Updated with market close information.

NEW YORK ( TheStreet) -- KBW analyst Brady Gailey late on Tuesday lowered his rating for Cullen/Frost Bankers to "Underperform," despite calling the San Antonio "one of our highest quality names under coverage."

Cullen Frost's pulled back 1% to close at $51.97, after rising 12% over the previous month. The shares were still down 11% year-to-date, comparing favorably in a generally difficult year for bank stocks, to a 27% decline for the KBW Bank Index ( I:BKX).

Based on a 46-cent quarterly payout, the shares have a dividend yield of 3.50%.

Gailey lowered his 12-month price target for Cullen/Frost to $45 from $46 and predicted the shares would slide another 10%, while also predicting a 25% increase for the KBW Bank Index.

The analyst said that "near-term headwinds, such as NIM pressure, minimal loan growth, no near-term earnings upside from consolidation, etc., will weigh on its premium valuation in 2012."

Cullen Frost had $17.7 billion in total assets as of Sept. 30, operating 132 branches in Texas. The company trades at a premium to most other large U.S. banks, at 1.9 times tangible book value, according to SNL Financial, and 14.5 times the consensus 2012 earnings estimate of $3.63, among analysts polled by FactSet.

You get what you pay for, and in the case of Cullen Frost, investors have seen strong earnings performance, with no surprises. The company was included among TheStreet's 10 Bank Stocks Bringing Home the Bacon since Cullen Frost ranks near the top of actively traded U.S. banks for earnings performance, over the past five years.

Gailey lowered his 2012 EPS estimate for Cullen/Frost to $3.28 from $3.40, and sees the company's net interest margin -- essentially the difference between a bank's average yield on loans and investments and its average cost for deposits and wholesale borrowings -- falling "from 3.74% currently to approximately 3.5% by year-end 2012, causing spread income to remain under pressure." The analyst's "down margin forecast is driven by repricing in its loan book (currently yielding 5.0%) and its bond book (currently yielding 4.6% with an approximately 4 year duration), without a material amount of loan growth or cash liquidity deployment."

Despite caution "on share valuation over the next year as earnings decline," Gailey said he continues "to be impressed with the company's performance throughout this cycle and as of recent, and believes management is doing the right things."

Interested in more on Cullen/Frost? See TheStreet Ratings' report card for this stock. U.S. Bancorp ( USB) has also been a "strong and steady" earnings performer among regional banks over the past five years, with a return on average assets (ROA) staying above 1% all through the credit crisis, except for 2009, when the ROA was a still-decent 0.83%.

For the first three quarters of 2011, USB's ROA was 1.47%, according to SNL Financial. U.S. Bancorp's shares were flat year-to-date, closing at $26.50 on Tuesday. USB is currently paying a quarterly dividend of 13 cents, translating to a yield of 1.89%, but shareholders could see a dividend increase following the Federal Reserve's next round of stress tests in January."

On Wednesday, U.S. Bancorp announced it had purchased "the credit card assets of 28 financial institutions, in a portfolio comprising approximately $700 million of outstanding balances," from FIA Card Services, which is held by Bank of America ( BAC).

Guggenheim Securities analyst Marty Mosby rates U.S. Bancorp a buy, with a price target of $30.50, saying on Nov. 14 that the Minneapolis lender "has a strong capital position and we believe it could deploy this capital in order to enhance shareholder value in several ways."

Interested in more on U.S. Bancorp? See TheStreet Ratings' report card for this stock.

Another reliable earner among large regional banks has been Bank of Hawaii ( BOH), with an ROA of 1.24% for the first three quarters of 2011. The ROA ranged from 1.22% to 1.84%, over the previous five years, through 2010.

Bank of Hawaii's shares closed at $43.47 Tuesday, for a year-to-date decline of 4%. Based on a quarterly payout of 45 cents, the shares have a dividend yield of 4.14%.

Like Cullen/Frost and USB, Bank of Hawaii trades at a premium to many other large banks. The shares traded for twice their tangible book value, according to SNL Financial, and for over 13 times the consensus 2012 EPS estimate of $3.20, among analysts polled by FactSet.

KBW analyst Jacquelynne Chimera has a neutral rating for Bank of Hawaii, with a price target of $49.00.

Interested in more on Bank of Hawaii? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.
Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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