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) --

Wells Fargo


is likely to be one of the first big banks to be granted the ability to restore dividends, according to an analyst.

The largest 19 U.S. banks are now providing the

Federal Reserve

with detailed information about their capital plans. After receiving all the information in January, the Fed is expected to tell each bank's management whether or not they're allowed to raise dividends in the near-term.

RBC Capital Markets analyst Joe Morford recently held investor meetings with clients and Wells CFO Howard Atkins. In a report on Monday about those meetings, Morford called the dividend a "top priority" for both sides and believes regulators will give Wells Fargo the green light soon.

"We would expect Wells to be among the first group of banks allowed to increase their dividends early next year, and management initially seems to be targeting a payout ratio in the 20%-30% range," Morford said.

He also noted that management would like to buy back stock and call roughly $11 billion worth of trust-preferred securities that are costly and no longer count toward regulatory capital levels.

Morford has an outperform rating on Wells shares with a price target of $26.65. He notes that loan demand has finally started to pick up and Wells Fargo is "actively booking new commitments" while also running off riskier assets. He expects the bank to continue its strong mortgage-banking revenue trend and seize market share across most of its business lines.

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In recent trading, Wells shares were down 0.3% at 26.58. Over the past 52 weeks, it has traded in a range of $23.02 to $34.25.

-- Written by Lauren Tara LaCapra in New York


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