An industry-wide earnings analysis by KBW this week showed that fourth-quarter operating results climbed 1% on a quarterly basis, and 6% from the year-ago period -- the first sign of growth after 11 consecutive quarters of decline. A smaller portion of the industry -- 46% -- missed Wall Street expectations than has been the case in more than two years. (In the second quarter of 2007, 39% missed Street forecasts.)
If loan losses peaked in the third or fourth quarter -- as Bank of America executives have said, and Wall Street analysts have agreed with -- that means the lending market will only continue to improve, as the economy mends its wounds.
The market may continue to move downward, of course, and bank shareholders may still be spooked by regulatory specters. But Bove says the fear-driven sell-off is eerily similar to the one that occurred a year ago, ahead of the market's March lows. That, of course, was followed by a nine-month climb.
"That proved to be a wonderful buying opportunity," says Bove.-- Written by Lauren Tara LaCapra in New York.