NEW YORK ( TheStreet) -- Goldman Sachs published a review of fourth quarter regional bank earnings on Wednesday, with analysts stating they saw "little in terms of surprises," though there were some clear signs of weakness.

"Almost all of the banks saw core pre-provision operating profit decline in the quarter, potentially suggesting a slower path to full earnings recovery," the analysts wrote.

Still, banks tended to behave as expected, according to the report, with those that had been growing their loan books continuing to do so, and banks with big reserves still maintaining a big capital cushion.

Credit metrics "improved notably for the group," the report states. Non-performing loans declined in all product areas with the exception of home equity. Some of the best performers

Goldman analysts increased their 2011 estimates for four banks, including SunTrust Banks ( STI), Cathay General Bancorp ( CATY), Huntington Bancshares ( HBAN) and KeyCorp ( KEY).

They cut estimates for six companies, including Synovus Financial Corp. ( SNV), Zions Bancorporation ( ZION) BB&T Corp. ( BBT), Comerica Inc. ( CMA), Fifth Third Bancorp ( FITB) and First Horizon National Corp. ( FHN).

Despite dropping estimates on Zion by 65% for 2011, Goldman's analysts stated that they had grown more positive on the name after studying non- performing asset "inflow trends." Conversely, Goldman's analysts wrote that those same trends had made them "less constructive," on Fifth Third.

While acknowledging a view that a recovery in credit, margins and costs should occur in about two years, Goldman's analysts argue "the current interest rate environment" leads to "uncertainty around margin normalization."

"The ability to show near-term growth would likely give the market more comfort in the path to better earnings and thus result in outperformance," the report states.

Goldman's top large cap bank picks are JPMorgan Chase ( JPM) and Citigroup ( C), as the firm noted in a report its analysts published last week. Here are Goldman's top picks among regional players.

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3. Huntington Bancshares

Goldman has a $9 price target on Huntington versus a $7.22 price level when the report was published. It estimates the bank will earn 59 cents per share in 2011, 87 cents in 2012 and 98 cents in 2013. The analysts raised their 2011 estimates by 10% after Huntington announced earnings, citing improving credit among the chief reasons for their optimism on the stock.

Huntington reported net income of $122.9 million or $0.05 a share, a 22% improvement from the third quarter. Earnings took a hit from a $0.07 per share from a repayment to the U.S. Treasury Department's Troubled Asset Relief Program in December.

"The performance drivers were lower provision expense and higher net interest income, trends, we believe, will continue," said Huntington Chairman, president and CEO Stephen Steinour.

Huntington's loans increased by 1.6% in the fourth quarter, with auto loans rising by 6% and commercial and industrial loans up by 5% versus the third quarter. Commercial real estate "remains a headwind to growth," according to Goldman's analysts, which they argue is an issue for many other regional banks as well.

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2. East West Bancorp ( EWBC)

Goldman analysts cited "much stronger than expected loan growth," among the reasons for their bullishness on the largest U.S. bank catering to Chinese Americans. They attributed the jump to a strategy shift away from commercial real estate and toward commercial and industrial loans. Goldman did not raise its 2011 earnings estimates of $1.50 per share, and it lowered 2012 estimates by three cents to $1.83.

Though Goldman did not mention this in its report, a further bull case for East West could be found in the fact that the Federal Reserve and the Obama administration appear to have softened their stance toward Chinese banks seeking to make acquisitions in the U.S. U.S.-based observers of the Chinese and Chinese-American banking industries believe Chinese American-oriented banks may be atop the list of potential takeout targets if, as many expect, there is a wave of cross-border bank deals between the U.S. and China.

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1. Banco Popular ( BPOP)

Goldman listed this Puerto Rican bank as a top pick ahead of its fourth quarter earnings report on Friday, setting a $4.25 price target. Banco Popular missed analyst estimates, losing 22 cents per share in the quarter versus Thomson Reuters estimates of a three cent per share loss. Still, Banco Popular's shares traded higher on Friday and were at $3.36 shortly before the close of trading.

Goldman analysts argue Popular is the survivor in a Puerto Rican banking market that has consolidated dramatically as a result of the crisis, with 30% of the island's banks failing and being picked up by competitors in the same market.

Among Puerto Rico's banks, Goldman sees "the most structural and cyclical upside" to Banco Popular, arguing it can earn 45-50 cents per share by 2012-2013. That would mean significant upside if Banco Popular trades at what Goldman sees as a "modest" 10 times earnings.

-- Written by Dan Freed in New York.

>To see these stocks in action, visit the 3 Goldman Sachs Regional Bank Picks portfolio on Stockpickr.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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