10 Bank Stocks You Need to Watch During Earnings Season (Update 1)

>Updated with Monday comments on JPMorgan Chase from Credit Suisse analyst Moshe Orenbuch.

NEW YORK (TheStreet) -- It was a rocky second quarter for bank stocks, following what seems to have become an annual pattern for the sector.

The KBW Bank Index (I:BKX) closed at 45.79 Friday, down 8% during the second quarter, following a fat 26% return during the first quarter. On Friday, however, the index had recovered 12% from its second-quarter closing low of 41.00 on June 4.

In addition to weak investment banking and trading results, following a decent first quarter, there are several other major themes for the industry, heading into second-quarter earnings season:

HARP 2.0

Banks with mortgage lending operations will report another strong quarter for loan originations and income from quick loan sales to Fannie Mae (FNMA) and Freddie Mac (FMCC) , following President Obama's expansion of the Home Affordable Refinance Program, or HARP, which allows qualified borrows with mortgage loans held by Fannie or Freddie to refinance their entire loans balances, no matter how much the value of the collateral property has declined.

Sterne Agee analyst Todd Hagerman said on Friday that while he expects banks to report another strong quarter for mortgage loan originations, he expects mortgage revenue "to retreat somewhat" from the first quarter, because of last quarter's strong gains-on-sale. The analyst "also expects "diminished results from mortgage hedge gains will also likely be a drag on mortgage banking results given the relatively flat yield curve."

Fannie and Freddie Putback Demands