NEW YORK ( TheStreet) -- Bernstein Research published a list on Friday of its top picks among U.S. financials. The analysts highlighted one name from each of the four sectors its covers: Brokers, life insurance, mid-cap banks and large-cap banks.

Financial stocks had a mixed year in 2010, with lots of companies that held up relatively well during the crisis underperforming one that didn't. Big outperformers, for example, were AIG ( AIG) and Citigroup ( C), two of the biggest recipients of government bailouts during the crisis.

The Financial Select Sector SPDR ( XLF) underperformed the S&P 500 slightly during 2010. The popular financial sector exchange-traded fund rose 9.76% in 2010, excluding dividends, while the S&P 500 earned 11.64%.

Initially this disparity is difficult to understand. iShares U.S. Dow Jones Insurance ( IAK), an exchange traded fund that tracks the insurance sector, rose 16.23%, handily beating the S&P. The SPDR KBW Bank ( KBE) exchange traded fund, tracking large-cap banks, and SPDR KBW Regional Banking ( KRE), which follows smaller names, both handily outperformed the Financial Select Sector SPDR.

But a look at the top holdings of the exchange traded funds appears to offer an easy explanation. The Financial Select Sector ETF has JPMorgan Chase ( JPM) as its top holding, accounting for 9.02% of the fund. JPMorgan earned just over 1% in 2010. Its number three holding was Bank of America ( BAC), which accounts for 8.12% of the fund. Bank of America shares lost 12.51% in 2010. Citigroup, shares of which gained 41.18% in 2010, makes up only 6.52% of the Financial Select Sector ETF.

SPDR KBW Regional Banking, by contrast, has Citigroup as its largest holding, comprising more than 11% of the fund. JPMorgan is a distant second, accounting for just 8.51% of the KBW-branded fund.

Year to date, both the KBW large cap bank fund and the more diversified Financial Select Sector are outpacing the S&P 500, though the KBW regional ETF and the iShares Dow Jones insurance ETF are lagging the S&P.

Here, then, are Bernstein's top four picks.

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4. CME Group ( CME)

Bernstein says the Chicago-based exchange giant CME is "one of the better plays on higher interest rates," on the idea that its interest rate futures and options products will trade heavily if the market senses rates are moving higher over the next 12 months.

However, Bernstein dubs CME "more than just a rate bet," arguing it will do well from an overall boost in the economy due to its diversified range of products.

CME Group shares have been a disappointment of late, which is one of the reasons TheStreet's readers named CEO Craig Donohue the worst performing financial CEO of 2010.

Still, Bernstein expects strong trading volumes in rates to be boosted by a "secular shift" into equities by investment managers. The research firm also sees growth in foreign exchange trading as currency volatility shows little sign of cooling off around the globe. Bernstein's price target of $420 compares to a level of $316.98 shortly after noon on Friday.

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3. MetLife ( MET)

Bernstein argues MetLife is the only life insurer and one of just a few financial services companies "that has significantly improved its franchise value through the crisis." The analysts point to increased market share in several of MetLife's key business lines, as well as the insurer's acquisition of American Life Insurance (Alico) from AIG for $15.5 billion, which significantly expands its global franchise.

MetLife now has "one of the most attractive business mixed in U.S. life insurance, according to Bernstein's team of analysts.

Among the catalysts for strength in MetLife shares is better-than-expected earnings growth on strength in equities and higher interest rates. Assuming interest rates climb slowly, it will allow MetLife to roll over its short term fixed income portfolio, investing it at a higher interest rate. However, as TheStreet pointed out last year, MetLife is also better positioned than many insurers to weather a sustained low interest rate environment.

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2. Synovus Financial ( SNV)

Columbus, Ga.-based Synovus has rallied sharply in recent weeks as a long-awaited pickup in regional bank acquisition activity has kicked into gear. Many expect Synovus is a target, as it has fallen on hard times after financing a hugely ambitious plan to turn the sleepy Sea Island resort on the Georgia coast into a word class tourist spot. The deal turned into one of the more infamous real estate boondoggles of the crisis.

Bernstein believes losses are slowing down at Synovus, and if the bank can turn a profit it won't pay taxes for a long time given a big deferred tax benefit it currently isn't able to record as an asset. Further, Bernstein analysts believe Synovus could command $3 using Bank of Montreal ( BMO)'s acquisition of Marshall & Ilsley ( MI) in December as a guide. However, valuing Synovus at an 8% premium to its core deposits, which Bernstein argues is concervative, would imply a $4 price. Synovus shares were trading at $2.79 Friday afternoon.

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1. Wells Fargo ( WFC)

Wells Fargo is in a good position among U.S. banks, according to Bernstein's report, which argues "credit leverage" will be the driver near term, while the bank has the ability to slash expenses in 2012. It also has strong longer term growth prospects as it integrates legacy Wachovia branches it acquired during the crisis.

The analysts also see net interest margin and mortgage-related risks as "manageable." Though Bernstein singles out Wells Fargo as tops among U.S. large cap buying opportunities, it is also positive on the sector in general, giving an "outperform" rating to Bank of America, JPMorgan and PNC Financial ( PNC).

"We believe bank stock valuations look attractive and see several positive catalysts potentially unfolding in 2011. However, the stocks may first need to digest a recent run of outperformance and round of downward EPS revisions as pencils get sharpened ahead of and throughout the January reporting season," the report states.

The analysts' $39 price target for Wells compares to the $32.53 trading level for the San Francisco-based bank as of Friday afternoon.

-- Written by Dan Freed in New York.

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