Ahead Of The Bell: Banks Upgraded By BMO Capital

While banks still face mounting loan losses — especially in areas like commercial real estate — recent Depression era loss assumptions are unlikely to actually occur, meaning banks will be in better shape than previously anticipated, Winter wrote.

In upgrading BOK Financial, Winter increased his price target to $51 from $40 and said its diversified stream of fee income provides strong growth potential.

East West Bancorp was upgraded because it is unlikely the bank will have to raise additional capital to cover future loan losses, and it is actively trying to address current credit problems, Winter wrote. He increased his price target to $11 from $7.

Winter doubled his price target on TCF Financial to $22, saying it has been able to take advantage of increased market share in areas where competitors stopped issuing loans, such as equipment financing and home equity lending. The bank has also already repaid the government loan it received last fall as part of the Troubled Asset Relief Program. The government provided hundreds of loans to banks during the mushrooming credit crisis last fall as part of the program.

Winter raised U.S. Bancorp's price target to $25 from $16 and said the bank should receive approval to repay its TARP loan by the end of the second quarter. U.S. Bancorp's capital levels are among the strongest, and it has taken advantage of customers' flight to quality amid the downturn, he added.