NEW YORK ( TheStreet) -- As we get closer to the Federal Reserve's rule-making on banks' capital requirements and another round of stress tests early next year for the industry's largest players, capital strength remains among the biggest concerns of bank investors.

Since we looked at the 10 large banks with the strongest second-quarter capital levels in September, our list of large, strongly capitalized holding companies has changed a bit, with two growing their assets more than the $25 billion threshold during the third quarter, and two companies leaving the list.

First Niagara Financial ( FNFG) of Buffalo, N.Y., was on the second-quarter list, but its Tier 1 common equity ratio declined to 11.27% as of Sept. 30 from 11.41% the previous quarter, according to SNL. While First Niagara's Tier 1 common ratio was still very strong, the company is no longer in the top 10. Heading into the expected first-quarter completion of the company's deal to purchase 195 branches in upstate New York and Connecticut from HSBC ( HBC), First Niagara plans to raise between $750 million and $800 million in common equity through a public offering.

New York Community Bancorp ( NYB) is not on the list this quarter because a Sept. 30 Tier 1 common equity ratio wasn't yet available when we pulled the data on Monday.

For the largest U.S. banks, capital levels will be of paramount importance over the next several years, as the enhanced Basel III capital levels are implemented. The largest banks that are also considered "systemically important financial institutions" will need to achieve Tier 1 common equity ratios of at least 9.5% by January 2019, and under Basel III, the Tier 1 common equity ratio is lower than the Basel I calculation currently in use.

The Fed is expected to follow the Basel Committee's lead in setting its final capital requirements before the end of the year, following up with a third round of stress tests in the spring.

This time around, the stress tests will be called the Comprehensive Capital Analysis and Review, or CCAR, and will cover 35 U.S. bank holding companies with total assets of $50 billion or more.

Large banks are likely to be required to complete the CCAR process before gaining regulatory approval to accelerate a return of capital to shareholders through dividend increases or expanded share repurchase programs. MetLife ( MET) -- which will continue to be regulated by the Fed as a bank holding company until the insurer completes the sale or wind-down of its MetLife Bank unit -- saw its capital plan rejected by bank regulators in October.

For the following 10 bank holding companies, investors can take some comfort in strong capital levels, although some of the companies are still working through high levels of problem loans, and some are seeing increased legal risk.

Here are TheStreet's 10 Large Banks with Solid Capital, in order of ascending Basel I Tier 1 common equity ratio, using data provided by SNL Financial.

10. KeyCorp

Shares of Cleveland-based KeyCorp ( KEY) closed at $7.33 Friday, declining 16% year to date. Based on a quarterly payout of 3 cents, the shares have a dividend yield of 1.64%.

The company's Tier 1 common equity ratio was 11.28% as of Sept. 30, according to SNL Financial.

KeyCorp is making some good use of its excess capital, planning to redeem $331 million of its 6.75% trust preferred securities on Dec. 15.

Third-quarter net income to common shareholders was $234 million, or 25 cents a share, below earnings in the second quarter, but increasing from $178 million, or 20 cents a share, in the third quarter of 2010.

The earnings decline from the previous quarter reflected an increase in losses from discontinued operations to $17 million in the third quarter, from $9 million in the second quarter, as well as a $10 million provision for loan loss reserves. During the second quarter, the company transferred $8 million from reserves. In the third quarter of 2010, the company's provision for loan losses was $94 million.

Despite the change in direction on the provision for loan losses, reserves declined by $241 million during the third quarter, directly boosting earnings.

The third-quarter return on average assets (ROA) was 1.07%, according to SNL Financial.

KeyCorp reported 3% growth in commercial, financial and agricultural loans to an average balance of $17.4 billion during the third quarter, from $16.9 billion both in the second quarter and a year earlier.

Third-quarter net interest income was $555 million, declining from $570 million the previous quarter and $647 million a year earlier, with the year-over-year decline reflecting "both a decline in earning assets and tighter spread between asset yields and funding costs." The tax-adjusted net interest margin -- the difference between a bank's average yield on loans and investments and its average cost for deposits and wholesale borrowings -- declined to 3.09% as of Sept. 30, narrowing from 3.19% the previous quarter and 3.35% a year earlier.

Guggenheim Securities analyst Jeff Davis said on Oct. 21 that KeyCorp had "too much capital," and in addition to saying a trust-preferred redemption was possible (it was announced on Oct. 31), the analyst said that he was assuming "a 40% distribution rate" of dividends and share buybacks to earnings for 2012.

Davis rates KeyCorp a buy, with an $8.50 price target.

The shares trade for 0.8 times tangible book value and 9.5 times the consensus 2012 EPS estimate of 77 cents.

Out of 22 analysts covering KeyCorp, six rate the shares a buy, 14 have neutral ratings, and two analysts recommend selling the shares.

The company's solid capitalization and the unlikeness of being slapped with the "systemically important financial institution" label, put it in the driver's seat for Basel III compliance.

9. Citigroup

Shares of Citigroup ( C) closed at $30.34 Friday, for a year-to-date decline of 36%.

The company's Tier 1 common equity ratio was 11.71% as of Sept. 30, according to SNL Financial, which was the highest among the "big four" U.S. banks.

For Bank of America ( BAC), the Tier 1 common ratio was 8.65% as of Sept. 30, while the ratio was 9.35% for Wells Fargo ( WFC), and 9.90% for JPMorgan Chase ( JPM), according to SNL.

Citigroup on Oct. 19 agreed to pay $285 million to settle Securities and Exchange Commission charges that the company sold $500 million in collateralized mortgage obligation -- for which it assisted in the selection of assets making up the underlying portfolio -- before shorting the mortgage-related assets it had just sold.

U.S. District Judge Jed S. Rakoff in Manhattan held a hearing on Wednesday to question the SEC and Citigroup lawyers before deciding whether the settlement is "fair, reasonable, adequate, and in the public interest." Rakoff famously questioned Bank of America's 2009 $33 million SEC settlement over the nondisclosure of billions of dollars in bonus payments to Merrill Lynch executives before Merrill was acquired by Bank of America.

The Judge has not yet decided whether or not to approve the settlement but the Wall Street Journal reported on Thursday that Rakoff asked SEC lawyers why the regulator hadn't pursued contempt charges against Citi or against other companies when similar previous deals had been violated.

Bloomberg reported on Monday that Moneygram Payment Systems had sued Citigroup and two of its subsidiaries of fraudulently selling collateralized debt obligations as investment-grade securities, and was seeking to recover $140 million in losses.

In other recent Citigroup news, The Wall Street Journal reported on Monday that the company had hired a recruiting firm to help strengthen the management team for its Japanese operations, after putting the unit under the direct control of Citigroup President and Chief Operating Officer John Havens.

Please see TheStreet's full coverage of Citigroup's third-quarter results, including international revenue growth and the continued progress of CEO Vikram Pandit's good bank/bad bank strategy to unwind non-core assets.

Atlantic Equities analyst Richard Staite on Oct. 24 reiterated his overweight rating for Citigroup, with a $52 price target, while increasing his 2012 EPS estimate by 3% to $4.72, saying the increase was "driven by Citi's decision to retain the Retail Partner Cards business which was previously due for disposal." Staite described the retail partner business as highly profitable, "contributing over $2.2bn of PBT so far this year."

Sterne Agee analyst Todd Hagerman also rates Citi a buy, with a $40 price target, saying on Oct. 18 that he expects the company to "comply fully with Basel III by year-end 2012 on a fully phased-in basis." That's seven years ahead of the January 2019 requirement for the full Basel III phase-in, and while Hagerman said that Citi's "management is being prudently cautious in the current environment," he expects the company to "raise the annual dividend to about $0.15/share from $0.01/share, representing about a 13-14% payout," and that he also expects the company to buy back between $4.5 billion and $5 billion in common shares during the second half of 2012.

The shares trade for 0.6 times tangible book value according to SNL, and 6.9 times the consensus 2012 EPS estimate of $4.42.

Out of 22 analysts covering Citigroup, 16 rate the shares a buy, four have neutral ratings, and two analysts recommend selling the shares.

8. Northern Trust

Shares of Northern Trust ( NTRS) of Chicago closed at $39.67 Friday, declining 27% year to date. Based on a quarterly payout of 28 cents, the shares have a dividend yield of 2.82%.

The company's Tier 1 common equity ratio was 11.80% as of Sept. 30, according to SNL Financial.

The company reported third-quarter net income of $170.4 million, or 70 cents a share, increasing from $152 million, or 62 cents a share, during the second quarter, and $155.6 million, or 64 cents a share, during the third quarter of 2010.

Northern Trust's third-quarter provision for loan losses was $17.5 million, increasing from $10 million the previous quarter, but declining from $30 million a year earlier.

Total revenue increased to $971.5 million during the third quarter from $944.8 million the previous quarter, and $889.5 million a year earlier.

Trust, investment and servicing fees increased 7% year over year to $555.3 million, reflecting a 7% increase in total assets under custody to $4.17 trillion, as of Sept. 30.

The company's third-quarter ROA was 0.72%, according to SNL Financial.

Guggenheim Securities analyst Marty Mosby rates Northern Trust a buy, with a $43 price target, and said in a report on Oct. 20 after the third-quarter results were announced that the company had "been the most-impacted trust bank from this low interest rate environment," and that the third quarter was an "inflection point," where "operating environment begins to stabilize and incremental business growth begins to turn into positive total revenue and earnings growth."

The shares trade for 1.5 times tangible book value and 13.4 times the consensus 2012 EPS estimate of $2.95.

Four out of 13 analysts covering Northern Trust rate the shares a buy, while the remaining analysts all have neutral ratings.

7. First Horizon National

Shares of First Horizon National ( FHN) of Memphis, Tenn., closed at $7.10 Friday, declining 40% year to date.

The company's Tier 1 common equity ratio was 11.98% as of Sept. 30, according to SNL Financial.

When reporting its third-quarter results, First Horizon announced it had "launched a program to repurchase up to $100 million of its common stock in the open market or in privately negotiated transactions, subject to market conditions, by the end of August 2012."

Third-quarter net income was $36.1 million, or 14 cents a share, increasing from $20 million, or 8 cents a share, during the second quarter and earnings of $15.9 million, or 64 cents a share, during the third quarter of 2010.

The earnings improvement reflected a $36.7 million "loss accrual related to a litigation settlement," during the second quarter, along with significant restructuring charges during the second quarter and the third quarter of 2010.

The overall expense reduction was partially offset by an increase in mortgage repurchase and foreclosure provisions to $52.8 million in the third quarter, from $24.6 million the previous quarter and $44.7 million a year earlier.

The third-quarter provision for loan losses was $32 million, following two straight quarters of minimal $1 million provisions. A year earlier, the provision for loan losses was $50 million.

Third-quarter net interest income was $176.3 million, up slightly from $172.9 million in the second quarter, but down from $186.1 million in the third quarter of 2010. The net interest margin was a tax-adjusted 3.23% during the third quarter, which matched the margin during the third quarter of 2010, while increasing slightly from 3.20% in the second quarter.

Total noninterest income was $220.1 million during the third quarter, increasing from $187.6 million during the second quarter, but declining from $242.7 million in the third quarter of 2010. The quarter-over-quarter improvement reflected a recovery of capital markets revenue to $99.6 million from $77.9 million the previous quarter. During the third quarter of 2010, capital markets revenue was $114 million. Third-quarter revenue also reflected $35.2 million in securities gains.

Mortgage banking income declined to $12.8 million in the third quarter from $32.1 million the previous quarter and $53.1 million a year earlier.

First Horizon reported nonperforming assets totaling $582.6 million as of Sept. 30, declining 22% quarter over quarter and 37% year over year. The ratio of nonperforming assets to total assets was 3.02% as of Sept. 30, improving from 4.09% the previous quarter and 5.00% in September 2010.

The annualized ratio of net charge-offs -- loan losses less recoveries -- to average loans was 2.65% and loan loss reserves covered 2.77% of total loans as of Sept. 30.

The shares trade for 0.8 times tangible book value according to SNL, and 10.8 times the consensus 2012 EPS estimate of 66 cents.

Out of 21 analysts covering First Horizon, 10 rate the shares a buy, 10 have neutral ratings, and Sterne Agee analyst Todd Hagerman has an underperform or sell rating on the shares, saying on Oct. 19 that "core revenues remain uninspiring and the outsized benefit from improving credit will likely dissipate as we enter 2012 -- challenging the company's ability to earn its cost of capital. "

Hagerman added that "increasing uncertainty surrounding the company's legacy mortgage exposure remains an overhang on the stock, valuation, capital, and earnings."

6. Popular

Shares of Popular ( BPOP) of Hato Rey, Puerto Rico, closed at $3.55 Friday, declining 44% year to date, as the island territory's economy has languished.

The company's Tier 1 common equity ratio was 12.02% as of Sept. 30, according to SNL Financial.

Popular owes $935 million in government bailout funds received through the Troubled Assets Relief Program, or TARP. The company was an innovator in converting the government's preferred shares to trust-preferred share in August 2009. While the conversion didn't change the amount of money owed to the government or the 5% coupon on the shares held by the U.S. Treasury, the transaction "resulted in a favorable impact to accumulated deficit on the exchange date of $485.3 million," because Popular assumed a discount rate of 16%, taking into account the much greater dividend rate it would pay if it had offered trust-preferred shares in the open market.

Popular reported third-quarter earnings to common shareholders of $26.6 million, or 3 cents a share, compared to second-quarter earnings of $109.8 million, or 11 cents a share, and third-quarter 2010 earnings of $494.1 million, or 48 cents a share, when the company booked a $531 million gain on the sale of a 51% stake in its Evertec subsidiary.

Third-quarter earnings declined sequentially because of a $32 million increase in provisions for loan losses and because the second-quarter results included "a tax benefit of approximately $59.6 million related to the timing of loan charge-offs for tax purposes."

Credit costs increased because the company on Sept. 29 "completed the sale of construction and commercial real estate loans with an unpaid principal balance and net book value of approximately $358 million and $128 million, respectively," the majority of which were nonperforming loans.

Following the earnings announcement, Cantor Fitzgerald analyst Michael Diana reiterated his buy rating on Popular, raising his price target for the shares to $2.50 from $2.25.

KBW analyst Derek Hewitt said that Popular's weakening credit quality during the third quarter was "due to a change in methodology and realized credit costs and overall reserve levels were flat." Hewitt added that "capital continues to build putting BPOP in a good position to eventually exit TARP without a common capital raise."

The shares trade for 0.6 times tangible book value according to SNL, and 5.6 times the consensus 2012 EPS estimate of 31 cents.

All five analysts covering Popular rate the shares a buy.

5. Bank of New York Mellon

Shares of Bank of New York Mellon ( BK) closed at $20.99 Friday, for a year-to-date decline of 29%. Based on a quarterly payout of 13 cents, the shares have a dividend yield of 2.48%.

The company's Tier 1 common equity ratio was 12.50% as of Sept. 30, according to SNL Financial.

The company may need the extra capital cushion, as it is facing multiple lawsuits over accusations that it overcharged institutional clients for foreign currency trades.

The Journal reported on Friday that Bank of New York was negotiating with federal prosecutors to settle $2 billion in lawsuits.

With $322.2 billion in assets as of Sept. 30, BNY Mellon is among the smallest of the 29 systemically important financial institutions named by the Basel Committee, although it's too early to say just how much of an extra capital cushion the company will be required to hold.

The company repurchased 20.4 million common shares during the third quarter, for $462 million, and that its capital plan for 2011 authorized total repurchases of up to $1.3 billion.

Third-quarter net income available to common shareholders of $651 million, or 53 cents a share, compared to net income available to common shareholders of $735 million, or 59 cents a share in the second quarter, and $622 million, or 51 cents a share, in the third quarter of 2010.

Total fee and other revenue for the third quarter was $2.89 billion, declining from $3.06 billion in the second quarter, but increasing from $2.67 billion in the third quarter of 2010.

The year-over-year revenue increase reflected the acquisitions of e acquisitions of Global Investment Servicing in July of 2010 and BHF Asset Servicing GmbH in August of last year.

Investment services fees increased 2% quarter over quarter and 11% year over year to $1.8 billion in the third quarter.

Guggenheim Securities analyst Marty Mosby rates BNY Mellon a buy, with a $25 price target, and said after the company announced its third-quarter results that the increased share repurchase activity had "increased this quarter's payout to shareholders to 87%," and that "BK can create incremental shareholder value through a continued focus on efficiency gains and share repurchase."

The shares trade for 0.8 times the company's reported tangible book value of $27.79 as of Sept. 30, and 8.7 times the consensus 2012 EPS estimate of $2.40.

Out of 18 analysts covering Bank of New York Mellon, 12 rate the shares a buy, five have neutral ratings, and one analyst recommends selling the shares.

4. BOK Financial

Shares of BOK Financial ( BOKF) of Tulsa, Okla., closed at $52.49 Friday, for a flat year-to-date return. Based on a quarterly payout of 33 cents, the shares have a dividend yield of 2.51%.

BOK Financial joins TheStreet's list of the most strongly capitalized large U.S. banks because the company's total assets grew to $25.1 billion as of Sept. 30, just over the $25 billion threshold.

The company's Tier 1 common equity ratio was 12.94% as of Sept. 30, according to SNL Financial.

BOK Financial reported third-quarter earnings of net income of $85.1 million, or $1.24 a share, increasing from $69.0 million, or $1r a share, during the second quarter, and $64.3 million, or 94 cents a share, in the third quarter of 2010.

The company saw revenue increases across the board during the third quarter, partially offset by $9.5 million in other-than-temporary impairment losses. Revenue highlights included $29.5 brokerage and trading revenue, increasing 24% from the previous quarter and 9% year over year, and $29.5 million in mortgage banking revenue, increasing 52% from the second quarter and 1% year over year.

Credit costs continued to decline, as the company made no provision for loan losses during the third quarter, after setting aside $2.7 million for reserves in the second quarter and $20 million a year earlier.

Third-quarter net interest income totaled $175.4 million, increasing from $174.0 million the previous quarter, but declining from $180.7 million a year earlier. Total loans increased 4% during the third quarter, to $11.1 billion.

The third-quarter net interest margin was a tax-adjusted 3.34%, declining from 3.40% in the second quarter and 3.52% in the third quarter of 2010,

The third-quarter ROA was 1.39% according to SNL, which was the highest among this group of 10 banks.

Sterne Agee analyst Brett Rabatin has a neutral rating on the shares, saying in an Oct. 27 note that that "a more bullish thesis for BOK Financial's shares requires expectations for higher interest rates, since securities comprise approximately half of earning assets." Rabatin added that "BOKF's model of diversified fee revenue sources and geographic positioning are proving to result in stronger profitability than we expected."

The shares trade for 1.5 times tangible book value according to SNL, and 12.2 times the consensus 2012 EPS estimate of $4.32.

Out of nine analysts covering BOK Financial, three rate the shares a buy, while the remaining analysts all have neutral ratings.

3. First Republic Bank

Shares of First Republic Bank ( FRC) of San Francisco closed at $28.26 Friday, down 3% year to date.

First Republic joins TheStreet's third-quarter list of the most strongly capitalized large U.S. banks because the institution's total assets exceeded the $25 billion threshold as of Sept. 30.

The bank's Tier 1 common equity ratio was 13.36% as of Sept. 30, according to SNL Financial.

First Republic was acquired by Bank of America ( BAC) as part of the purchase of Merrill Lynch in January 2009, and then sold in July 2010 to an investor group that included Colony Financial ( CLNY) and General Atlantic LLC and was led by First Republic's original management team. First Republic completed a public offering in December.

The bank was included among TheStreet's 10 Banks Seeing Double-Digit Growth in Business Loans because its non-real estate commercial loans grew 12% quarter over quarter and 63% year over year, to $1.4 billion as of Sept. 30.

Third-quarter net income was $87.8 million, or 66 cents a share, increasing from $84.8 million, or 66 cents a share, in the second quarter, and $66.4 million, or 53 cents a share, during the third quarter of 2010.

The loan growth drove an increase in net interest income to $268.9 million in the third quarter from $236.2 million the previous quarter and $256.8 million a year earlier. The third-quarter net interest margin was 4.48%, narrowing from 4.67% in the second quarter and 4.54% in the third quarter of 2010.

The third-quarter ROA was 1.36%, which was the second-highest among this group of 10 banks.

KBW analyst Christopher McGratty has a neutral rating on First Republic, with a price target of $31, saying after the bank reported its third-quarter results that total "loan growth was impressive, up 23%, but equally as impressive was the 36% increase in deposits." McGratty added that although the compression of the net interest margin was "a legitimate concern," the "favorable growth outlook" led him to increase his 2012 earnings estimate to $2.70 a share from $2.45.

Cantor Fitzgerald analyst Michael Diana rates First Republic a buy, with a $34 price target, saying in an Oct. 24 note that "First Republic's business model/strategy is unique," as the bank focuses on originating jumbo mortgage loans and assigns "each client a service oriented relationship manager, who is the point person for whatever products/services the client requires, whether related to private banking/wealth management or related to business banking."

According to Diana, First Republic's customer service model enables the bank to cross-sell "an average of nine products/services to new jumbo mortgage borrowers and in converting many private banking clients to business banking clients." The analyst also said that "about 70% of First Republic's historical growth has been generated by referrals from existing clients and by existing clients doing more (and more complex) business with First Republic."

Diana expects the company to earn $2.73 a share in 2012.

The shares trade for 1.6 times tangible book value according to SNL, and 10.6 times the consensus 2012 EPS estimate of $2.66.

Four out of 10 analysts covering First Republic rate the shares a buy, while the remaining analysts all have neutral ratings.

2. People's United Financial

Shares of People's United Financial ( PBCT) of Bridgeport, Conn., closed at $12.40 Friday, down 7% year-to-date. Based on a quarterly payout of 16 cents, the shares have a dividend yield of 5.08%.

The company's Tier 1 common equity ratio was 15.00% as of Sept. 30, according to SNL Financial.

People's United reported third-quarter net income of $52.9 million, or 15 cents a share, compared to $51.2 million, or 15 cents a share, in the second quarter and $24.1 million, or 7 cents a share, during the third quarter of 2010.

Leaving out one-time expenses of $14.4 million from the acquisition of Danvers Bancorp of Danvers, Mass., on June 30 and other one-time charges, including a $6.2 million prepayment fee for Federal Home Loan Bank borrowings, the company's third-quarter operating earnings were $67.3 million, increasing from $57.3 million the previous quarter, and $27.7 million a year earlier.

The sequential earnings improvement reflected balance sheet growth from the Danvers acquisition, which had $2.6 billion in total assets when it was acquired. The year-over-year operating improvement mainly reflected a decline in the provision for loan losses to $14.4 million in the third quarter from $21.8 million a year earlier.

People's United reported a third-quarter net interest margin of 4.11%, which was down slightly from 4.13% in the second quarter, but bucked the industry trend in rising from 3.74% a year earlier.

The company reported an operating ROA of 0.98% for the third quarter.

During the third quarter, People's United completed its stock repurchase plan, buying back 15.8 million shares at an average price of $11.81 a share. The company's board in October approved a new plan to buy back up to 18 million additional shares, or 5% of the outstanding common shares.

Following the earnings announcement, Guggenheim Securities analyst David Darst reiterated his neutral rating for People's United and maintained his 2012 EPS estimate of 87 cents. Darst added that "PBCT remains focused on optimizing the franchise and organic growth, with a goal of reaching a 55% efficiency ratio, which we think is achievable in late 2013 and is reflected in our 2013E EPS of $1.08."

The efficiency ratio is essentially the number of pennies of expenses for each dollar of a bank's revenue. For People's United, the third-quarter efficiency ratio was 67.8%, compared to 68.4% the previous quarter and 63.0% a year earlier.

The shares trade for 1.4 times tangible book value according to SNL, and 14.6 times the consensus 2012 EPS estimate of 85 cents.

Out of 16 analysts covering People's United Financial, five rate the shares a buy, while the remaining analysts all have neutral ratings.

1. State Street

Shares of State Street ( STT) of Boston closed at $39.99 Friday, down 13% year to date. Based on a quarterly payout of 18 cents, the shares have a dividend yield of 1.80%.

The company's Tier 1 common equity ratio was 16.00% as of Sept. 30, according to SNL Financial.

With $208.8 billion in total assets as of Sept. 30, State Street -- which focuses on institutional investment services -- is, by far, the smallest of the 29 Global Systemically Important Financial Institutions named on Nov. 4 by the Basel Committee, although it was not announced how much of an additional capital cushion any of the 29 banks would be required to hold.

Please see TheStreet's earnings coverage for a review of State Street's third-quarter results.

The company acquired Bank of Ireland Asset Management in January, following the 2010 acquisition of the securities services business of Intesa Sanpaolo.

During the company's third-quarter conference call CEO Joseph Hooley emphasized State Street's strong growth in its European business, with $156 billion of $245 billion in new assets to be serviced, coming from Europe. With such a strong capital war chest, Hooley said the company was looking for additional European acquisitions, saying "if it falls into the strategic sweet spot and meets our hurdle rate for pricing, then we're a buyer."

Guggenheim Securities analyst Marty Mosby rates State Street a buy, with a price target of $45.50, saying after the company reported its third-quarter results that the company's investments in its program to improve efficiency and information technology "began to show some incremental savings" and would show "meaningful improvement by the fourth quarter."

Mosby added that the shares would continue to be supported by the company's share repurchase program. State Street bought back 5.8 million, or about 1% of outstanding shares during the third quarter and was authorized to purchase another $225 million worth of shares.

When discussing State Street's 16% Tier 1 common equity ratio under Basel 1, the analyst forecast that the "impact from Basel III new guidelines is approximately 6.0% in 2012, which would still put STT above Basel III requirements at current levels."

State Street estimated that under Basel III, its Tier 1 common equity ratio would have been 11.7% as of Sept. 30, putting the bank comfortably under the strictest Basel III capital cushion requirement.

The shares trade for 1.8 times tangible book value, according to SNL, and 10 times the consensus 2012 earnings-per-share estimate of $4.00, among analysts polled by FactSet.

Out of 19 analysts covering State Street, 14 rate the shares a buy, while the remaining five analysts all have neutral ratings.

>>To see these stocks in action, visit the 10 Large Banks With Very Strong Capital portfolio on Stockpickr.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

To submit a news tip, send an email to: tips@thestreet.com.

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.

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