Q3 Earnings: Goldman Joins Other Big Banks in Struggle Through Bad Economic Climate

However, net revenues in Goldman's Financial Advisory business were 5% higher, at $523 million, versus the $499 million of revenues earned in the third quarter of 2010. Reflecting the poor quarter, though, Q3 2011 advisory revenues were 18% lower than the $637 million earned in Q2 2011.

In general, wealth management and private bank performance helped save the day for many big banks this quarter, according to Villalta.

"That's an area that has held up much better than the investment banking side, especially the fee-based businesses," he said. "A lot of those institutions are valued parts of those businesses because they are viewed as more stable than the investment banking and trading operations. That was the impetus to move in that direction years ago, and I think it has paid off."

Villalta pointed to BofA's purchase of Merrill Lynch as an example.

"You look at a company like Merrill Lynch, and in some circles it has been derided as a poor purchase on the part of Bank of America, and there's some litigation around the purchase when it took place and what disclosures were made, but by and large we think that was an excellent purchase and that it has made an excellent contribution to Bank of America and will continue to contribute going forward," he said.

A value investor, Villalta said that rather than selling out of bank stocks as a result of Q3 results, his fund has bought into weakness.

"We've maintained our positions in the banks," he said. "I think it's going to turn out to be a very good call for us over the next year to 18 months as these companies recover. There has been an unprecedented string of outflows from domestic equity mutual funds. Our feeling is that it's an over-reaction. If you look at valuations today in the market, if you look at yields on loans, if you look at the money that's shifted out of equity and into bonds over the last five years and where valuations are, we think it's irrational to move money out of equities and into bonds."

For more Q3 news, go to AdvisorOne's Earnings Calendar for the Finance Sector.