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One Regional Bank Stock Has Further to Run: Pro

With five regional banks touching new 52-week highs this week, does the sector have any more room to the upside?

Paul Miller, head of financial services for FBR Capital Markets, said that PNC Bank continues to exceed expectations, helped by its acquisition of National City about one year ago.

"That's the one stock we would continue to buy here," Miller said.

On the other end, Fifth Third Bancorp and BB&T are likely trade relatively flat, due to their rich valuation, Miller said. He added that he has been surprised by the sector's runup thus far, as markets had been expecting such positive earnings results.

Though Miller doesn't think a feared blowup in commercial real estate will bring as much of a downside to regionals as some think, he did say that financial reform could weigh on their stocks.

He specifically pointed to the creation of an independent consumer agency, which could create rules that limit credit card and overdraft fees.

"We don't know what could happen," he admitted. "But there is power in place if this bill passes to really restrict the fee income of these institutions."

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Other Regional Banks Hitting 52-Week Highs This Week:

Zions Bancorp

Suntrust Banks

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Disclosures:

Neither Miller nor his firm own any shares of BB&T, PNC or Keycorp. FBR Capital Markets acts as a market maker or liquidity provider for Fifth Third Bancorp securities.

Disclaimer