Bank analysts continued to cut ratings Tuesday, arguing that the big profits in the bank sector already have been made.

Fleet Financial Group, Barnett Banks Inc., and Signet Bank Corp. ratings were cut one notch each by Anthony Davis of Dean Witter Reynolds. He said the three were trading at or near his price targets.

And Frank Barkocy of Josephthal Lyon & Ross Inc. slapped a "hold" rating on KeyCorp, saying he would have "no objection" if investors decided to lock in profits by selling the stock, which has gained more than 26% since late July.

Mr. Davis maintained his earnings estimates on Fleet, Barnett, and Signet, but said in an interview that momentum for banks in general has slowed.

"We thought the third quarter was the most engineered third quarter in a year and a half," Mr. Davis said. He pointed out that many banks had to use share buybacks and other nonrecurring items to match earnings expectations.

Among banks he covers, Mr. Davis noted an 11% rise in past-due loans from the second quarter. He said loan growth fell to 6% from 8%, and efficiency ratios didn't improve.

Bank stocks are up 358% since October of 1990, and many issues now trade at a price-to-earnings ratio of about 75% of the P/E ratio of S&P 500 stocks - an unusually high level for bank stocks, Mr. Davis said.

Fleet, Barnett and Signet have all gained about 20% in share price since August, Mr. Davis said. He cut his rating on Fleet and Signet to "accumulate" from "buy," and lowered his rating on Barnett to "neutral" from "accumulate."

The analyst said he has a 12-month target price of $52 on Fleet, which was unchanged at $51.875 on Tuesday. Mr. Davis has a $40 target for Barnett - which slipped 37.5 cents to $39.875. He has set a target of $31 for Signet, which fell 12.5 cents to $28.875 in trading Tuesday.

Mr. Davis agreed that Fleet's acquisitions of Shawmut National Corp. and Natwest Bancorp. will reduce expense ratios significantly next year, but said that Fleet's exposure to the New England economy could hurt the Boston-based company.

He said optimism about Barnett's insurance and technological initiatives, which the Jacksonville, Fla., bank will discuss with analysts this week, already is factored into its share price.

Richmond-based Signet, widely rumored to be a merger target, could command $36 a share in a deal, but on the basis of business prospects alone is unlikely to rise much beyond the $31 target price, Mr. Davis said.

Mr. Barkocy, who had recently downgraded National City Corp. and Norwest Corp., noted that KeyCorp has appreciated more than 26% since July 23, when he put a buy rating on it. KeyCorp shares were unchanged at $47.875 Tuesday.

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