[ by Melanie Gretchen ]

Dick Bové predicted the industry could turn around as early as Q4.  At the time, bank earnings could hit a record $38 billion, before the industry hits a solid 2013.  Speaking on Monday on CNBC's "Closing Bell," Mr. Bové said that that progress has been coming, as industry earnings have risen year-over-year for the past 14 quarters, with banks collectively earning $37 billion in the third quarter.

What Will Happen? In order to effect this kind of change, 2 things will happen:

• investors will flock back to the stocks next year as banks start returning more capital to shareholders
  - Bank of America will pay out 30% of earnings in dividends over the next couple of years
  - Other banks will also get to a payout ratio of around 30% or 35%

While Mr. Bové is a minority – the former Rochdale Securities analyst himself said the market hasn't recognized the "superb" outlook for the industry – he said the industry has reason for optimism: the banks with brokerage operations are in the sweet spot.

"You have to assume that that money will get converted into securities, that trading activity will pick up dramatically, that investment banking opportunities right now are probably greater than they've been in decades. ... And when you take a look at the $38 billion relative to the $25 billion earned in the fourth quarter last year, it'll be a 50 percent increase." -- Mr. Bové.

For further details, go to [CNBC, 12/17/12]. and our Who's News story [Dick Bové Leaving Rochdale].