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Bank 'Stress Test' Twist May Damp Buybacks, Dividends

This could impact banks with a huge exposure to mortgage-backed securities and low overall securities yield.

Despite these concerns, Penala still expects buybacks to triple in 2013, with JPMorgan Chase (JPM - Get Report) and Citigroup (C - Get Report) poised to return $4 billion and $15 billion next year.

Among the regional banks, Regions Financial (RF - Get Report) and BB&T (BBT) are her top picks. These banks might ask for debt extinguishment, boosting net interest margins and earnings power.

-- Written by Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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