When it comes to bank stocks, you generally get what you pay for. That’s why shrewd investors continue to buy shares in banks that are trading for substantial premiums to their tangible book values, including The Bank of New York Mellon , U.S. Bancorp, State Street , and Wells Fargo.
There’s no hard and fast rule that dictates when a bank’s shares are cheap or expensive, but the most popular benchmark revolves around whether or not it’s trading for more than its tangible book value per share. The greater the premium, the dearer the price.
As you can see in the table below, all four of these banks meet this criterion: