NEW YORK ( TheStreet) -- Earnings for companies listed in the S&P 500 Financial Sector are expected to rise this year an average of 21.58%, according to Capital IQ Estimates.

Among the list, E*Trade Financial ( ETFC) ranked highest in terms of expected increase to earnings. E*Trade's full-year EPS estimates are expected to rise 1,618.8%, to 55 cents a share, from the estimated 3 cents a share it is likely to post for 2010 earnings, the data says.

Regional banks including Comerica ( CMA), Huntington Bancshares ( HBAN), Fifth Third ( FITB) and Keycorp ( KEY) round out the top five financial companies whose earnings are expected to rise the most this year, the data says.

This week, TheStreet ran its own screen through SNL Financial to determine which bank holding companies are predicted to post the highest earnings growth over the next 12 months. The estimates are as of Dec. 31.

Not surprisingly, the list is mainly large and mid-size regional banks that will benefit from improved credit leverage.

"It's credit leverage off a low base -- that is the story," says Andrew Marquardt of Evercore Partners. "It's all continuing improvement in charge offs and reserve releases, modest revenue growth, and lower expenses. However, it is mostly credit related."

It's also no secret that revenue growth will remain challenging for banks this year, due to a confluence of factors.

"Although we expect the quality of banks' balance sheets to improve, we also believe revenue growth will be challenging, down 1%, given the limited loan demand and challenging yield curve environment," Keefe, Bruyette & Woods analysts wrote in their 2011 Large-Cap Bank Outlook last month.

Of banks listed in the KBW Bank Index, Regions Financial ( RF), Zions ( ZION), M&T Bank ( MTB), KeyCorp, Fifth Third, SunTrust Banks ( STI) and Marshall & Ilsley ( MI) still have yet to repurchase the preferred stock held by the U.S. Treasury Department under the Troubled Asset Relief Program.

That means investors will see more capital raises by banks in 2011 in order to repay the funds and keep capital levels satisfactory for regulators at the same time. Earnings (and correlating estimates) will also be affected by banks' share counts.

Other than credit, analysts are incorporating banks' to experience net interest margin improvement, as loan growth inches forward in select sectors, and deploy capital in the form of share buybacks and dividend raises.

However, 2011 is still primarily going to be a year in which banks continue to slog through their balance sheets. Marquardt notes that even 2012 will have a meaningful degree of credit leverage still incorporated into earnings estimates.

"The question is how much and how quickly does credit turn and that's really going to be the driver of earnings in the near term," Marquardt says. "As we get closer to 2012, that's the year we'll start to see a run rate for normalized earnings."

TheStreet's list as follows, in order of ascending order:

10. Sandy Spring Bancorp ( SASR)

Company Profile: Sandy Spring, based in Onley, Md., is a $3.6 billion-asset bank offering business and retail services through 43 branches in the Maryland and Virginia footprint.

Most recently, the company completed the second half of its TARP repurchase in December, repaying to the government $41 million and an additional $173 million in dividends. It repaid the first half last July. Treasury still holds Sandy Spring Bank's outstanding warrants.

Third Quarter EPS: 27 cents per share

Expected Fourth Quarter and 2010 EPS: 27 cents/71 cents per share

Analyst's 2011 EPS Consensus: $1.25 per share

CEO Comment: "Our positive third quarter results provide us with further reason for optimism even as the economy struggles to recover from the recent recession. The experience gained during this very challenging economic period has enabled us to emerge as a stronger institution as we remain focused on the business of community banking," Sandy Spring's CEO Daniel Schrider said in the bank's third-quarter earnings report. "We recognize that more work remains to be done in this area, given the tenuous state of the economic recovery, and our credit team is continuing to work diligently to deal with our remaining problem credits."

9. KeyCorp ( KEY)

Company Profile: Key is a Cleveland-based financial services institution with $94 billion in assets. The regional bank offers banking services to consumers and businesses across 14 states in the Midwest.

Key is one of seven large-cap banks that still has yet to repurchase preferred stock under TARP. Key is looking to return to profitability for the year after a strenuous three years from the financial crisis.

Still its troubles returning to profitability and high credit problems (not the mention the fact that it's located in slower-growth Midwest states), the regional bank has been often seen as a takeout target. With longtime Chairman and CEO Henry Meyer retiring in the spring, M&A speculation is likely to pick up surrounding the Key franchise.

Third Quarter EPS: 20 cents per share

Expected Fourth Quarter and 2010 EPS: 13 cents/27 cents per share

Analyst's 2011 EPS Consensus: 53 cents per share

CEO Comment: "With the third quarter's results, Key has returned to profitability on a year-to-date basis," CEO Henry Meyer said in its last earnings statement. "We are pleased with our progress and recognize the important contributions of employees across Key who have remained focused on serving our clients through what has been the most challenging economic period in decades.

"Our third quarter results reflect a higher net interest margin, continued credit quality improvement, well-controlled expenses, and improvements in several fee-based businesses," Meyer said. "Our work to lower our risk profile and proactively address credit issues is resulting in asset quality improvements across a majority of our loan portfolios and the fourth consecutive quarterly decline in nonperforming assets."

8. Webster Financial ( WBS)

Company Profile: Webster Financial is a Waterbury, Conn.-based bank with $17.8 billion assets and 181 branches across the Northeast.

Webster announced on Dec. 29 that it had repurchased $200 million of TARP-owned preferred stock. The bank had repurchased $200 million in two separate installments earlier in 2010. The recent TARP repurchase was funded by a $153 million stock offering two days earlier. Webster and its largest shareholder, Warburg Pincus, and an affiliate also completed a private placement offering, in which the firms bought an additional 2 million shares. In total roughly 8.7 million shares were offered by Webster through the capital raise.

Third Quarter EPS: 22 cents per share

Expected Fourth Quarter and 2010 EPS: 20 cents/49 cents per share

Analyst's 2011 EPS Consensus: 98 cents per share

CEO Comment: "We are pleased to report higher earnings for the third quarter. Our operating fundamentals remained strong and credit trends showed further improvement," Webster Chairman and CEO James Smith said in its third quarter earnings report.

CFO Jerry Plush added that given "improvement in key asset quality indictors in the quarter, including the level of non-performing loans, charge-offs and delinquencies, we were able to report a lower provision for loan losses compared to the second quarter. If a continuation of such positive trends occurs in coming quarters, reduced provisioning is a likely outcome."

7. Fifth Third Bancorp ( FITB)

Company Profile: Fifth Third is a Cincinnati-based institution with $112 billion in assets and 1,300 locations in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina.

Like KeyCorp, Fifth Third has yet to repay its TARP-related preferred stock, however analysts have been encouraged by the aggressive actions Fifth Third has taken against problem loans.

Third Quarter EPS: 22 cents per share

Expected Fourth Quarter and 2010 EPS: 24 cents/53 cents per share

Analyst's 2011 EPS Consensus: $1.11 per share

CEO Comment: "This quarter's earnings results were strong and showed continued improvement," said Fifth Third's CEO Kevin Kabat said during third-quarter earnings report. "We saw a pick-up in loan production and improvement in loan balance trends, and low-cost deposit growth remained strong."

Fifth Third "took action to sell about half of our residential mortgage nonperforming loans in the quarter. We also transferred approximately a third of our commercial nonperforming loans -- largely loans tied to real estate -- to loans held-for-sale. Disposing of these loans further reduces Fifth Third's exposure to future real estate losses in what is anticipated will be a slow recovery in that sector," Kabat said.

"While the financial landscape and financial regulation continue to evolve, we believe our strengths in traditional lending and deposit-taking activities, and our strong customer service, position us very well to compete and succeed in the future," he said.

6. Oritani Financial ( ORIT)

Company Profile: Oritani is a $2.1 billion asset bank headquartered in Washington, N.J.

Oritani completed a second-step conversion from a mutual holding company to full public ownership in June in which it raised $413 million. The bank operates on a June-fiscal year.

Fiscal 2010 EPS: 23 cents per share

Analyst's 2011 EPS Consensus: 49 cents per share

CEO Comment: "The difficult economic environment is certainly providing challenges but we have been able to deploy much of the funds raised in our recent second-step stock offering and our net interest income continues to expand significantly," Oritani's Chairman and CEO Kevin Lynch said during its most recent earnings report.

Lynch continued: "Problem loan resolution remains a primary focus. Our efforts have not decreased but acceptable resolution remains difficult, due in large part to the lengthening time period required to obtain title through foreclosure via the judicial process, which is inhibiting our ability to resolve these matters."

5. Huntington Bancshares ( HBAN)

Company Profile: Huntington Bank, based in Columbus, Ohio, operates 600 branches across the Midwest and has $53 billion in assets.

The bank has made strides this year, first by returning to profitability in the first quarter, but also by repaying TARP funds last month as other regional banks continue to struggle.

Huntington was able to repay $1.4 billion in TARP money on Dec. 22, following a $920 million capital raise the previous week.

Third Quarter EPS: 10 cents per share

Expected Fourth Quarter and 2010 EPS: 9 cents/22 cents per share

Analyst's 2011 EPS Consensus: 47 cents per share

CEO Comment: "We are a strongly capitalized bank poised to invest more in growing our customers and in support of our communities," Huntington Bank's CEO Stephen Steinour said in its TARP-repayment announcement last month.

"In 2010, Huntington returned to profitability a year sooner than expected. Moreover, we have made major investments in small business lending and customer convenience, along with expanded products and services," he said

4. Comerica ( CMA)

Company Profile: Comerica is the eighteenth largest bank/thrift by asset size, headquartered in Dallas.

Comerica and its management are formidable players in an industry that was shaken to its core during the worst of the financial crisis and is now going through massive adjustment.

The $55 billion-asset bank was able to plow through the past three years even while adjusting to a new home state, after moving its headquarters to Dallas from Detroit in 2007.

Richard Bove, an analyst at Rochdale Securities, wrote in a note to clients last month that Comerica is "in better position than perhaps any other bank in the U.S. to benefit from an economic recovery."

That's because Comerica's bread-and-butter product is commercial and industrial (C&I) lending, which means the institution largely avoided headaches seen by peers as a result of consumers defaulting on their loans. As a business-oriented bank, Comerica has been able to successfully navigate through another source of trouble for banks, construction and development loans.

The bank is also actively looking to take market share in its growth markets, California, Texas, Florida, while its Midwest roots act as a "cash cow," another analyst said.

Third Quarter EPS: 33 cents per share

Expected Fourth Quarter and 2010 EPS: 31 cents/62 cents per share

Analyst's 2011 EPS Consensus: $1.78 per share

CEO Comment: "You don't go into C&I lending over night and part of our strength the fact that we've been doing C&I lending for a very long time, have well-trained individuals that understand the industries they work in, both on the customer side as well as the credit side, which is very important and I think it really paid dividends, as you've seen how we've come through the credit in this recessionary environment," CEO Ralph Babb said at the Goldman Sachs Financial Services Conference in December.

"We have a size that allows us to provide a wide array of products and services but maintain a community bank feel. It also affords us the ability to be nimble and provide quick response to customer requests," he said.

3. Umpqua Holdings ( UMPQ)

Company Profile: Umpqua Bank is a $9 billion-asset bank based in Portland, Ore. The bank has made a name for itself by using unconventional methods to attract customers. And while the company is well capitalized, it has not been immune to the housing downfall, mainly troubled by commercial exposure and residential development loans.

Third Quarter EPS: 7 cents per share

Expected Fourth Quarter and 2010 EPS: 10 cents/18 cents per share

Analyst's 2011 EPS Consensus: 57 cents per share

CEO Comment: "The results from this past quarter once again attest to the strength of the core growth strategy of Umpqua as organic deposit growth exceeded $700 million," Umpqua CEO Ray Davis said in its third-quarter earnings report. "We believe the actions management has taken over the last several quarters have positioned the Company for continued growth."

2.First Midwest Bancorp ( FMBI)

Company Profile: First Midwest is based in Itasca, Ill., has struggled against its commercial exposure but has also been able to acquire three failed Illinois banks during this credit cycle through government-assisted transactions.

Third Quarter EPS: 0

Expected Fourth Quarter and 2010 EPS: loss of 3 cents/profit of 13 cents per share

Analyst's 2011 EPS Consensus: 42 cents per share

CEO Comment: "The quarter evidenced continued solid underlying business performance offset by higher credit costs," CEO Michael Scudder said in the bank's third-quarter earnings report. "While elevated from last quarter, problem assets remain well below peak levels, with the quarter's increase largely due to three individual borrowers."

1. Oriental Financial ( OFG)

Company Profile: As one of the Puerto Rican banks hit hard by the residential housing downturn on the island, Oriental was able to survive at the behest of its doomed local competitors. In May, the bank acquired failed competitor EuroBancshares and in November tweaked its quarterly dividend higher by a penny to 5 cents a share.

Third Quarter EPS: loss of 67 cents per share

Expected Fourth Quarter and 2010 EPS: 32 cents/39 cents per share

Analyst's 2011 EPS Consensus: $1.40 per share

CEO Comment: "Oriental is being positively transformed by the Eurobank acquisition into a bank that generates more recurring income from customer-based businesses versus income from investments," said Oriental's Vice Chairman and CEO José Rafael Fernández in its third-quarter earnings report. "Going forward our focus is on continuing to increase revenues through commercial loan production and our banking and wealth management activities, while reducing our cost of funds and completing the Eurobank cost-savings and integration program."

-- Written by Laurie Kulikowski in New York.

To contact the writer of this article, click here: Laurie Kulikowski.

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