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Banks, weathering the storm that has descended on commercial loan portfolios in recent months, now face more clouds on the horizon in the form of troubled consumer loans, a

Goldman Sachs

banking analyst said.

Goldman analyst Lori Appelbaum Tuesday cut her rating on Chicago-based

Bank One


to market perform from outperform, saying consumer loan portfolios are the "next to watch" when it comes to banks and credit quality.

Citing weakening consumer confidence and employment data, Appelbaum says trends suggest consumer credit deterioration will continue, though at a more moderate pace than has been seen with

commercial credit. Credit cards and subprime loans are most at risk, she notes.

Appelbaum said the reason for the Bank One downgrade stemmed from its "greater loan mix toward credit cards and little benefit from lower interest rates." Banks that have shielded themselves from interest rate increases by adjusting the asset mix often don't stand to gain as much as some of their financial peers amid rate easings. Bank One was lately down $1.88, or 5.1%, to $35.12

Among the recommended bank stocks were companies with "strong consumer underwriting track records," including




Wells Fargo

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. Firstar was off 28 cents to $23.12, while Wells was down $1.19 to $48.92.

Appelbaum also mentioned






because of the absence of unsecured consumer loans in their portfolios, and noted

Bank of America


, "given its greater leverage to interest rate easings." The last one could be up for debate given that Bank of America is certainly

no stranger to bad loans itself.

The stock picks saw minimal upside impact as investors were busy panning the financial sector. Comerica was off $1.26 to $62.79, SunTrust was slipping $1.92 to $65.64 and Bank of America was down $1.72 to $49.69. The

KBW Banks Index

, which measures the performance of the country's 24 largest banks, was down 3.2%.