Credit quality and interest rate cuts were the topics of discussion at American Banker's quarterly roundtable conducted on January 9. Analysts were uniformly cautious about the outlook for this year, expecting continued deterioration in bank loan portfolios. Credit-troubled banks like First Union Corp., Bank of America Corp., and Bank One Corp. are the stocks to avoid, analysts said, while Citigroup Inc. is the one to watch. Participants were Frank Barkocy of Keefe Managers, Michael Plodwick of UBS Warburg Securities, Andrew Collins of ING Barings, and Katrina Blecher of Sandler O'Neill & Partners.

We have just wrapped up a pretty tumultuous year, a year in which financial stocks were viewed as being out of favor. But the American Banker index of the 225 largest banks was up 35% year on year, while the Standard & Poor's 500 index and the Dow Jones industrial average were both down. Why is the perception different from the reality?

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