Updated with FBR's Thursday comments on First Niagara's sale of 37 branches to KeyCorp, additional information on Regions Financial's late Wednesday announcement of a deal to sell Morgan Keegan to Raymond James Financial and earnings pre-announcement, analyst reaction, and market close information.

NEW YORK ( TheStreet) -- Analysts have subdued expectations for regional banks reporting fourth-quarter results over the next two weeks, and also see higher stock price upside for the largest national players.

Starting with the 24 components of KBW Bank Index ( I:BKX), we narrowed down our list of 10 regional banks to the ones with the most upside potential, based on Friday's market data and consensus price targets among analysts polled by Thomson Reuters.

Goldman Sachs analyst Christopher Neczypor said in his firm's regional banks' earnings preview on Monday said that "with regional bank stocks up 20% in the past six weeks," some investors were skeptical, pointing to "a similar backdrop this time last year - a 23% rise in stocks, which ultimately proved unsustainable - while others suggest fundamentals actually support the change in value this time."

In his discussion on what has changed for regional banks from a year ago, Neczypor made several points of great importance to investors, saying that "bank stocks are 20%-plus lower, Street estimates have decreased 15%, there is more clarity on capital, and banks are growing loans now."

Analysts expect to see a sequential earnings decline for many banks, with the prolonged low-rate environment squeezing net interest margins, and a smaller release of loan loss reserves providing a reduced boost to bottom-line results.

Eight of the 10 featured here trade at higher multiples to consensus forward earnings than the "big four" U.S. banks, reflecting in part the regulatory overhang faced by the biggest banks from the enhanced capital requirements for systemically important financial holding companies, which still haven't been finalized by the Federal Reserve, as well as the Volcker Rule, which will ban "proprietary trading" and have the greatest effect on holding companies with significant brokerage and investment banking operations.

Here's how the stock price multiples stack up for the big four, as of Friday's market close:
  • Shares of Bank of America (BAC) closed at $6.18 Friday, declining 57% from a year earlier. The shares traded for 6.9 times the consensus 2012 EPS estimate of 91 cents and for 0.5 times tangible book value, according to HighlineFI.
  • JPMorgan Chase (JPM) closed at $35.36 Friday, for a one-year decline of 18%. The shares traded for 7.4 times the consensus 2012 EPS estimate of $4.81, and 1.2 times tangible book value.
  • Shares of Wells Fargo (WFC), closed at $28.94 Friday, sliding 9% from a year earlier. The shares traded for nine times the consensus 2012 EPS estimate of $3.21 and 1.9 times tangible book value.
  • Citigroup (C) closed at $28.55, declining 42% from a year earlier. The shares traded for 6.6 times the consensus 2012 EPS estimate of $4.32, and for 0.6 times tangible book value.

Goldman Sachs analyst Richard Ramsden said on Monday that his firm's top banking picks "remain WFC and JPM, while clarity around BAC's capital base by the Fed should allow for outperformance from current levels." Ramsden also expects that "all banks will pass the stress test, which will serve as a catalyst for the group."

Here are TheStreet's fourth-quarter earnings previews for our select group of large regional banks. The list is sorted by ascending upside potential, based on analysts' consensus 12-month price targets.

10. Fifth Third Bancorp

Shares of Fifth Third Bancorp ( FITB) of Cincinnati closed at $13.49 Friday, declining 6% from a year earlier. Based on a quarterly payout of eight cents, the shares have a dividend yield of 2.37%.

Fifth Third is scheduled to announce its fourth-quarter results on January 20, before the market opens. The consensus among analysts polled Thomson Reuters is for the company to report fourth-quarter earnings of 36 cents, declining from earnings of 40 cents a share in the third quarter, but increasing from EPS of 33 cents a share during the fourth quarter of 2010.

The company warned last Thursday that its fourth-quarter earnings before taxes would be reduced by about $68 million, in connection with the company's sale of its Class B Visa ( V) shares in 2009, when \the company "entered into a total return swap in which we are required to make payments to the swap counterparty in the event that the Class B conversion rate decreases."

Following Visa's announcement that it would deposit $1.565 billion into its litigation escrow account, Fifth Third determined it would "make a payment of approximately $64 million to the swap counterparty during the quarter ended March 31, 2012," but that fourth-quarter charges would result from an "increase the fair value of the swap liability by approximately $54 million (reducing noninterest income)" and an increase in "litigation reserves associated with bankcard association membership by approximately $14 million (increasing noninterest expense)."

Oppenheimer analyst Terry McEvoy rates Fifth Third "Outperform," with a 12 to 18-month price target of $15, and is slightly ahead of the consensus, estimating fourth-quarter earnings of 35 cents a share. McEvoy said in December that he expects "the combination of organic growth opportunities within Fifth Third's Midwest markets as well as 4Q11 net interest margin expansion will differentiate the company's near-term financial performance from its peers."

Another interesting angle for investors is the possibility of take-out. Miller Tabak analyst Tom Mitchell in December initiated his coverage of Fifth Third with a "Strong Buy," rating and $13.69 price target, and while commenting on long-term valuation for the shares, said "the excellent balance-sheet stewardship of FITB management in recent periods is more likely to be rewarded in the M&A market than in the stock market." Mitchell estimated that "FITB's strategic-takeover net asset value " had increased "to $23.8/share from the previous $23.2," said he expected the take-out value "to keep increasing quarter by quarter."

The shares trade for nine times the consensus 2012 EPS estimate of $1.42, among analysts polled by Thomson Reuters, and for 1.3 times tangible book value, according HighlineFI.

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

9. Comerica

Shares of Comerica ( CMA) of Dallas closed at $27.92 Friday, for as one-year decline of 31%. Based on a quarterly payout of 10 cents, the shares have a dividend yield of 1.43%.

Comerica on Dec. 14 announced that it would continue its share repurchases and that it expected share buybacks, "combined with dividend payments, will result in a payout of up to 50 percent of net income for the first quarter of 2012."

As of Nov. 30, Comerica had roughly 8.6 million shares remaining in its buyback authorization.

Comerica is scheduled to announce its fourth-quarter results on Jan. 20, before the market opens. Analysts polled by Thomson Reuters expect the company to post fourth-quarter EPS of 48 cents, declining from 51 cents the previous quarter and 53 cents a year earlier.

Guggenheim Securities analyst Jeff Davis rates Comerica a "Buy," with a $32 price target and estimates the company will report fourth-quarter earnings of 45 cents a share, including roughly "$40 million of merger charges for the Sterling Bancshares acquisition," which was completed in July. Davis thinks "investors are going to be focused on loan growth given CMA's commercial and industrial focus," and while the analyst expects "nil loan growth" overall, he expects "C&I loan growth," along with "a rebound in auto dealer floor plan financing and ongoing strength in mortgage warehouse finance."

Davis estimates Comerica will earn $2.20 a share during 2012.

In his fourth-quarter earnings preview for midcap banks last Thursday, Morgan Stanley analyst Ken Zerbe called Comerica his firm's "top pick" going into earnings season, "due to its leverage to improving commercial and industrial loan growth." Zerbe expects Comerica to earn $3.34 a share in 2012.

The shares trade for 12.6 times the consensus 2012 EPS estimate of $2.22, among analysts polled by Thomson Reuters, and for 0.9 times tangible book value, according to HighlineFI.

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

8. U.S. Bancorp

Shares of U.S. Bancorp ( USB) of Minneapolis closed at $27.75 Friday, returning 8% over the previous year. Based on a quarterly payout of 12.5 cents, the shares have a dividend yield of 1.80%.

U.S. Bancorp is scheduled to announce its fourth-quarter results on January 18, before the market opens. The consensus among analysts polled by Thomson Reuters is for the company to report fourth-quarter earnings of 63 cents a share, compared to 64 cents the previous quarter and 49 cents a year earlier.

The company in November was featured among TheStreet's 10 Bank Stocks Bringing Home the Bacon, which highlighted actively traded banks with consistent and strong earnings performance over the past five years.

Morgan Stanley analyst Betsy Graseck in December reiterated her "Overweight" rating for U.S. Bancorp and increased her price target for the shares to $32 from $31, based on higher commercial and industrial loan growth "and share repurchases and less margin compression."

During the third quarter, USB repurchased 13.1 million shares at an average price of $24.45, and the company was authorized to buy back another 34.4 million shares as of Sept. 30.

Graseck estimates that U.S. Bancorp will post fourth-quarter EPS of 65 cents and earn $2.65 a share in 2012.

UBS analyst Greg Ketron in December called U.S. Bancorp his firm's "top pick" among the large-cap regionals, having "the most optimal banking model for the current environment," along with "a proven track record of superior revenue generation." Ketron said he expected that the bank's "fee revenues will continue to drive return outperformance versus peer banks," and noted that U.S. Bancorp achieved an average return on common equity of "15.7% over the first 3 quarters of 2011 vs. an average of 7.5% at peers."

Ketron's price target for USB is $32, and he estimates the company will report fourth quarter earnings of 62 cents a share, followed by EPS of $2.65 a share in 2012.

The shares trade for 10.5 times the consensus 2012 EPS estimate of $2.65, among analysts polled by Thomson Reuters, and for 2.9 times tangible book value, according to HighlineFI.

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

7. New York Community Bancorp

Shares of New York Community Bancorp of Westbury closed at $13.02, declining 26% from a year earlier. The company is a well-known dividend play, with the shares yielding 7.68% on a quarterly payout of 25 cents.

The company is scheduled to announce its fourth-quarter results on Jan 25, before the market opens. Analysts polled by Thomson Reuters estimate the company will report fourth-quarter earnings of 27 cents a share, matching its third-quarter earnings, but way below the 34 cents a share the company earned during the fourth quarter of 2010, when the company booked $40.4 million in mortgage banking income and $11.3 million in Federal Deposit Insurance Corp. indemnification income connected to its purchase of select assets and deposits of the failed AmTrust in 2009.

Some of the pressure on the shares over the past year has reflected investor concerns that New York Community Bancorp has been paying out most of its earnings in dividends. Then again, the company -- which specializes in multifamily lending in the New York City area -- has maintained its 25-cent payout for 31 straight quarters, and it reported an adjusted ratio of tangible equity to tangible assets of 7.92% and tangible book value of $7.04 a share as of Sept. 30, increasing from 7.67% and $6.83, a year earlier.

Deutsche Bank analyst Dave Rochester on Jan. 4 initiated his firm's coverage of New York Community Bancorp with a "Hold" rating and a price target of $12.50, saying he was "sidelined until it is clearer that growth could exceed expectations or that the yield curve could steepen near-term (a plus for refinance volume, loan/securities yields)."

Rochester added that "dividend risk exists but we believe it is low outside of a double-dip scenario, however we note that greater economic weakness could increase perceived risks by the market, negatively impacting shares."

Rochester estimates that the company will announced fourth-quarter earnings of 29 cents a share.

The shares trade for 11.8 times the consensus 2012 EPS estimate of $1.10, among analysts polled by Thomson Reuters, and 1.9 times tangible book value, according to HighlineFI.

Interested in more on New York Community Bancorp? See TheStreet Ratings' report card for this stock.

6. Huntington Bancshares

Huntington Bancshares ( HBAN) of Columbus, Ohio, has seen its stock pull back 17% over the past year, closing Friday at $5.80. Based on a quarterly payout of four cents, the shares have a dividend yield of 2.76%.

The company is scheduled to announce its fourth-quarter results early on Sept. 19, and the consensus among analysts polled by Thomson Reuters is for Huntington to post earnings of 14 cents a share, declining from 16 cents in the third quarter, but increasing from 5 cents a share during the fourth quarter of 2010.

Bright spots for the company during the third quarter included continued strong growth in checking account deposits and the resumption of the company's auto loan securitization activity, which netted Huntington $15 million in gains.

Deutsche Bank analyst Matt O'Connor has a "Hold" rating on Huntington, with a $5.00 price target, saying in December that the company's "various growth initiatives seem likely to boost revenue growth over time," but "it's unclear whether there will be a meaningful revenue lift without higher rates and/or meaningful pick up in loan growth--neither of which seem likely near term." O'Connor also said he was concerned that "while many banks are looking to cut costs, expenses are likely to continue to rise at HBAN given growth initiatives."

The analyst estimates that Huntington will report earnings of 14 cents a share for the fourth quarter, followed by EPS of 56 cents in 2012.

The shares trade for 9.5 times the consensus 2012 EPS estimate of 61 cents, among analysts polled by Thomson Reuters, and 1.2 times tangible book value, according to HighlineFI.

Interested in more on Huntington Bancshares? See TheStreet Ratings' report card for this stock.

5. Zions Bancorporation

Shares of Zions Bancorporation ( ZION) of Salt Lake City closed at $17.64 Friday, for a one-year decline of 29%.

The company is scheduled to announce its fourth-quarter results on Jan. 23 after the market closes and analysts are expecting Zions to report earnings of 33 cents a share, compared to 35 cents in the third quarter and a loss of 62 cents in the fourth quarter of 2010, when the company's provision for loan losses totaled $173.2 million. The provision declined to just $14.6 million in the third quarter.

Zions owes $1.4 billion in federal bailout funds received through the Troubled Assets Relief Program, or TARP.

SunTrust Robinson Humphrey analyst Jennifer Dembra said in December that Zions was her firm's "top pick on near term catalysts," basing a price target of $22 on 11 times her 2013 EPS estimate of $2.00, and 1.16 times tangible book value. Dembra said that the company's asset quality has improved and it has "returned to sustained core profitability," with "enough cash being held at the parent company now to at least redeem half of TARP if approved."

The analyst estimates that Zions will report fourth-quarter earnings of 36 cents a share and earn $1.88 a share in 2012.

The shares trade for 11.2 times the consensus 2012 EPS estimate of $1.58, among analysts polled by Thomson Reuters, and 0.9 times tangible book value, according to HighlineFI.

Interested in more on Zions Bancorporation? See TheStreet Ratings' report card for this stock.

4. First Niagara Financial Group

Shares of First Niagara Financial Group ( FNFG) of Buffalo, N.Y., closed at $9.01 Friday, for a one-year decline of 32%.

The company on Dec. 7 priced a $450 million common equity offering at $8.50 a share, and also priced a $350 million preferred offering with a very high coupon of 8.625%, as it raised capital in advance of completing pending purchase of 195 branches from HSBC ( HBC). First Niagara also cut its quarterly dividend in half, to 8 cents, translating to a dividend yield of 3.55%.

To address the Justice Department's concerns over First Niagara's market concentration following the branch purchase, the company has agreed to immediately sell 40 branches once the HSBC deal is completed, and also plans to sell an additional 60 branches in markets overlapping its current branch base. On Thursday, the company announced a deal to sell 37 branches to KeyCorp ( KEY).

KeyCorp agreed to "pay a 4.6% premium on deposits, or approximately $110 million based on current deposit balances."

First Niagara's shares rose over 3% on Thursday, closing at $9.58.

First Niagara is scheduled to report its fourth-quarter results on Jan. 26, before the market opens. Analysts expect the company to announce earnings of 24 cents a share, compared to operating EPS of 25 cents the previous quarter and 24 cents a year earlier.

Deutsche Bank analyst Dave Rochester on Jan. 4 initiated his firm's coverage of First Niagara with a "Buy" rating and a $10 price target, saying he expects "upside to trading multiples in FY12 with a more meaningful pause in M&A activity, as we expect pro forma earnings per share and return on tangible common equity could be robust enough to reduce investor deal fatigue and reinvigorate interest in the shares."

Rochester estimates that First Niagara will report fourth-quarter earnings of 22 cents a share, followed by EPS of 90 cents in 2012.

FBR analyst Bob Ramsey said on Thursday that with the KeyCorp deal, First Niagara had laid out 2/3 of its planned branch sales, and that he expected "some news on the remaining deposit divestitures within two weeks when the company reports 4Q11 earnings."

Ramsey said the pricing for the branch sales to KEY was "at the higher end of the company's targeted range for an average deposit premium of 4% to 5%." The analyst called First Niagara "a highly profitable franchise which we expect to generate organic loan growth funded with a very low cost deposit base (51 bps). Shares trade at 9.8x our 2012 EPS estimate of $0.95, a discount to peers."

The shares trade for 9.1 times the consensus 2012 EPS estimate of 99 cents, among analysts polled by Thomson Reuters, and 1.2 times tangible book value, according to HighlineFI.

Interested in more on First Niagara Financial Group? See TheStreet Ratings' report card for this stock

3. Regions Financial

Shares of Regions Financial ( RF) of Birmingham, Ala., closed at $4.41 Friday, declining 38% from a year earlier.

Regions stands out among publicly traded bank holding companies, owing $3.5 billion in TARP money.

The company on Wednesday announced an agreement to sell its Morgan Keegan subsidiary to Raymond James Financial ( RJF) for $930 million, and that Morgan Keegan would pay Regions a dividend of $250 million before the sale, which is expected to be completed during the first quarter.

Regions also announced it would take a fourth-quarter goodwill impairment charge ranging between $575 million and $745 million, and said it expected to report a fourth-quarter net loss to common shareholders "in a range of $432 million to $633 million or $(0.34) per common share to $(0.50) per common share," but that "net income from Continuing Operations without the goodwill impairment charge (non-GAAP) is expected to be in a range of $88 million to $119 million or $0.07 to $0.09 per common share."

The company's shares pulled back over 2% on Thursday, closing at $4.69.

FBR analyst Scott Valentin said on Thursday that "while the $1.18 billion valuation is slightly above our expectations, the net benefit to capital ratios was less than expected," and that through the Morgan Keegan sale, Regions Financial's "Pro forma 3Q11 Tier-1 common equity ratio increases 9 bps, to 8.25%, and Tier-1 capital risked-based ratio increases 13 bps, to 12.97%."

Valentin reiterated his "Market Perform" rating for Regions.

Regions Financial is scheduled to announce its fourth-quarter results on January 24, before the market opens. The consensus among analysts polled by Thomson Reuters is for the company to report fourth-quarter earnings of five cents a share, declining from eight cents in the third quarter, but improving from a three-cent profit in the fourth quarter of 2010.

KBW analyst Jefferson Harralson rates Regions Financial "Market Perform," with a $6 price target. The analyst had previously predicted that Regions would "pull $250 million in cash" from Morgan Keegan before the sale, and his estimates factored in the Morgan Keegan sale bringing Regions between "$1.150 to $1.250 billion in cash."

Harralson said that "the real benefit of the deal is that the $1.0 billion plus in cash will augment RF's $2.6 billion in holding company cash," and prepare the company to repay TARP.

The shares trade for 9.4 times the consensus 2012 EPS estimate of 47 cents, among analysts polled by Thomson Reuters, and 0.7 times tangible book value, according to HighlineFI.

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

2. SunTrust

Shares of SunTrust ( STI) of Atlanta closed at $19.75 Friday, down 31% from a year earlier. Based on a quarterly payout of five cents, the shares have a dividend yield of 1.01%.

SunTrust is scheduled to announce its fourth-quarter results on January 20, before the market opens. The consensus among analysts polled by Thomson Reuters is for the company to report fourth-quarter earnings of 28 cents a share, declining from 39 cents during the third quarter, but increasing from 23 cents in the fourth quarter of 2010.

Fourth-quarter earnings are expected to decline sequentially, because SunTrust has already announced that mortgage putback demands increased during the quarter.

Guggenheim Securities analyst Marty Mosby rates SunTrust a "Buy," with a $22 price target, saying in December that he shares had considerable upside "just to get back" to tangible book value, which the analyst said was $25. Mosby estimates that SunTrust will earn 32 cents a share during the fourth quarter, followed by EPS of $2.05 in 2012.

Mosby believes that SunTrust "could have as much as $2 billion in excess capital by year-end 2012, even after paying out 25% of 2012's earnings in dividends," and that the company could reduce its share count by 5%, with $500 million in stock buybacks.

The shares trade for 10.7 times the consensus 2012 EPS estimate of $1.85, among analysts polled by Thomson Reuters, and 0.8 times tangible book value, according to HighlineFI.

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

1. Capital One Financial

Shares of Capital One Financial ( COF) of McLean, Va., closed at $45.16 and were flat from a year earlier.

The company expects soon to receive Federal Reserve approval of its agreement to purchase ING Direct (USA) from ING Groep ( ING) for roughly $9 billion. During the third quarter, Capital One issued $3 billion in senior notes and closed an underwritten public offering of 40 million shares at a price of $50, which should net the company roughly $1.94 billion by the required settlement date of Feb. 15. The ING deal is expected to be completed during the first quarter.

ING Direct's main thrift subsidiary had $91.7 billion in assets as of Sept. 30, with $82.3 million in deposits gathered over the Internet, providing plenty of liquidity for Capital One's purchase of HSBC's ( HBC) U.S. credit card portfolio for a premium of $2.6 billion. Capital One expects to raise between $750 million and $1.25 billion in common equity to complete the HSBC deal in the second quarter.

Capital One is scheduled to announce its fourth-quarter results on Jan. 19 after the market closes, with analysts polled by Thomson Reuters estimating EPS of $1.55, compared to $1.77 the previous quarter and $1.52 a year earlier.

FBR analyst Scott Valentin on Tuesday added Capital One to his firm's "Top Picks," saying the two acquisitions would increase "confidence in 2013 earnings." Valentin has a $60 price target for Capital One and estimates the company will post fourth-quarter earnings of $1.75 a share, followed by EPS of $6.35 in 2012.

The shares trade for 7.4 times the consensus 2012 EPS estimate of $6.10, among analysts polled by Thomson Reuters, which is, by far, the lowest forward P/E among this group of 10 regional bank stocks. The shares trade for 1.4 times tangible book value, according to HighlineFI.

Out of 20 analysts covering Capital One, 15 rate the shares a buy, four have neutral ratings and one analyst recommends selling the shares. Based on a consensus price target of $56.89, the shares have 35% upside for 2012.

Interested in more on Capital One? 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.

To submit a news tip, send an email to: tips@thestreet.com.
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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