UPDATE 1-Susquehanna starts Synovus with positive rating

Wed Jul 14, 2010 8:03am EDT

* Starts Synovus, Comerica with positive rating

* Starts KeyCorp with negative rating

* Says regional banks should compare well with large banks

July 14 (Reuters) - Susquehanna Financial started coverage of the mid-cap and regional bank sector and attached "positive" rating to Synovus Financial Corp (SNV.N), Comerica Inc (CMA.N), New York Community Bancorp Inc NYB.N and Hudson City Bancorp Inc (HCBK.O).

"Since a rally off lows in early to mid 2009, the mid-cap names have been somewhat out of favor with investors, but at present, we think a number of companies are worth revisiting," analyst Jack Micenko said.

The analyst said New York Community's strong market share in niche multi-family lending drives above-average loan growth and better credit metrics than its peers while Comerica has a clean bill of health from regulators after repaying bailout money and a solid capital base from which to play offense.

With stricter oversight around consumer lending and reduced earnings from proprietary trading, the regionals should compare more favorably to larger cap banks from a valuation standpoint in the future, analyst Micenko said.

Analyst Micenko also initiated First Horizon National Corp (FHN.N), Marshall & Ilsley Corp MI.N, SVB Financial Group (SIVB.O) and Zions Bancorp (ZION.O) with "neutral" rating and KeyCorp (KEY.N) with a "negative" rating.

Keycorp faces a number of pending regulatory and accounting proposals that could require higher capital levels and the cost of common equity for the company is very high going forward, the analyst said. (Reporting by Supantha Mukherjee in Bangalore; Editing by Jarshad Kakkrakandy)

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