Is a day of reckoning for bank stocks on the horizon? Some analysts think so.

For years now, bank experts have predicted bank stocks would reach a crossroads, a point at which investors stop buying, or selling, into the whole sector, and instead grow more selective with their bank choices.

Under this scenario, stocks with stronger fundamentals would break away from the pack. Currently most bank shares rise and fall together.

Now, fears of a credit crunch and dwindling net interest incomes appear to be starting to convince investors to be more stingy in choosing bank equities, said Anthony Davis, an analyst with Dean Witter Reynolds Inc.

In January, Mr. Davis said, a number of stocks performed very well - Wells Fargo & Co. and CoreStates Financial Corp. for example. At the same time, shares of Zions Bancorp and Commerce Bancshares in Kansas City, among others, have endured steep declines, he said.

Mr. Davis pointed to "the standard deviation" - or percent difference between the price of the low and high stocks from the average share price in a sector - as evidence of greater selectivity in bank stocks.

In 1994, the standard deviation for the top 50 bank stocks was only 11%, indicating investors were not being especially choosy with the banks. The figure reached an astronomical 52% in 1992, demonstrating that investors were comfortable with only a few banks. The average for the last 26 years is 20.1%.

"Our suspicion is you are going to see the standard deviation back above the norm this year because different banks are going to have varying degrees of success in generating revenues and controlling costs," Mr. Davis said.

"It is time to place your bets, whereas in past years investors have used a more basket-type approach."

In time of crisis or uneasiness, Mr. Davis said, the number rises. So after the bank failures and credit crisis of the early 1990s, the standard deviation was high.

But as the decade wore on, and banks enjoyed wide net interest margins engineered by the Federal Reserve, the standard deviation shrank.

Now net interest margins are contracting as interest rates decline, and more than ever, banks must be innovative to survive.

"The companies that focus on nonbank businesses will grow earnings faster than those banks that still earn 70% of income of interest rate spreads," said Ruchi Madan, a bank analyst with Prudential Securities.

"As we see a divergence in earnings growth, we will also see a divergence in price-to-earnings growth," she said. Her top pick is First Tennessee Corp., which earns more than half its income from fee-based, nonbank businesses.

Of course, investors maintain they have always been selective, and never buy a stock by sector alone.

Robert Bonelli, fund manager of Ernst & Co.'s highly successful bank stock fund, emphasizes he is highly selective. But he concedes that many of his competitors have not been. "But when you see the Dow Jones industrial average go from 3,500 to 5,400, you will see increasing selectivity," he said.

Diverging earnings results will soon spark different stock performances, he said.

For Mr. Davis, two factors will drive the differentiation: cost control and fear of the credit cycle. Companies that cut costs, like CoreStates and First Union Corp., will enjoy much higher stock prices than their peers, he said.

Fears of higher credit costs will also drive investors to be more selective, he said. When nonperforming assets as a percentage of assets have been high, the standard deviation has also been high, he said.

For example, when the deviation numbers were high in 1991 and 1992, nonperforming assets were 2.3% and 1.87% respectively. In 1993 and 1994, when the deviation figures were below the average, nonperforming assets were 0.88% and 0.71% respectively.

In trading Thursday, bank stocks retreated after Wednesday's sharp gain. The banks had enjoyed a healthy run driven by expectations the Fed would cut interest rates. After the Fed acted, profit-taking overtook the sector.

The Standard & Poor's index of major banks fell 0.69%, as the S&P 500 rose 0.37%.

Boatmen's Bancshares fell 37.5 cents to $42.50, one day after closing its $1.2 billion deal to buy Fourth Financial Corp. Analysts ascribed the decline to arbitragers working out their positions after the close of the merger.

Shares of credit card issuers declined after PaineWebber analyst Gary Gordon issued a negative report on the sector, and downgraded MBNA Corp. to "unattractive" from "neutral." MBNA finished down 75 cents at $40, while First USA Corp. fell $1.125 to $51.

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