Updated from 3:04 p.m. EDT

Bank stocks reversed ground and finished higher after Treasury Secretary Timothy Geithner told a Congressional Oversight Panel that some firms could be allowed to repay government bailout funds.

Citigroup ( C), which was among the worst performing financial stocks earlier Tuesday ahead of its annual meeting, rallied 10.2% to close at $3.24.

Ahead of the meeting, The Financial Times reported that senior officials at the Federal Deposit Insurance Corp. privately have discussed who might replace CEO Vikram Pandit if the bank needed more government aid.

During his testimony on Capitol Hill, Geithner said that a "vast majority" of banks have more capital than needed, but cautioned that any buyout of the government's preferred equity stakes bought through the Troubled Asset Relief Program would be left to bank regulators. Still, his remarks prompted the turnaround in Citigroup shares.

Most other major banks reversed earlier losses as well. Wells Fargo ( WFC) gained 10.7%, JPMorgan Chase ( JPM) rose 9.6%, and Bank of America ( BAC) climbed 9.2%.

Elsewhere, several other financial stocks were mixed after reporting quarterly earnings. Bank of New York Mellon ( BK) shed 0.2% after the bank reported a 57% drop in first-quarter profit and said it is slashing its dividend to 9 cents from 24 cents.

KeyCorp ( KEY) also lost ground after reporting a far wider first-quarter loss than analysts expected, citing a sharp decline in asset values and a build to reserves for additional losses ahead. KeyCorp shares finished lower by 4.7%

Additionally, Northern Trust ( NTRS) shares slid 3.4% after the bank fell well short analysts' estimates with its first-quarter earnings report.

On the other hand, State Street ( STT) reported a first-quarter profit that exceeded expectations, and shares closed 17.9% higher despite Chairman and CEO Ronald Logue's warning that a weaker-than-expected first quarter would likely lead 2009 results to the "weaker end" of previous guidance.

US Bancorp ( USB) was also among the financial stock winners after the bank beat expectations with its earnings report, though the 51% profit decline due to higher loan losses may be a red flag for some investors. Shares rallied 20.9%.

Shares of Regions Financial ( RF) reversed ground and finished up 5.9% after the bank holding company beat Wall Street's expectations.

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