised its dividend to 34 cents per share from 31 cents.

At the end of June, Citigroup’s assets totaled $2.1 trillion, more than any other U.S. bank. Wells Fargo ranked fifth with $609.1 billion. The largest bank by market value is Bank of America Corp. at $158.4 billion.

However, Wells Fargo announced yesterday that with the federal takeover of Fannie Mae and Freddie Mac, it will take a non-cash charge in the third quarter of 2008. The company did not specific how much the charge would be, but said it has $336 million in securities issued by Fannie Mae and $144 million in Freddie Mac securities. The company does not hold any common stock or other equity securities issued by the mortgage giants.