JP Morgan is another company that managed to stay a step above the rest throughout the financial crisis. The company currently trades at a reasonable 9.30 times earnings, with most recent earnings per share of $5.20, and a very nice dividend yield of 2.40%. JP Morgan is essentially “average” when it comes to our banking metrics with an efficiency ratio 67%, a LTD ratio of 61%, loan growth of $10 billion, and deposit growth of $60 billion. The company seems to be very conservative when it comes to generating revenue from its deposit base, which, considering the current financial environment may not be bad thing.
Bank of America Corp (NYSE:BAC) has a much different story than the two banks above. At face value the bank seems way out whack. The company currently trades at 50.28 times trailing twelve-month’s earnings, with measly $0.25 earnings per share, and a dividend yield of 0.30%. As terrible as those fundamentals may look our banking metrics tell a much different story. Bank of America Corp (NYSE:BAC)’s efficiency ratio sits at 85%; its LTD ratio is 82%, with loans decreasing year-over-year by $18 billion and deposits increasing $70 billion year-over-year. You might think that the decrease in loans generated is a dark spot on Bank of America Corp (NYSE:BAC)’s financial resume, however the fact the bank is being more conservative in originating loans and still generating revenue from theses expenses are great signs that point towards long term growth.
Finally, we have another dark sheep of the financial crisis. Citigroup Inc. (NYSE:C)’s story is awfully similar to Bank of America’s except the recent upturn has been even more tremendous. The bank’s fundamental are fortunately not as unappealing as Bank of America Corp (NYSE:BAC)’s. The company currently trades at 18 times earnings, with an EPS of $2.44, and an almost nonexistent dividend yield of 0.10%. Once again the banking metrics tell a slightly different story. Citigroup Inc. (NYSE:C)’s efficiency ratio sits at 72%, LTD ratio is at 70%, with deposits growing 7% year-over year, and loans growing around 1%.
You are probably expecting me to now make a recommendation for one or maybe two of the companies I just described in so much detail and you would be wrong. Because I am not just going to recommend one or tell you to keep a couple on your radar, I am going to recommend you research ALL of them.
The fundamentals of these companies tell two very different stories. One of income and growth, while the other of turnaround and speculation. The most important thing to grasp from all this is the banking metrics show tremendous upside for all four. With conservative efficiency ratio and great deposit and loan growth, and the banks are showing long-term viability. The only question that remains is if you are going to be in for ride or watching from the sideline
The article Best of Breed: Big US Banks originally appeared on Fool.com and is written by Daniel Paterson.
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