NEW YORK ( TheStreet) -- For truly long-term investors, Bank of America ( BAC) and JPMorgan Chase ( JPM) are the best bargains among big banks, according to KBW analyst Christopher Mutascio. For several years, analysts and investors have been considering large banks' potential "normalized earnings" as a tool in making long-term stock picks. The credit crisis, of course, caused a few years of outsized loan losses to hammer industry earnings. In the aftermath of the crisis, the release of loan loss reserves has boosted results, but that activity can't go on forever. The industry is also being held back by slow loan demand in many important categories. And the volume of mortgage loan applications is slowing from last year's record pace, as fewer borrowers refinance and rising long-term rates lower affordability for some potential homebuyers.
The Federal Open Market Committee completes its two-day meeting Wednesday, which will be followed by a policy statement at 2 p.m. EDT. Investors will be looking for any change in language confirming whether the central bank's bond-buying may be reduced, as early as September.
On the other end of the spectrum for KBW's 2016 EPS estimates, KeyCorp ( KEY) comes out as the most expensive bank. The Cleveland lender's shares closed at $12.20 Tuesday, which was 12.6 times KBW's 2016 EPS estimate of 97 cents a share, under the third scenario for net interest margin expansion. -- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn