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Call of the Day: Regional Banks

After a bullish analyst note investors are wondering if they should take a deep breath and gobble up regional bank shares.

Specifically, they're wondering if Credit Suisse analyst Craig Siegenthaler is on to something. He said Wednesday he was optimistic that the loan losses experienced by regional banks would begin to shrink in 2010.

Losses on nearly all types of loans have hampered the sector's profitability since 2007 when the housing market started to collapse.

But Siegenthaler says, banks also won't likely have to raise any new capital to help offset the last push of loss provisioning. And Once the banks start to cut back on provisioning and loan losses dwindle, their share prices are likely to return to more normalized levels.

As a result, Siegenthaler now rates the regional banking sector "Overweight." He also upgraded SunTrust to "Outperform" from "Neutral" and BB&Tto "Neutral" from "Underperform."

But neither of those names are his favorite.

Seigenthaler tells Fast Momney, I’m very optimistic on Fifth Third. I think the stock could be up 50% over the next 12 months. And they have very high reserves and they have strong earnings power.


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