Star bank analyst Dick Bove has missed the mark a bit this year, turning bullish on the industry’s stocks in a year when the KBW Bank Index has dropped 25 percent so far.

But the Rochdale Securities guru is undaunted. He sees bank stocks rebounding in 2012. “[Next year] has every indication for being a gangbuster year in terms of earnings, market share, loan growth, deposit inflows, liquidity, capital growth for the American banking industry,” he tells Yahoo.

“Yet people keep selling the stocks.”

That will change next year, Bove says.
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First the U.S. economy is strengthening.

Dick Bove (Rochdale file photo)

Second, deposit inflows are surging, with overall deposit levels probably having reached a record high, he says. Loans are rising rapidly too.

In addition, European banks are shedding assets like there’s no tomorrow, selling packages of loans, credit card portfolios, and even entire business units to their U.S. competitors.

"European banks have got to shrink," Bove says. "They have to increase capital."

Earnings for the banking industry have hit a 4 ½-year high, rising for nine straight quarters, Bove says. And the picture looks even better for next year.

He is certainly right that bank fundamentals are improving markedly. But the European debt crisis remains a huge fear for investors, and so does the U.S. economy.

If the economy indeed grows buoyantly next year, as Bove predicts, bank stocks could rebound. But many experts expect the economy to take a turn for the worse.