NEW YORK ( TheStreet) -- Banks stocks have been hitting lows not seen since 2009 in recent sessions, the rally on Monday offering only a small relief to shareholders.

Bank analysts have been slashing their estimates and price targets for the sector, as uncertainties surrounding European debt crisis and mortgage-related litigation continue to persist, while the impact of regulatory changes and a prolonged low-interest rate cycle might play out over several quarters.

Still, industry observers are quick to point out that the sector is much healthier than it was at the depth of the financial crisis. Banks have much stronger capital and liquidity levels now and have significantly tightened underwriting standards in recent years, which means they are better placed to cope with an economic downturn.

>>10 Banks on Solid Financial Footing

Indeed, the stock of Bank of America ( BAC), that has been heavily battered over the past year, is still trading 100% higher than it did on March 6, 2009, when the KBW Bank Index bottomed.

Citigroup ( C), Wells Fargo ( WFC) and U.S. Bancorp ( USB) have delivered returns of 142%, 175% and 163% respectively over the period. Fifth Third Bancorp ( FITB) is up nearly eight-fold.

Of the 22 U.S. banks that have assets greater than $25 billion, only five banks now trade at prices below the crisis levels of March 2009, based on data compiled from Bloomberg.

Almost all of them figured in TheStreet's list of banks on a solid financial footing and in the list of banks paying a healthy dividend yield.

>>5 Banks With Over 6% Dividend Yield

Here are the five banks that still trade like its 2009.

5. First Niagara Financial

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Current Market Price: $9.71

Market Price on March 6, 2009: $9.87

Shares of Buffalo, New York- based First Niagara Financial ( FNFG) have dropped 30% in 2011.

The bank reported operating earnings of $71.2 million, or 25 cents a share, beating the consensus estimate among analysts polled by Thomson Reuters by a penny.

Commercial loans grew at an annualized 17% pace during the second quarter, while core deposits grew at an annualized pace of 22%.

It recently acquired 195 branches of HSBC ( HBC) and announced plans to divest 100 of the acquired branches. It plans to raise $800 million in common stock and $400 million in debt to fund the acquisition.

Analysts expect the bank to report an earnings per share of 27 cents on revenues of $ 303.14 million for the third quarter.

The bank has a healthy dividend yield. Based on a quarterly payout of 16 cents, the shares have a dividend yield of 6.8%. It also has a strong Tier 1 common equity ratio of 11.4% as of June 30.

KBW analyst Damon DelMonte says that the bank is among those poised for "growing profitability, sustainable dividend policies and stable asset quality trends."

Seven analysts rate the stock a buy or outperform. Four analysts have a hold rating on the stock. There are no sell ratings.

4. First Horizon National

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Current Market Price: $6.51

Market Price on March 6, 2009: $6.93

Shares of Memphis, Tennessee-based First Horizon National ( FHN) are down 46% year-to-date.

The company's second-quarter net income zoomed to $43 million, or 16 cents a share from $2.7 million, or a penny a share, in the second quarter of 2010. A $65 million release of loan loss reserves directly benefited earnings.

Reserve releases, while legitimate given the improvement in credit quality since the crisis, are considered to be an unsustainable driver of earnings.

The bank has a strong capital ratio of 11.86% as of June 30 and has repaid government bailout money. However, its biggest problem is its exposure to mortgage putback claims.

Its pipeline of investor requests stood at $451million at the end of the second quarter, down 15% from the first quarter.The bank has not yet received repurchase claims from investors of proprietary securitizations.

FBR Capital Markets analyst Paul Miller estimates that the bank could see an additional $590 million in losses from breaches of representations and warranties, a whopping 17% of its tangible book value.

But Kevin Fitzsimmons at Sandler O'Neill is more bullish on the stock. According to the analyst, the management has indicated that the mortgage repurchase requests from agencies is moderating and that losses stemming from private label requests, if any, will be manageable. The bank has also expressed interest in buying back stock, with deal activity slowing.

"We expect the shares to react positively as FHN begins to buy back stock, GSE-related mortgage repurchase provisions continue to wane, investors gain increased clarity/comfort on the manageability of repurchase risk from FHN's private-label mortgage securitizations, credit losses continue to decline, and the company delivers on its goals to reduce expenses," Fitzsimmons wrote in a recent note following a meeting with the management. "We also think some investors will begin to view FHN as a potential acquisition target, which would likely help support the multiple on the shares."

Consensus expects the bank to report an earnings per share of 16 cents on $358.58 million.

3. People's United Financial

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Current Market Price: $11.70

Market Price on March 6, 2009: $16.87

Shares of Connecticut-based People's United Financial ( PBCT) have been a relative outperformer in 2011 among bank stocks, down about 18% compared to the KBW Bank Index decline of 31%.

The bank has solid capital ratios with a Tier I Risk-Based Capital Ratio of 17.6% as on June 30.

Second-quarter net income was $51.2 million, or 15 cents a share, increasing from $16 million, or four cents a share, in the second quarter of 2010, on the back of acquisitions of Danvers Bancorp.

The bank said at the Barclays Capital Global Financial Services Conference that it expects to deploy excess capital towards acquisitions but that it will also maintain strong dividend. It also said that it will maintain its net interest margin at above 4% in 2011. It is targeting an efficiency ratio of 55% (66% currently), which will be driven by M&A-related synergies as well as changes to its retirement benefit program.

KBW analyst Damon Del Monte rates the stock an outperform. "The combination of unrealized earnings potential, strong asset quality and healthy capital, coupled with a strong and stable dividend, make PBCT an attractive investment, in our view," the analyst wrote in a August 12 report.

People's United is expected to post an earnings per share of 17 cents on $322.21 million, according to Thomson Reuters.

Seven analysts rate the stock a buy or outperform. 11 analysts rate the stock a hold and one analyst has an underperform rating on the stock.

2.Hudson City Bancorp

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Current Market Price: $5.81

Market Price on March 6, 2009: $8.80

Shares of Hudson City Bancorp ( HCBK) are down 55% year to date.

The thrift holding company reported earnings of $96 million, or 19 cents a share during the second quarter, declining from $142.6 million, or 29 cents a share, during the second quarter of 2010.

Earlier in the year, the bank was forced by the Office of Thrift Supervision to restructure its balance sheet after its strategy of borrowing from the Federal Home Loan Bank of New York and investing the proceeds in securities backfired in a low interest rate environment.

Hudson also had to cut its quarterly dividend to 8 cents a share from 15 cents per share.

The stock trades at a dividend yield of nearly 6% at current levels. But that has not made the analyst community bullish on the stock's prospects.

Only one analyst has a buy rating on the stock, while 18 analysts have a hold rating and 2 analysts have a sell or underperform rating on the stock.

"Although the company has a strong capital base, we believe that regulatory focus on improving the credit and risk management processes and procedures will prevent any type of return of capital in the near-term, which will also constrain the valuation," RBC Capital analysts wrote in a July 20 note, when the stock was trading at $8.19. "On a fundamental basis the stock appears to be fairly valued at the current level due to the aforementioned headwinds, but just earning the 3.9% dividend yield is not sufficient reason to own the stock given our positive bias for the US banking sector on the whole. We believe investors can locate other names in the thrift space with capital gains potential, better revenue generation, more diversified loan portfolios and less balance sheet risk from wholesale funding exposure."

The bank is expected to report a third-quarter earnings per share of 18 cents on $261.83 million, according to Thomson Reuters.

1. Synovus

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Current Market Price: $1.11

Market Price on March 6, 2009: $2.65

Shares of Columbus-Georgia based Synovus ( SNV)are down nearly 60% year to date.

The bank reported a $53.5 million loss during the second quarter, compared to a $242.6 million loss in the year-ago quarter. That marked the twelfth straight quarter of losses from the bank, as it bore the brunt of the housing meltdown in the south east.

Analysts expect the bank to post another loss in the third quarter at 3 cents per share on revenues of $300.48 million, according to estimates at Thomson Reuters.

Synovus says that credit metrics are improving for the bank. New non- performing loan inflows slowed to $231.1 million in the second quarter, the lowest level in 11 quarters.

The bank is targeting $75 million in expense savings in 2011 and $100 million in savings in 2012. It plans to lay-off 850 employees in total by the year end.

Sandler O'Neill analyst Kevin Fitzsimmons rates the stock a hold. He expects the stock to continue trading at a sizeable discount to tangible book value until investors see more significant disposition activity, signs of life on core revenue growth front, a more sizable capital cushion and a return to profitability.

Seven analysts rate the stock a buy or outperform, 19 analysts have a hold rating on the stock , while two analysts have an underperform or sell rating on the stock.  

>>To see these stocks in action, visit the 5 Bank Stocks Trading Below the Basement portfolio on Stockpickr.  

--Written by Shanthi Bharatwaj in New York

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