One Of The Street's Top Bank Analyst Offers His Hottest Pick

Mike Mayo has earned himself a reputation as being on of the Street's most notable bank analysts when he worked at CLSA. Mayo, now operating as an independent analyst, was a guest on a recent CNBC "Trading Nation" segment to share his top bank pick as earnings season for banks kicked off last week.

Wall Street Banks Over Main Street Banks

According to Mayo, banks with a Wall Street connection are outperforming banks that cater more toward Main Street. Specifically, Wall Street banks have shown double-digit growth in capital market activities along with double-digit earnings per share growth. Meanwhile, Main Street banks have shown its worst loan growth in six years along with a worse-than-expected increase in margins.

Goldman Sachs Is A Pure Play To Positive Trends

With that said, it shouldn't surprise many that Mayo's top pick in the segment is one of Wall Street's most notable firms: Goldman Sachs Group Inc GS.

Mayo explained that Goldman has exposure to some of the biggest stories among banks, which are:

1. Capital markets trends.
2. The strength of bank balance sheets are the strongest it has been in a generation.
3. Declining share counts.
4. Credit quality of banks remains very strong.
5. To a lesser extent, cost control did contain some noise but isn't necessarily a concern as of now.

"Goldman Sachs is a more pure play to some of those trends, especially when it comes to higher equity markets, especially in areas like private equity and equity underwriting and areas like that," Mayo said.

Mayo also suggested that Citigroup Inc C's stock should be trading higher than where it is after last week's earnings report, which came in better than expected.