Bank investors began focusing more on third-quarter earnings prospects Friday than on interest rates, as most banks posted strong gains.

Bank of America Corp. was an exception as a result of reports that the company's revenue growth may be slowing. Carla D'Arista, an analyst with Friedman, Billings, Ramsey & Co., cut her third-quarter earnings estimates and her 12-to-18-month price target.

Aside from Bank of America and J. P. Morgan & Co., stocks of most large banks rose for the day. The Standard and Poor's index of 31 banks was up 2.4%, and the Nasdaq index of 721 banks rose 1.7%.

"People are getting a little tired of this silly interest rate game and are looking at third-quarter earnings instead," said Miles P.H. Seifert, chief investment officer at Gray, Seifert & Co., New York, a unit of Legg Mason Inc., managers of about $1.5 billion of funds. "The multiples are reminiscent of 1994. It's a wonderful time to buy bank stocks."

Some market watchers say bank stocks have lost so much of their value in recent months that investors who short bank equities are buying shares to exit their positions.

"Bank stocks have been beaten down so much," said Adam Lewis, senior vice president and trader at Keefe, Bruyette & Woods Inc., New York. "The shorts are running scared."

Mr. Lewis said that many portfolio managers of financial stocks, who are getting trounced by the major indexes this year, felt that it was time to jump back into the market at the relatively low valuations.

In Friday trading, the markets shrugged off conflicting reports issued by the government early in the day that indicated jobs were down but wages were up sharply.

Bank of America improved by the market's close, down 56.25 cents, or about 1%, to $56.125. But it bounced around throughout the day, at one point down $1, or 1.8%, in reaction to an article in Friday's San Francisco Chronicle. The article cited an internal Bank of America newsletter that implied the bank's earnings would decline.

A copy of the newsletter, obtained by American Banker from Ms. D'Arista, said Hugh McColl Jr., the bank's chief executive officer, said, "We must continue revenue growth but the current economic environment will slow our ability to grow revenues at the desired rate."

Mr. McColl said the "squeeze on margins has had a dampening effect on net interest income, and rising rates have made further securities gains highly unlikely."

Ms. D'Arista was not totally bearish on Bank of America. "On a price basis, we believe that the stock is very attractively priced for long-term investors, but note that the near-term sentiment is likely to be dampened by current trends affecting market-sensitive revenues," she said.

But Jon Lee, president of Hollister Asset Management, which had been an investor in Bank of America, said, "It sounds like they are prepping everybody to the fact that they are not meeting the numbers. It seems as if they are positioning themselves to disappoint their shareholders."

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