NEW YORK ( TheStreet) -- With the financial industry in recovery mode and the results of the stress tests due out in March, analysts predict that there will be an acceleration of bailout repayments the banks received through Troubled Assets Relief Program, or TARP.

Fifth Third Bancorp ( FITB) announced on January 20 that it would repay TARP after a common equity raise and closed an offering at $14 a share on Tuesday, to raise $1.7 billion, raising another $1 billion through a senior debt offering with a 3.625% coupon, due in January 2016.

Stifel Nicolaus analyst Charles Nabhan told TheStreet that his firm's "model has a first quarter TARP repayment built in for KeyCorp ( KEY) and SunTrust ( STI) along with a capital raise." Nabhan said the companies were awaiting the results of the second round of government stress tests, which "should come at the beginning of March, and thereafter we expect a TARP repayment."

"These banks are more or less fully valued in our view. These are banks that have really struggled at one point in the cycle and they are still dealing with credit risk. Their earnings power isn't as substantial as banks like Wells Fargo ( WFC) and United Bancorp ( USB) but they are trading at same multiples," said Nabhan.

After Regions Financial ( RF) reported its fourth-quarter results, Christopher Mutascio - also of Stifel Nicolaus -- maintained his hold rating on the shares and said in a report that the company "remains a laggard in terms of credit and will likely be the last of our large cap banks to exit TARP." He expects "a 4Q11 repayment, with the company raising $1.75 billion in common equity in order to pay off the government's $3.5 billion TARP preferred investment"

Brian Foran of Nomura Securities said that "as the banking system heals and as it starts to make its money back ultimately the goal of the Treasury is to have this be a temporary investment," and that "it seems like the main metric to repay TARP is to have a 9 percent tier one common" capital ratio. Since KeyCorp and SunTrust "are both at about 8.5 percent right now so the amount of money they need to raise will actually be potentially pretty small as a percentage of their TARP or percentage of the market cap," Foran said, but for Regions, the capital raise "could be a little bit bigger just because their tier one common ratio is still a little bit below 8 percent."

Using Foran's guideline for a 9% Tier 1 common equity ratio, we have identified 10 more banks with capital ratios exceeding that level that were also profitable during the most recent reported quarter.

Here are 10 holding companies meeting the criteria with the strongest Tier 1 common equity ratios:

Terms

For each of the 10 banks discussed on the following pages, we'll be looking at capital strength, earnings quality and asset quality. For an explanation of those terms you can click on the box below.

10. Sterling Bancorp

Company Profile

Shares of Sterling Bancorp of New York closed at $9.83 Friday, returning 36% over the previous year. With a quarterly payout of 9 cents, the shares have a dividend yield of 3.66%.

While a fourth-quarter Tier 1 common capital ratio was not yet available, the ratio was 9.90% as of September 30, according to SNL Financial, and the company was profitable during the fourth quarter and comfortably supporting its dividend.

The company owes $42 million in TARP money and raised $69 million in common equity during the first quarter of 2010.

During Sterling's conference call discussing fourth-quarter results, CFO John Tietjen said that as the company considers TARP repayment "against the other capital deployment opportunities that arise in this environment, we will continue to review that option, and we will make a decision that benefits the company and its shareholders at the appropriate time." John Millman, Sterling Bancorp's president, said the company wasn't "aware of anything that would prohibit us from paying it back."

On January 25, Sterling filed a shelf registration for the sale of up to $100 million in common share, preference shares and warrants.

Income Statement

Fourth-quarter net income available to common shareholders was $3.5 million, or 13 cents a share, following a loss of $3.3 million, or 12 cents a share, in the third quarter and net income to common shareholders of $2 million, or 9 cents a share, during the fourth quarter of 2009.

The fourth quarter provision for loan losses was $3 million, declining from $14 million in the third quarter and $8 million in the fourth quarter of 2009. The elevated provision in the third quarter "included an additional provision for loan losses of $8.5 million, reflecting the company's decision to accelerate the resolution of certain nonaccrual loans, principally in its lease financing receivable portfolio."

The fourth-quarter net interest margin was 3.98%, declining from 4.49% a year earlier, as the company reduced its leasing portfolio and "deployed excess funds in short-term, lower yielding assets."

The return on average assets (ROA) for the fourth quarter was 0.71%, according to SNL.

Balance Sheet

Total assets were $2.4 billion as of December 31 and Sterling said that "non-performing assets fell to 0.29% of total assets at December 31, 2010, from 0.89% a year ago."

Stock Ratios

The shares trade for 12 times the 2012 consensus earnings estimate of $80 cents a share, among analysts polled by Thomson Reuters.

Analyst Ratings

Three of the four analysts covering Sterling Bancorp rate the shares a buy, while the remaining analyst has a neutral rating on the shares.

9. Cathay General Bancorp

Company Profile

Shares of Cathay General Bancorp ( CATY) of El Monte, Calif. closed at $17.12 Friday, returning 69% over the previous year.

The company operates branches in California and New York, as well as other states. It also has a branch in Hong Kong and representative offices in Taiwan and China.

Cathay General owes $258 million in TARP money and raised $132.3 million in common equity during the first quarter of 2010. While a fourth-quarter Tier 1 common capital ratio was not yet available, the ratio was 10.28% as of September 30 and the company was profitable during the fourth quarter.

Income Statement

Fourth-quarter net income attributable to common shareholders was $14 million, or 18 cents a share, compared to $13.2 million, or 17 cents a share, in the third quarter and a net loss to common shareholders of $39.4 million, or 64 cents a share.

The provision for credit losses declined to $10 million in the fourth quarter, from $17.9 million the previous quarter and $91 million a year earlier.

The fourth-quarter net interest margin was 2.88%, increasing 2.65% a year earlier. The fourth quarter ROA was 0.65%.

Balance Sheet

Total assets were $10.8 billion as of December 30, and nonperforming assets totaled $325 million, or 3.01% of total assets. The annualized ratio of net charge-offs to average loans for the fourth quarter was 1.32% and loan loss reserves covered 3.57% of total loans as of December 31.

Stock Ratios

The shares trade for 12 times the consensus 2012 earnings estimate of $1.41 a share.

Analyst Ratings

Out of 10 analysts covering Cathay General, one rates the shares a buy, while the remaining analysts all have neutral ratings. Howe Barnes Hoefer & Arnett analyst Chris Stulpin reiterated his neutral rating, saying the fourth quarter was "good for the bank as credit metrics continued to improve, even more so than what we had anticipated," and that the current valuation is "appropriate given CATY's better capital position and earnings potential compared to regional Asian-American peers.

8. MB Financial

Company Profile

Shares of MB Financial ( MBFI) of Chicago closed at $19.32 Friday, down 5% over the previous year.

The company owes $196 million in TARP money and had a Tier 1 common equity ratio of 10.61% as of December 31, according to SNL Financial.

After MB Financial announced its fourth-quarter results, Bryce Rowe of Robert W. Baird & Co. upgraded the shares to "outperform" or buy, with a price target of $26, citing "projected earning power of $2.33/share and return on assets of 1.3%," and that a patient approach "could allow MBFI to avoid having to raise common equity to facilitate TARP repayment."

John Rodis of Howe Barnes Hoefer & Arnett maintained his neutral rating, saying that the shares were "probably in a new trading range ($17.50 - $21.50/share)," and that the company was "one of the more attractive Chicago-based banks" in an active market for mergers and acquisitions.

MB Financial was included among TheStreet's 10 Community Bank Takeover Targets.

The company has acquired several failed banks, including New Century Bank and Broadway Bank - two of the seven Illinois banks closed by regulators back on April 23.

Income Statement

The company reported fourth-quarter net income available to common shareholders of $595,000 , or a penny a share, compared to a net losses to common shareholders of $5.4 million, or 10 cents a share, in the third quarter and $12.4 million, or 25 cents a share, during the fourth quarter of 2009.

Net income available to common shareholders for the fourth quarter excluded $2.6 million, or 5 cents a share, in dividends and discount accretion on $196 million in TARP preferred shares.

Following the pattern for so many banks at this point in the credit cycle, the main factor in the earnings improvement was a decline in the provision for loan losses, which was $49 million during the fourth quarter, down from $65 million the previous quarter and $70 million a year earlier. The fourth-quarter provision was slightly below the $50.7 million in net charge-offs.

MB Financial's fourth-quarter net interest margin was a tax-adjusted 3.83%, rising from 2.86% a year earlier.

Balance Sheet

Total assets were $10.3 billion as of December 31. Nonperforming assets totaled $434 million, or 4.21% of total assets, compared to 4 2.84% in December 2009. The fourth-quarter net charge-off ratio was 2.99% and loan loss reserves covered 2.90% of total loans as of December 31.

During the fourth quarter, the company sold $22 million in nonperforming commercial real estate and construction loans.

Stock Ratios

The shares trade for 11 times the consensus 2012 earnings estimate of $1.69 a share.

Analyst Ratings

Out of 13 analysts covering MB Financial, five rate the shares a buy, seven have neutral ratings and one analyst recommends selling the shares.

7. National Penn Bancshares

Company Profile

National Penn Bancshares has seen its stock return 38% over the past year, closing at $8.17 Friday.

The company owes $150 million in TARP money and in November announced an agreement with Warburg Pincus for a $150 million common equity investment. National Penn received $63.3 million in November and expects Warburg Pincus to make the remainder of its investment after regulatory approval is received.

In November, CEO Scott Fainor told TheStreet in an interview that the company would "accelerate TARP repayment," and "continue to play offense."

When National Penn reported its fourth-quarter results, the company said it expected to receive regulatory approval for the Warburg Pincus deal in January.

The company's Tier 1 common capital ratio was 11.10% as of December 31, according to SNL Financial.

Income Statement

Fourth-quarter net income available to common shareholders was $6.6 million, or 5 cents a share, compared to $10.3 million, or 8 cents a share in the third quarter and a net loss to common shareholders of $238.3 million, or $2.25 a share, in the fourth quarter of 2009, which included a noncash goodwill impairment charge of $275 million.

Credit costs continued to decline, as the fourth-quarter provision for loan losses was $17.5 million, compared to $20 million the previous quarter and $47 million a year earlier.

The net interest margin for the fourth quarter was 3.43%, increasing from 3.29% a year earlier and the fourth-quarter ROA was 0.38%.

Balance Sheet

Total assets were $8.8 million as of December 31 and the nonperforming assets ratio was 1.03%. The fourth-quarter net charge-off ratio was 1.45% and reserves covered 2.82% of total loans as of December 31.

Stock Ratios

The shares trade for 13 times the consensus 2012 earnings estimate of 61 cents a share.

Analyst Ratings

Two of the 10 analysts covering National Penn rate the shares a buy, while the other analysts all have neutral ratings. Following the fourth-quarter earnings release, David Darst of Guggenheim Securities reiterated his neutral rating, saying the stock "now trades in line with peers in the $5-15B asset group."

6. Popular, Inc.

Company Profile

Shares of Popular, Inc. ( BPOP) of Hato Rey, Puerto Rico, closed at $3.18 Friday, up 50% over the previous year.

Popular owes $935 million in TARP money and had a Tier 1 common capital ratio of 11.40% as of September 30. The company is scheduled to report its fourth-quarter results on Friday.

During the third quarter of 2009, Popular converted the $935 million in preferred shares held by the U.S. Treasury for TARP assistance to trust-preferred shares. Although the company is still paying the government 5% on the TARP money, the conversion was a huge gain for the company, lowering Popular's accumulated deficit by $485 million because of an assumed discount rate of 16%, taking into account the much greater dividend rate the company would have paid if it had offered trust-preferred shares in the open market.

Popular purchased the failed Westernbank from the Federal Deposit Insurance Corp. in May, putting in the strongest market position for deposits in Puerto Rico.

The company previously announced that its fourth-quarter earnings would take a $190 hit from the reclassification of $610 million in construction, commercial real estate and land loans during the fourth quarter. On Monday, Popular announced that its main subsidiary Banco Popular de Puerto Rico had agreed to sell about $500 million in loans (mainly nonperforming) to a third party, with the bank taking a 24.9% equity state in the new venture and providing about 50% of the financing for the loan purchase.

Income Statement

For the third quarter, Popular reported net income to common shareholders of $494.5 million, or 48 cents a share, compared to net income to common shareholders of $595.6 million, or $1.40 a share, during the third quarter of 2009.

The third-quarter 2010 results included an after-tax gain of $531 million on the completed sale of 51% of the company's Evertec subsidiary. Interest income was also boosted by a $78.5 million discount accretion on FDIC-covered loans acquired from Westernbank.

Balance Sheet

Total assets were $40.8 billion as of September 30 and nonperforming assets - including nonaccrual loans (excluding balances covered by FDIC loss-sharing agreements) and reposed real estate - made up 6.85% of total assets. The fourth-quarter net charge-off ratio was 4.52% during the third quarter and reserves covered 5.63% of portfolio loans as of September 30.

Stock Ratios

The shares trade for 8 times the consensus 2012 earnings estimate of 39 cents a share, for the lowest forward P/E among the stocks listed here.

Analyst Ratings

Fix of the six analysts covering Popular rate the shares a buy, with the remaining analyst recommending investors hold the shares. A noisy fourth quarter followed by a major loan sale in the first quarter may delay TARP repayment, but analysts love the stock, with a $4.57 price target implying 44% upside.

5. Nara Bancorp

Company Profile

Shares of Nara Bancorp ( NARA) of Los Angeles closed at $9.55 Friday, returning 4% over the previous year.

The company owes $67 million in TARP money and while a fourth-quarter Tier 1 common capital ratio was not yet available, the ratio was 12.08% as of September 30, according to SNL Financial and the company was profitable during the fourth quarter.

The company agreed on December 9 agreement to merge with Los Angeles competitor Center Financial ( CLFC) in an all-stock deal valued at $285.7 million, to create "the largest and best-capitalized Korean-American community bank" with operations in California, New York and New Jersey, according to a statement by the companies.

Shareholders of Center Financial are to receive 0.7804 shares of Nara stock for each of their shares. Based on the December 8 closing prices of $9.17 for Nara and $6.65 for Center Financial, Center's investors would receive $7.16 per share, or an 8% premium.

The deal is expected to close during the second half of 2011 and Nara Bancorp's CEO Alvin Kang will serve as CEO for the combined company, which has yet to be named.

The deal features a $10 million breakup fee if either bank takes a superior offer before the merger is consummated.

Center Financial owes $55 million in TARP money. Though a fourth-quarter Tier 1 common capital ratio was not yet available, Center Financial's ratio was 13.52% as of September 30, according to SNL Financial, and is featured later in this article, since that's the highest ratio among the companies listed here that met our criteria.

Income Statement

Nara Bancorp's fourth-quarter net income available to common stockholders of $5 million, or 13 cents a share, improving from $4.3 million, or 11 cents a share, the previous quarter and a net loss to common shareholders of $1.5 million, or 4 cents a share, a year earlier.

The fourth-quarter provision for loan losses was $5.8 million, declining from $11.1 million in the third quarter and $17.9 million in the fourth quarter of 2009.

The net interest margin expanded to 3.99% during the fourth quarter, from 3.34% a year earlier. The fourth quarter ROA was 0.81%, which was the best among the banks listed here that have already reported for the fourth quarter.

Balance Sheet

Total assets were $3 billion and the nonperforming assets ratio was 2.72% as of December 31, improving from 3.66% a year earlier. The fourth-quarter net charge-off ratio was 1.33% and loan loss reserves covered 2.92% of total loans as of December 31.

Stock Ratios

The shares trade for 13 times the consensus 2012 earnings estimate of 76 cents a share.

Analyst Ratings

Five out of seven analysts covering Nara Bancorp rate the shares a buy, while the other two analysts have neutral ratings. Joe Gladue of B. Riley & Co. upgraded the shares to a buy last Wednesday, with a target price of $11 saying that after the merger with Center Financial is completed, "the company to produce higher profitability than either company could separately," and that there will be "greater opportunities for growth through both organic means and acquisitions."

4. Associated Banc-Corp

Company Profile

Shares of Associated Banc-Corp ( ASBC) of Green Bay, Wis. closed at $13.83 Friday, returning 8% over the previous year.

The company owes $525 million in TARP money and had a Tier 1 common capital ratio of 12.26% as of December 31, according to SNL Financial. Associated Banc-Corp raised $500 million in common equity in January 2010.

CEO Philip Flynn said in the company's press release announcing fourth-quarter results that "as we have stated in the past, we expect to repay the U.S. Treasury TARP funds this year."

Income Statement

Fourth-quarter net income available to common equity was $6.6 million, or 4 cents a share, compared to $6.9 million in the third quarter and a net loss to common equity of $180.6 million during the fourth quarter of 2009.

The provision for loan losses declined to $63 million during the fourth quarter, from $64 million the previous quarter and $394.8 million a year earlier.

The net interest margin for the fourth quarter was 3.20%, narrowing from 3.59% in the fourth quarter of 2009. The earnings declined from the previous quarter reflected a $3 million decline in net interest income and a $3.5 million decline in service charges on deposit accounts as regulatory changes continued to have their effect. These declines were partially offset by a $4.2 million increase in mortgage banking revenue.

The fourth-quarter ROA was 0.25% according to SNL.

Balance Sheet

Total assets were $21.8 billion as of December 31, and the nonperforming assets ratio was 2.84%, improving from 3.47% the previous quarter. The fourth-quarter net charge-off ratio was 3.41% and reserves covered 3.78% of total loans as of December 31.

Stock Ratios

The shares trade for 13 times the consensus 2012 earnings estimate of $1.08 a share.

Analyst Ratings

Out of 14 analysts covering Associated Banc-Corp, two rate the shares a buy, nine have neutral ratings and three analysts recommend selling the shares. After the fourth-quarter earnings announcement, Jeff Davis of Guggenheim Securities reiterated his sell rating, saying "we see ASBC as facing greater revenue headwinds than many peers," and that "while we look for the contraction in spread revenue to slow, we believe fee income pressure could increase." Regarding TARP repayment, Davis said "it seems unlikely to us that the Fed will allow ASBC to do so without raising some equity."

3. International Bancshares

Company Profile

International Bancshares ( IBOC) of Laredo, Texas, has seen its stock decline 9% over the last year, closing at $18.58 Friday.

The company owes $216 million in TARP money and had a Tier 1 common ratio of 12.88% as of September 30. International Bancshares hasn't scheduled its fourth-quarter earnings announcement.

Income Statement

Third-quarter net income was $30.2 million, or 45 cents a share, compared to $33.7 million, or 49 cents a share a year earlier. The net interest margin declined to 3.29% during the third quarter from 3.64% a year earlier, according to SNL Financial. The company said in its third-quarter 10-Q filing that the margin decline was due to "the sale of mortgage-backed securities, increasing liquidity, and the net interest margin returning to more traditional levels" from prior years.

Balance Sheet

Total assets were $12.1 billion as of September 30 and the nonperforming assets ratio was 1.36% according to SNL. The third-quarter net charge-off ratio was 1.04% and reserves covered 1.51% of total loans as of September 30.

Stock Ratios

The shares trade for 10 times the consensus 2012 earnings estimate of $1.92 a share.

Analyst Ratings

Brett Rabatin of Sterne Agee has a neutral rating on the shares, saying in November that his firm's "hesitation to be more optimistic has been a lack of catalysts other than valuation, limited disclosure on the prospect for lower service charges," and the company's status as the only remaining Texas bank owing TARP money.

2. Southwest Bancorp

Company Profile

Shares of Southwest Bancorp ( OKSB) closed at $13.98 Friday, more than doubling over the previous year.

Southwest Bancorp was also included among TheStreet's 10 Community Bank Takeover Targets.

The company owes $70 million in TARP money and raised $57.5 million in common equity in April. While a fourth-quarter Tier 1 common capital ratio wasn't yet available, the ratio was 13.26% as of September 30, according to SNL Financial, and the company was profitable during the fourth quarter.

Income Statement

Fourth-quarter net income available to common shareholders was $3.3 million, or 17 cents a share, compared to $2.8 million, or 15 cents a share, in the third quarter and $2.5 million, or 17 cents a share in the fourth quarter of 2009. The fourth quarter provision for loan losses was $7.3 million, down from $12 million the previous quarter and $10.6 million a year earlier.

The net interest margin for the fourth quarter was 3.82%, improving from 3.71% a year earlier, and the return on average assets was 0.59%.

Balance Sheet

Total assets were $2.8 billion as of December 31 and nonperforming assets - excluding those covered by loss-sharing agreements with the Federal Deposit Insurance Corp. -- made up 5.13% of total assets, compared to 5.90% the previous quarter and 4.01% a year earlier.

The ratio of net charge-offs to average loans for the fourth quarter was 2.35% and reserves covered 2.80% of portfolio loans as of December 31.

Stock Ratios

The shares trade for 18 times the consensus 2012 earnings estimate of 79 cents a share.

Analyst Ratings

One out of three analysts covering Southwest Bancorp rates the shares a buy, while the other two have neutral ratings. Despite their amazing run, the shares could have significant upside in a takeout, with Matt Olney of Stephens, Inc. telling TheStreet recently that "$16.25 a share is a fair target at the lower end and I could see something close to $18 in valuation if it sells."

1. Center Financial

Company Profile

Shares of Center Financial ( CLFC) of Los Angeles closed at $7.24 Friday, which is a slight premium to the value shareholders expect to receive when the company consummates its merger deal with Nara Bancorp, which is discussed above.

While the company is probably going to merge out of existence in the second half of 2011, we have kept Center Financial in our list because it had the highest Tier 1 capital ratio of the banks meeting our criteria, at 13.52% as of September 30, according to SNL Financial, so its $55 million in TARP money shouldn't be a burned to the merged company. Center Financial is scheduled to release its fourth-quarter results on February 3.

An interest development since the merger was announced was the firing of Center Financial's CEO Jae Whan Yoo on January 7, with the company only saying that Yoo wouldn't be paid any severance. A call to Center Financial requesting information on Yoo's the firing was not returned. Richard Cupp was named to serve as Center Financials interim CEO until the completion of the merger with Nara.

On the same day, Timothy Coffey of FIG Partners downgraded Center Financial to "market perform" from "outperform," saying "the lowered price target will reflect the heightened level of uncertainty resulting from the turnover in CLFC's management."

Income Statement

Third-quarter net income available to common shareholders was $5.2 million, or 13 cents a share, compared to a loss of $3.3 million, or 19 cents a share a year earlier. The third-quarter provision for loan losses was $4 million, declining from $10.6 million in the third quarter of 2009.

The net interest margin for the third quarter increased to 3.31%, from 2.85% a year earlier. The third-quarter ROA was 1.04%.

Balance Sheet

Total assets were $2.3 million as of December 31, and the nonperforming assets ratio was 3.03% according to SNL. The third-quarter net charge-off ratio was 2.18% and loan loss reserves covered 3.45% of total loans as of December 31.

Stock Ratios

The shares trade for 10 times the consensus 2012 earnings estimate of 70 cents a share.

Analyst Ratings

Three out of four analysts covering Center Financial rate the shares a buy. The remaining analyst has a neutral rating. Despite the pending take-out, the consensus price target among analysts polled by Thomson Reuters is $8.63, implying 19% upside for the shares.

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-- Written by Philip van Doorn in Jupiter, Fla. and Maria Woehr in New York.

>To see these stocks in action, visit the 10 Banks Ready to Repay TARP portfolio on Stockpickr.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.