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Bank Stock Picks for 3Q: Analysts

Stocks in this article: WFC BPOP DRL BBT STI

NEW YORK ( TheStreet) -- Research firm Sterne Agee unveiled its third quarter earnings preview for banks and thrifts, and they recommend just three names in their coverage universe, which does not include the most popular bank stock, Citigroup (C) and Bank of America (BAC).

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Wells Fargo (WFC) is one of the names on the list. The Sterne Agee analysts estimate Wells will earn $3.60 per share in 2012, while the shares closed Monday at $25.38--roughly seven times that figure. That is a lower multiple than less-profitable peers, the analysts argue.

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Also on Sterne Agee's buy list is BB&T (BBT). Despite concerns about economic weakness in the Southeastern U.S., the Sterne Agee analysts argue BB&T's strong capital cushion and pre-provision earnings, plus an additional backstop against potential losses in troubled areas such as Florida and the Alabama coast, will allow the bank to outperform.

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In Puerto Rico, the analysts like Banco Popular (BPOP). They argue the bank's sale of a 51% stake in payment technology firm EVERTEC in July for $600 million should have "put to rest" any worries about the strength of its capital position. The analysts see Popular breaking even in the third quarter, slightly better than the consensus loss of a penny per share.

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