Bank stocks helped Denver money manager Philip J. Dubuque score a 64% gain for his mutual fund this year, but over the last few months he has tossed most of them overboard.

"We're at low ebb right now on the banks," he said in a telephone interview.

Bank equities currently make up just 16% of his Strategic Financial Services Portfolio, down from 60% in late August.

Mr. Dubuque likes some bank stocks, including those of KeyCorp, First Union Corp., Banc One Corp. and First Bank System Inc. But he sees several reasons for a bearish outlook in general.

First, he thinks banks lag behind the stock market in early months of an economic recovery, "when loan demand has begun to to pick up but has not yet reached the bottom line."

Seconde, he is concerned that an extraordinarily weak recovery is under way. By his lights, analysts are still underestimating the lingering impact from overbuilt real estate markets on the East and West coasts.

"Unwinding real estate can take five years, with a bottom typically being hit in the third year," he said. "Much of the Middle Atlantic, for instance, is still in its second year."

Nor is he persuaded that projected cost savings from the several ballyhooed mergers can actually be achieved in the advertised time frames. That will take the wind out of many stocks that rose on expectations of dramatic cost cutting.

The 1986 acquisition of Crocker National Corp., San Francisco, by Wells Fargo & Co. "is still the only deal you can name where the numbers came in," Mr. Dubuque said.

He sold holdings in Comerica Inc. and Manufacturers National Corp. after the Detroit banks announced their merger. He cleared out shares of Cleveland's Ameritrust Corp., after news of its deal to be bought by rival Society Corp.

And the portfolio manager last month closed out a position in Chemical Banking Corp., which is set to merge with Manufacturers Hanover Corp. in a combination of New York City money-center giants.

"The market will have a hard time digesting all that [additional] stock," he said, referring to the equity-building efforts that are part of the deal. "And I think it will mean just that much less incremental buying power in the [bank stock] group."

Of course, an overriding reason for lightening up on bank shares is to take profits from big run-ups the stocks have enjoyed in the past year. The movement is illustrated by the shift in asset size of Mr. Dubuque's fund.

The fund, whose parent is Invesco Funds Group Inc., Denver, currently has assets of $84 million, up from $3.9 million at the opening of the year and from just $1.1 million in October 1990, when bank stocks hit bottom in value.

After the bank stock boom of the past year, Mr. Dubuque thinks these stocks are now in the underperforming phase of a recession-to-recovery economic cycle.

It may last through the first half of 1992, hopefully to be followed by healthy upward moves again in the second half of next year.

Bank, Thrift Rivals Added

In place of most bank stocks he has acquired shares of financial services companies "that are taking business away from the thrift industry and some banks as well."

That group includes the Federal National Mortgage Association, Federal Home Loan Mortgage Corp., and Student Loan Marketing Association.

It also includes such niche players in financial services as Countrywide Credit Industries, Pasadena, Calif., the mortgage banker, and Ezcorp Inc., Austin, Tex., the pawn brokerage firm.

But specialty bank card issuers are not on his list. The portfolio manager sold his shares of both MBNA Corp., Baltimore, and Advanta Corp., Horsham, Pa., after last month's stir over a possible ceiling imposed by Congress on credit card interest rates.

Mr. Dubuque's fund currently owns shares of just seven banks and he has a reason for owning each.

* KeyCorp, Albany, N.Y.: "They hit a winner in getting Goldome," a Buffalo thirft institution sold by the government.

* First Union Corp., Charlotte, N.C.: "The same with Southeast [Banking Corp., Miami]. They will reap the cost savings."

* Banc One Corp., Columbus, Ohio: "A great company, and they may get First City [Bancorp. of Texas]."

* First Bank System, Minneapolis: "My earnings estimate for next year is $2.65. The [Wall] Street estimates are in the $2.40-$2.50 range."

* Mellon Bank Corp., Pittsburgh: "Good earnings momentum and the stock is cheap."

* Michigan National Corp., Bloomfield Hills, Mich.: "Good trends in the past two quarters."

* PNC Financial Corp., Pittsburgh: "Declining nonperformers and evidence of hard work by management."

Mr. Dubuque is himself a former banker. He worked as a research investment officer at Centerre Trust co., St. Louis, which has since been acquired by rival Boatmen's Banchsares Inc., and as assistant vice president for trust research at First Chicago Corp.

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