Banks

Dick Bove's JPM advice: Remain cautious in 2014

Expect record earnings from banks in 2014: Bove
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Expect record earnings from banks in 2014: Bove

Bank analyst Dick Bove remains cautious about JPMorgan Chase.

The mountain of litigation and fines facing the investment bank won't crumble in 2014, and its future earnings remain questionable because of the recently enacted ban on proprietary trading, the vice president of equity research at Rafferty Capital said Tuesday during an interview with CNBC.

(Read more: Madoff penalties hit JPMorgan Chase profit)

Hours earlier, JPMorgan had announced a 7.3 percent decline in fourth-quarter earnings. It cited legal expenses and weaker investment banking revenue for the reduced profits.

The bank took several legal blows last year, agreeing to $20 billion worth of settlements. during a Tuesday conference call with reporters.

"I don't think it's anywhere close to ending its litigation, its fines, its lawsuits, etc.," Bove told "Squawk on the Street." "So I'm a little more cautious on this company."

(Read more: JPMorgan Chase ready to make long-awaited deal)

Dick Bove
Jin Lee | Bloomberg | Getty Images

Further, he said, new restrictions placed on certain types of trading at investment banks create questions about JPMorgan—as well as potential holes in its balance sheet.

"Will they sell the commodities business?" Bove said. "Will they get out of student lending when they can't do proprietary trading?"

Earlier on "Squawk on the Street," David Katz, chief investment officer at Matrix Asset Advisors, made a more bullish call, saying that both JPMorgan and Wells Fargo would be good bets this year.

Banks are going to lead this year: CIO
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Banks are going to lead this year: CIO

"We think the banks are going to continue" performing well, he said. "They're not going to continue at the same pace as last year, [but] we think they are going to be one of the leading groups this year. … We would actually split whatever money you want to put into the banks and put it into both of them."

Bove said Wells Fargo is a much better play and forecast "record earnings" for it in 2014. Investors often undervalue the company, he said, as they can't divorce its core businesses from its relationship with the housing market.

(Read more: Dick Bove: Why America needs big banks)

The biggest mortgage lender in the U.S., Wells announced better-than-expected fourth-quarter earnings Tuesday as costs from bad loans fell and mortgage lending slowed. JPMorgan also beat expectations.

"Revenues went up," Bove said of Wells Fargo. "Expenses went down. How bad could that be?"

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street." Reuters contributed to this report.