Royal Bank of Canada (TSX:RY)(NYSE:RY) and Bank of Montreal (TSX:BMO)(NYSE:BMO) have both seen their share prices pull back this year, and investors are wondering if this is the right time to buy.

Let’s take a look at both companies to see if one deserves to be in your portfolio right now.

Royal Bank

Royal Bank reported net income of $2.475 billion for the most recent quarter, up 4% from the same period last year. The company continues to perform well despite the headwinds facing the Canadian economy.

Royal Bank’s earnings come from a variety of segments, and this diversification helps ensure balanced exposure to the market.

Over the past year 52% of earnings came from personal and commercial banking activities, while capital markets added 23%, and wealth management contributed 11% of profits. Royal Bank recently made a large acquisition in the U.S., and that should boost the wealth management contributions in the coming years.

Royal Bank’s insurance operations added 8% of earnings, and the company’s investor and treasury services group kicked in the remaining 6%.

Royal Bank just increased its dividend by 3%. The new quarterly payout of $0.79 per share yields 4.4%.

The company finished the latest quarter with $201 billion in Canadian residential mortgages on its books, of which, 39% are insured. The loan-to-value ratio on the remaining loans is 55%.

Royal Bank says its oil sector exposure represents 1.6% of its total loan portfolio. If the oil sector continues to struggle, the bank could start to see higher loss provisions in the energy space.

The company is well capitalized with a Basel III CET1 ratio of 10.1%.

Royal Bank trades at 10.4 times forward earnings.

Bank of Montreal

Canada’s oldest bank delivered an adjusted 6% year-over-year gain in adjusted net income for the quarter ended July 31.

The company’s Canadian personal and commercial banking operations brought in 43% of the profits, while the same team in the U.S. group contributed another 18%. Bank of Montreal has a large wealth management division that contributed 18% of the quarterly profits. The final 21% of earnings came from the capital markets division.

Bank of Montreal pays a quarterly dividend of $0.82 per share that yields 4.7%.

About 2% of Bank of Montreal’s loan book is exposed to the oil and gas sector, and like Royal Bank, the company will start to see loss provisions creep up in that segment if crude prices don’t rebound.

Bank of Montreal has $95.4 billion in Canadian residential mortgages on its books with 60% of the portfolio insured. The remainder has a loan-to-value ratio of 58%.

Bank of Montreal is also well capitalized with a CET1 ratio of 10.4%.

The stock trades at 9.8 times forward earnings.

Which should you buy?

Both banks are solid long-term holdings and have diversified revenue streams with significant exposure to the recovering U.S. market. Bank of Montreal’s mortgage portfolio carries a bit less risk and the company offers a slightly higher dividend yield. The stock is also a touch cheaper, so Bank of Montreal probably gets the edge.

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Fool contributor Andrew Walker has no position in any stocks mentioned.