Earnings at most big banks outpaced expectations in the third quarter. Some banks, like JPMorgan Chase (JPM) and Wells Fargo (WFC), could even brag that they'd brought in record income so far this year. But for many investors, the question is whether better-than-forecast results are sustainable.

When it appears they aren't, things can take a turn for the worse in a hurry. While bank stocks recovered on Thursday, they fell significantly a day earlier when veteran banking analyst Richard Bove at Rochdale Securities cast doubt on Wells Fargo's chances to repeat its strong performance and recommended clients sell the stock as a result. Within moments of Bove's recommendation, the S&P 500 had fallen by 1.5 percent.
Bove's market-moving insight? Financial arrangements designed to protect Wells Fargo from a fall in revenue from mortgage servicing fees were bringing in huge amounts of money. In fact, they had become "the most compelling earnings event in each quarter," he wrote in a research report. Meanwhile, "the remaining business of the bank was very mixed," he added.

"It does not appear the bank can sustain the third quarter's results," Bove wrote. "I would avoid this stock."

It probably didn't help that Bove had been on CNBC that same morning touting Wells Fargo's stock after it reported a third-quarter profit that far exceeded most analysts' estimates. (He subsequently told Dow Jones Newswires that he'd no longer make such appearances, adding that his comments came before he had "a chance to take a good look at the numbers.")

But Bove is far from the only analyst casting doubt on Wells' performance on such grounds. David Hendler, a debt analyst at CreditSights, wrote that the lender's "machine may be out of gas" as non-performing assets (those that are delinquent and no longer accruing interest) jumped in the quarter by more than any of its rivals.

So it's not too surprising that investors have been skeptical. Wells Fargo's shares have fallen about one percent since its earnings announcement on Wednesday morning, compared with a one percent gain for the financial companies included in the S&P 500.

Nor is Wells Fargo unique in this regard. David Konrad, a banking analyst at Keefe Bruyette & Woods, a New York investment firm that focuses on the financial industry, cited government involvement, shareholder dilution and potential losses on toxic assets as big reasons why better-than-expected results at Citigroup (C) were unlikely to be repeated.

Citigroup's stock has fallen 10.8 percent since reporting its third-quarter results last Thursday; the S&P 500 was little changed over the same period.

Meanwhile, JPMorgan, a company about which investors appear to harbor few doubts, has climbed 0.11 percent since announcing record quarterly revenue of $28.8 billion on Oct. 14. And it would be up even more if not for Wednesday afternoon's sell-off -- which just shows how pervasive doubts about sustainability can be.

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