First Republic Bank (FRC), Bank of America Corp (BAC), Wells Fargo & Co (WFC): The Best American Bank

First Republic Bank (NYSE:FRC) has registered the highest Return on Equity (ROE), followed by Wells Fargo & Co (NYSE:WFC). Bank of America Corp (NYSE:BAC) has a very weak ROE, owing to the drastic declivity in its interest and non-interest income.

Efficiency ratio analyzes the overhead structure, with the lowest being the most desirable. First Republic Bank is making considerably more than it’s spending and is therefore on sound fiscal footing. However, Bank of America Corporation must spend the highest amount in order to make one dollar of income.

Book value per share, being the highest for Wells Fargo & Co (NYSE:WFC), puts its investors in a secure position as they would get a reasonable return if the bank was to hypothetically liquidate. Conversely, Bank of America Corp (NYSE:BAC) Corporation has the smallest book value per share due to its plunging revenues and net income.

The Basel III has specified a minimum of 8.0% total capital to risk-weighted assets, a regulatory requirement that has to be followed by banks to remain in compliance.

All three banks are safely operating within this requirement, providing them with extra cushion to take on higher risk to generate higher return. The increasing ratio puts the bank in a safe mode to be able to absorb volatility, should any losses occur.

Source: First Republic Bank Financials

First Republic Bank (NYSE:FRC)’s deposit office size is largest amongst all its peers in the marketplace which puts it in a lead position.  That basically means its doing a good job of using its assets effectively.

Future Prospects

To sum up, analysis supports the conclusion that First Republic Bank (NYSE:FRC) is a strong buy candidate.  Based on the numbers, Wells Fargo & Co (NYSE:WFC) could be a second choice, while the risk adverse may steer clear of Bank of America Corp (NYSE:BAC). Take a look for yourself–you might come to the same conclusion.

The article The Best American Bank originally appeared on Fool.com and is written by Awais Iqbal.

Awais Iqbal has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America and Wells Fargo. Awais is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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