Early reports for the finance sector's third-quarter 2012performance indicate that it is on track to best all other sectors,at overall profits of 11.8%, in what looks to be an otherwiselackluster earnings season.

Both S&P Capital IQ and Thomson Reuters expect that thecompanies of the S&P 500 index in Q3 will post their firstyear-over-year earnings decline in almost three years. But whileearnings expectations are at a three-year low, the stock marketindex is at a four-year high, said S&P Capital IQ GlobalMarkets Intelligence senior manager Christine Short during anearnings outlook webinar on Monday.

Short also took note of the finance sector's relative strength,saying that stock analysts expect it to post the highest quarterlyearnings out of the 10 industrial sectors.

“Only the financial sector is expected to post double-digitgrowth, of 11.8%, in the third quarter,” Short said.

S&P Capital IQ's research shows that Wall Street analystsare projecting a 1% earnings decline compared to a year ago, withestimates the lowest they've been since the Great Recession of2009. Revenue growth expectations stand at only 1%, their lowestsince Q4 2009, and well below the 10-year average of 7%.

“The only way for companies to succeed is growing that topline,” Short said, noting that such low growth suggests the U.S.economy may be headed for another recession. “One percent revenuegrowth is just not sustainable.”

Dozens more companies will lend more clarity to the economicpicture when they report earnings this week, but for now five of 10sectors are expected to post negative growth. The weakestperformance will likely come from the Energy and Materials sectors,which rely on high-priced commodities and have suffered fromChina's manufacturing slowdown.

Among financial companies, the insurance group is expected tosee 31% overall earnings, with The Hartford (HIG) anticipated to be an especially big winnerin the quarter. Commercial banks are expected to earn 24%, withsome of the greatest growth from SunTrust and Regions.

The big banks on Friday met expectations, with both JPMorgan(JPM) and Wells Fargo (WFC) announcing double-digit profits of 34% and22%, respectively. Even Citigroup (C), which reported a $4.7 billion loss due tothe sale of its stake in Morgan Stanley Smith Barney, on Mondaybeat analysts' expectations of earnings per share of $0.96. Thebank posted EPS of $1.06 on earnings of $3.27 billion versus $2.57billion a year ago.

This article was originally posted at AdvisorOne.com, a sister siteof Credit Union Times.