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Thursday, January 13, 2011

Bank of America (NYSE:BAC), PNC (NYSE:PNC), Comerica (NYSE:CMA), JPMorgan (NYSE:JPM), Goldman (NYSE:GS) Large Cap Top Picks of Wells Fargo (NYSE:WFC) in Banking Sector

Wells Fargo (NYSE:WFC) upgraded the large cap banking sector, naming Bank of America (NYSE:BAC), PNC Financial(NYSE:PNC), Comerica (NYSE:CMA), JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) as their top picks in 2011.

They said that "continued credit improvement, a return to positive loan growth, and a constructive investment banking outlook will drive average EPS growth of 59% in 2011, well above the 12% expected for the S&P 500."

Wells also believes sentiment for the large cap banks will improve on "an improving US economy, increased capital returns and a reduction in headline risks..."

The overall sector upgrade was the result of what Wells considers a "superior EPS growth to the S&P 500 and multiple expansion...."

Finally, Wells noted that the large cap banking stocks mentioned
"currently trade at price/TBV multiples that are below or inline with the sector average, allowing investors the ability to purchase strong performers at a valuation below more growth-challenged regional banks."

Expectations for dividends are the payout ratios will almost double from the current 14 percent average in the industry.

Bank of America closed at $14.99, gaining $0.30, or 2.04 percent. PNC closed at $62.20, gaining $0.58, or 0.94 percent. Comerica ended the trading session at $42.02, up $0.84, or 2.04 percent. JPMorgan closed trading at $44.71, increasing $1.11, or 2.55 percent. Goldman closed the day at $171.67, up $2.31, or 1.36 percent.

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