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5 Long-Term Bank Stock Picks From Jefferies (Update 1)

2. First Niagara Financial Group
Shares of First Niagara Financial Group (FNFG) of Buffalo, N.Y., closed at $9.84, returning 15% year-to-date, following a 35% decline during 2011.

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The shares trade for nine times the consensus 2013 EPS estimate of $1.09.

Based on an 8-cent quarterly payout, the shares have a dividend yield of 3.25%.

First Niagara expects to complete its HSBC (HBC) branch acquisition on May 18, after which the company will double in size, with roughly 200 branches and 1,200 employees.

Jefferies analyst Casey Haire on Monday raised his price target for the shares by a dollar to $12, leaving his 2012 EPS estimate of 95 cents and his 2013 estimate of $1.10 unchanged.

The consensus first-quarter EPS estimate for First Niagara is 19 cents, following fourth-quarter earnings of 24 cents during the fourth quarter and also during the first quarter of 2011.

Haire matches the consensus, saying he expects "EPS to drop a nickel Q-Q to $0.19, as a pre-announced premium amortization hit and a full-quarter drag from the HSBC deal financing (completed in Dec. '11) weigh on earnings." The analyst also expects the company's earnings "to snap back in 2Q when the HSBC deal closes."

Haire also expects "loan growth to remain positive," especially for commercial and industrial lending, "although a tough pricing environment will keep core [net interest margin] under pressure."

Interested in more on First Niagara? See TheStreet Ratings' report card for this stock.

Stock quotes in this article: BAC, C, JPM, STI, FNFG, PNC, FNBI, WAL 

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