Evaluating a bank might seem tough, but you really only need to look at three things before choosing a new one. Since modern banking began in 1865, over 17,300 banks have failed. To avoid banks that might go down this path, investors should focus on those with a proven record of efficient operations and careful risk management.
The first number to check when looking at a bank’s stock is the institution’s lowest yearly return on equity since 2008. If this number is negative, it’s a big warning sign that long-term investors should avoid that bank.