Bigger is better for banks in Q1: Dick Bove

Big banks should turn in reasonably good earnings in the first quarter on the strength of trading activity, while medium-size banks will likely report only mediocre results, analyst Dick Bove said Tuesday.

"I think there will be a split in terms of where the earnings show up. They'll be good for the big banks, won't be as good for the middle-sized banks," of Rafferty Capital Markets' vice president of equity research said on CNBC's "Squawk Box."

Shortly after Bove spoke, JPMorgan Chase and Wells Fargo delivered quarterly earnings that topped analysts' expectations.

Read More JPMorgan profit up on fixed-income trading rebound

Bank of America releases first quarter results on Wednesday morning. Goldman Sachs , Citigroup and American Express report Thursday.

Commercial and industrial loans performed well throughout the winter, which should boost big regional banks, Bove said.

Read More Markets look to bank earnings, retail data

Weakness in residential loans will be a drag on smaller regional and community banks, he said.

"Anything to do with residential lending, whether it's home equity loans or mortgages, did very badly," he said, noting the poor performance was not due to lack of demand, but government regulation that discourages banks from issuing home equity loans.

Beyond lending, trading looked good on the currency and fixed income side, Bove said, which should further bolster large financial institutions.

JefferiesAnd the Best Place to Work in the global financial markets 2018 is...

Register for HITC Business News