Big U.S. banks are “definitely out of the woods” after last year's credit crisis, but smaller community banks are still facing difficulty, banking analyst Dick Bove told CNBC.
“The big banks do not need the FDIC guarantees any longer,” Bove said in a live interview. “The markets have changed dramatically in a positive fashion.”
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Bove said that big banks that are more oriented toward capital markets, trading, and investment banking are "doing quite well." But traditional banks that take deposits or fund real estates "are going to be facing a couple of difficult quarters." (Watch the accompanying video for the full interview...)
“At the present time, we’re looking at big banks having diversified revenue streams—and those diversified revenue streams are beginning to kicking in so that you should have some surprisingly strong profits from the big banks than the little ones,” he said.
Bove said he expects the FDIC to step up and take over more weak banks. He said community banks would decline by 150 to 200 by year-end.
According to government reports on Wednesday, the nation's banks turned a profit in the first quarter, but the number of problem banks jumped to more than 300.
The FDIC said higher trading revenues at big banks helped the industry earn a $7.6 billion profit in the January to March period, compared with a record loss of $36.9 billion in the fourth quarter. The profit was 61 percent below the $19.3 billion earned in the year-ago period and followed the first quarterly loss in 18 years.