Closely watched bank analyst Mike Mayo, formerly of CLSA and now operating independently, was generally pleased with the first round of big banks' earnings.
Looking to this week's earnings, he sees Goldman Sachs as investors' best bet for big banks.
Following overall strong earnings announcements from JPMorgan, Citigroup and Wells Fargo on Thursday, Mayo noted several themes. Specifically, banks' balance sheets are the strongest "in a generation," debt underwriting is improving and banks' credit quality remains quite strong.
These elements, along with the S&P 500's gains in the first quarter and the positive showing from the banks reporting on Thursday, give Mayo a bit of confidence in Goldman.
"Goldman Sachs is a more pure play to some of those trends, especially when it comes to higher equity markets, especially in areas like private equity and equity underwriting and areas like that," Mayo said Thursday in an interview on CNBC's "Trading Nation."
To be sure, he said, Wall Street banks are faring better than those on Main Street. The yield curve is flattening and lending revenue is "flat," he wrote in an email to CNBC. He also noted that Wall Street banks have benefited from growing underwriting activity.
He said one space to keep an eye on is cost control, which proved not as good as he anticipated.
"So that's an area to watch, but the first quarter often has different types of noise in it," he said.
In terms of banks to avoid at this juncture, Mayo pointed to Citigroup. The bank did beat estimates on the top and bottom lines, bit it's "still way below where they should be," he said.
JPMorgan reported earnings and revenue that beat analysts' estimates; Wells Fargo reported earnings that topped expectations, but disappointed when it came to revenue.
Goldman Sachs' earnings report is being announced Tuesday before the opening bell.