2 Bank Stock Picks from Atlantic Equities

The analyst expects PNC's dividend yield to increase to 3.4% in 2013.

Staite highlighted "that PNC is operating below potential with a cost efficiency ratio of 63% for the core banking business compared to 55% at USB and WFC," and said "we see no reason why PNC cannot close this gap over time which could give a further 20% boost to earnings."

The efficiency ratio is essentially the number of pennies of overhead expenses incurred for every dollar of a bank's revenue.

Interested in more on PNC Financial Services Group? See TheStreet Ratings' report card for this stock.

Wells Fargo

Wells Fargo's shares closed at $34.18 Wednesday, returning 27% year-to-date, following a 10% decline during 2011. The shares trade for nine times the consensus 2013 EPS estimate of $3.67.

Based on a 22-cent quarterly payout, the shares have a dividend yield of 2.57%.

The company's operating returns on average equity (ROE) over the past five quarters have ranged between 11.51% and 12.37%. Staite estimates that in 2013, Wells Fargo will achieve a return on tangible equity of 16.7% and earn $3.79 a share, with its dividend yield increasing to 3.4%.

The analyst rates Wells Fargo "Overweight," with a $40 price target, and said the shares were "attractively valued on a P/TB of 1.6x," and that the price-to-tangible-book ratio could move up to 1.8.

Staite said that Wells Fargo's return on tangible equity "is currently running at 16% and should remain at this level with potentially weaker mortgages revenues in 2013 being offset by cost savings," but that "medium to longer term we think 18% is attainable."

Please see TheStreet's earnings coverage for details on Wells Fargo's second-quarter performance.

Interested in more on Wells Fargo? See TheStreet Ratings' report card for this stock.

U.S. Bancorp

Shares of U.S. Bancorp closed at $32.90 Wednesday, returning 24% year-to-date, following a 2% return during 2011. The shares trade for 11 times the consensus 2013 EPS estimate of $3.04.

Based on a quarterly payout of 19.5 cents, the shares have a dividend yield of 2.37%.

USB's operating returns on average equity (ROE) over the past five quarters have ranged between 14.65% and 16.44%. Staite estimates that in 2013, the company's return on tangible will be 22.5%, with EPS of $3.02, and a dividend yield increasing to 2.5%.

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