Growing fears about Europe's financial crisis continues to spread into the U.S. and affect the share prices of the largest financial institutions. However, America's big banks are a lot stronger today than they were three years ago and any effect from Europe is not going to be as impactful as what happened here in the U.S.

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Opportunity Converges
In addition to Europe, thanks to a poor trade by JP Morgan (NYSE:JPM), banks have sold off and again offer patient investors a chance to own them at very attractive prices. Coming out of the financial crisis, Wells Fargo (NYSE:WFC) and JP Morgan were widely considered the two strongest banks. Despite the trading loss, JP Morgan remains a very strong and well-capitalized bank. Now, shares trade for around $33, yield almost 4% and trade for roughly 70% of book value. Shares in JP Morgan are a perfect example of opportunity emerging from a crisis, very similar to what happened in late 2008 and early 2009. Whether JP Morgan ends up losing $3 billion or $5 billion from its poorly executed trade, the valuation today appears very favorable to value-seeking investors.

Take Your Pick
The overall U.S. financial industry has sold off and investors can choose from many of the largest names. Bank of America (NYSE:BAC) shares advanced by over 50% this year and have since fallen back to less than $8 a share. While many investors are reluctant to rely on book value as a valuation proxy for today's financials, it still serves a useful purchase. And with BAC trading at less than 40% of book and less than 60% of tangible book, that's a wide enough discrepancy to warrant a closer look at the stock. Citigroup (NYSE:C) shares, back at $27 a share, now trade for 44% of book value. Again, at these valuation levels and assuming Citi is worth 65% of book value (a reasonable long-term assumption), shares have an upside of 50%.

SEE: Book Value: How Reliable Is It For Investors?

The Bottom Line
At the current prices and with a significant discount from book value, large U.S. financials possess a solid margin of safety. The wide discount from book leaves a lot of room for error. Book value does not need to be accurate at these levels for investors to do well now.

At the time of writing, Sham Gad did not own shares in any of the companies mentioned in this article.

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