Tom Brown of Donaldson, Lufkin & Jenrette Securities Corp. has always offered strong opinions about bank stocks.

One of his strongest ever as a Wall Street analyst was his June 1987 buy recommendation for shares of BankAmerica Corp.

The San Francisco banking company was staggering under huge losses.

It had jettisoned its dividend, at that time a move with few precedents beyond the Great Depression. Its chairman had recently been jeered at by angry shareholders.

Given the hole it had dug for itself, few in the investment community were willing to cut the bank much slack. Mr. Brown, then an analyst at Smith Barney, Harris Upham & Co., zeroed in on the bank's strong points and came up with a table-pounding buy.

He continued extolling the stock's virtues as it fell in price from $11 to $7 following the massive stock market crash in the October of that year. "The fundamentals were getting better even as the stock was getting cheaper," he recalled.

Promoting it then was not easy with shares of the nation's best known companies at post-crash lows. But Mr. Brown was aware from his days as a hockey goalkeeper at Miami University how it was to be out in front, mostly alone. Ultimately, BankAmerica's shares outdid those of many other big banks in the deep bear market of 1989-90.

It was his tenacity and willingness to take such a bold position that has won Mr. Brown the respect of bankers and institutional investors. In the first-ever All-Star Banking Analyst survey by the American Banker he was a run-away top pick as the best analyst covering the sector.

Bankers praised him for his knowledge of banking and his cutting-edge approach to issues before many other analysts began to raise them. "Tom was advocating cost-control when everybody else thought that credit quality was the only problem banks had," said one banker. "He had a kind of missionary zeal for carrying that message around the country."

At DLJ, Mr. Brown works with partner Frank DeSantis to spot opportunities among the nation's largest banks. Indeed, the duo called the end of the bank bear market in 1990 -- which he says was his best investment call.

"That was in November 1990. It was a once-in-a-career moment and I'll never be that lucky again," he said. "It was a strong opinion and quite controversial at the beginning. But it took a lot of work at that particular point to get people back into the banks.

"Then some clients who hadn't gotten back in were a little bit resentful by January and February because they felt they had missed a move."

So where does he see banks stocks now? "We're in neither a bear market nor a bull market. The bank stocks are going to go through periods where they outperform as well as times when they underperform, just as we've already seen this year. And I think that could be the case for the next few years," he said.

But Mr. Brown added that he is "as excited right now as I have been in at least a year" about some of the possibilities in bank stocks.

As he sees it, "[investor] concerns about the approximately 20% of the banking industry with an interest-rate sensitivity problem have dragged down all the rest of the stocks."

Mr. Brown thinks the net interest margins at banks will narrow, "but not collapse," despite highly publicized problems at banks like PNC Bank Corp. and Banc One Corp.

Currently, Mr. Brown likes Fleet Financial Corp., Signet Banking Corp., Wells Fargo & Co., and old favorite Bank America.

"I didn't think we would see that stock under $40 again, but it's gotten there," he said. "I think banks are going to be very good performers relative to the market and particularly these names."

As he sees it, "one thing we know for sure is the Fed is going to do whatever it takes to slow the economy. The only debate is whether they are high enough now to do that.

"But whenever the economy does slow down, the relative earnings and the relative [share price] valuation of the bank stocks make them look quite attractive," he said.

The analyst thinks bank stocks are oversold right now, as the result of an "irrational sell-off" recently. He expects some positive development to boost the bank stocks between now and the end of January. "There will be some event that we will look back on as having caused investor attitudes to change," he predicts.

Mr. Brown has been watching banks as a stock analyst since 1980, when he shifted over from covering chemical industry stocks for Kemper Financial Services in his home town of Chicago. (He left there in 1983 for Smith Barney)

"I didn't like chemicals," Mr. Brown recalled. The research director at Kemper then offered him a choice of oil services stocks or banks. "I wanted oil services, but ended up with banks and it turned out to be a natural fit."

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