Ladenburg's Bove sees bank shares doubling

NEW YORK (Reuters) - Banks are stronger today than they have been in two to three years and when "hysteria" dies down their shares will double or triple in price, a well-known Wall Street banking analyst said on Monday.

Ladenburg Thalmann Co's Richard Bove told the Reuters Investment Outlook Summit in New York that the strength is due to a combination of increased revenues, stabilizing margins, deposits growing faster than normal, increasing market share and rising earnings assets.

Wells Fargo (WFC.N: Quote, Profile, Research, Stock Buzz), U.S. Bancorp (USB.N: Quote, Profile, Research, Stock Buzz), BB&T Corp (BBT.N: Quote, Profile, Research, Stock Buzz) and PNC Financial(PNC.N: Quote, Profile, Research, Stock Buzz) are best positioned to do well, he said, as their managements have done a better job of navigating the challenging environment than some of their rivals. Bove was speaking about the strength of commercial banks, and not investment banks.

"There is plenty of liquidity in the banking system and bank earnings are going to double over the next couple of years," he said.

The loan losses that are currently being recorded are a recognition of losses taken in prior years and not reflective of cash flow today, Bove said.

"When people stop panicking, when this hysteria is gone, bank stocks are going to go up 100 percent to 200 percent in value," he said.

He also expects more acquisitions in the banking sector. "There is no way people are going to let banks sit there at such a huge discount to their liquidation value," he said.

So when will the hysteria die down? Bove sees bank shares rising in November, due to a combination of a seasonal flow of funds and it being only a matter of time before investors recognize that bank shares are bargains.

Nearly a year ago, Bove was one of the first banking analysts to recommend selling financial stocks as credit market problems began. Last July, he correctly predicted the booming growth of the financial system could not be sustained by economic growth.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Kristina Cooke; Editing by Leslie Adler)