Richard Bove Bank Quotations

You have to have scale in this business. By doubling the size of their credit-card business, Bank of America will lower their cost of handling each individual account.

I wouldn't own any bank stocks in the Midwest. They're exposed to the problems of the auto industry and the Ford layoffs today are just the latest example.

From 1965 to 1982, the yield curve in this country was inverted 47 percent of the time, yet bank earnings averaged a more rapid increase than non-bank earnings. Bank stocks also outperformed the S&P 500, on average, over that period.

The ability to utilize those marketing programs is going to be enormous for Bank of America. You'll see a significant increase in the bank's credit-card activity now that they have MBNA.

It's increasingly difficult to be a regional broker. There's a lack of trade to worry about, yes, but you're also dealing with pricing weakness, competition from the big New York City companies and the universal banks that offer everything from checking accounts to financial advisory services.

Midwestern banks are accustomed to shifts in the local economies. They plan for it. However, they do not avoid it. They get hurt. Their loan losses rise. Their earnings tumble and their stock prices are impacted. It will happen again.

It is quite possible that Wal-Mart could, at some point, follow a similar course by simply opening a thousand bank branches in its stores and then challenging Congress to close them down. We think Wal-Mart will do this and that Congress will back down.

If you believe this a secular story then you should ignore cyclical swings. The banks may have bad quarters every now and then but so what?

I think it's clear that the banks that are more tied to the retail sector are going to have a much tougher quarter compared to those with diversified positions. The banks in the retail sector have to deal with interest rate compression, loan volume will be tougher, and they don't have the trading or investment banking that are hot now.

But that cycle is over. The banks are going to get squeezed.