The biggest problem that banks have faced was the fall in the housing market, and this seems to have bottomed, Rochdale Securities banking analyst Richard Bove told CNBC.
"I really believe that the industry has bottomed, that we're not going to see further crashes in home prices or in home sales," Bove told "Squawk Box."
Analysts are no longer happy with banks breaking earnings and revenue forecasts and are now looking at early stage delinquencies, he said. If that figure improves, then the stocks of the banks which beat earnings estimates are likely to rise, he added.
"It's all on expectation on what future numbers will be and for that people are going to keep an eye on these early stage delinquencies," Bove said.
Morgan Stanley and Wells Fargo beat earnings estimates Wednesday.
"I think Wells Fargo is proving itself to be a stand-out with these numbers," Bove said.
Wells Fargo's profit rose 60 percent in the third quarter, as revenue from mortgage banking surged, and the bank reported earnings per share of 56 cents, from 49 cents a year ago.
Bank of England governor Mervyn King called for a separation between banks' classical functions, such as simple loans and taking deposits, and risky, speculative operations, to avoid a new crisis. Bove said new legislation being examined in the US will in effect do that.
"I think if you look at legislation currently in front of Congress it will do exactly what Mervyn King is talking about," he said, saying that the change will come from the different capital and regulatory conditions imposed on the two types of banks – so called 'utility' banks and investment banks.
Disclosure information was not available for Dick Bove or his company.