Guidelines of New "Stress Tests" Announced - Focused on the Handling of Major Recessions in China and Europe

NEW YORK, NY--(Marketwire - Nov 26, 2012) - Despite the global economy experiencing a major slowdown financial stocks have shown investors some pretty admirable gains. The Financial Select Sector SPDR ETF (XLF) has gained 17.5 percent year-to-date, nearly 6 times the Dow Jones Industrial Average gain of 3 percent over the same period. Five Star Equities examines the outlook for companies in the Regional Banking Industry and provides equity research on U.S. Bancorp (NYSE: USB) and Hudson City Bancorp, Inc. (NASDAQ: HCBK).

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Last week the Federal Reserve announced guidelines for the latest round of "stress tests," which they expect to release results for by late by 2013. The latest tests will focus on how the nation's 19 largest banks would handle major recessions in Europe, China and Japan. The passing of the "stress tests" are considered key as it enables large banks to increase dividends and share buybacks.

"For the majority of banks, we view the scenarios laid out for [the capital analysis and review for] 2013 as modestly more optimistic as the one used in 2012," Barclays analyst Jason Goldberg said. There will be a number of banks that "will return the majority of their 2013 net income to shareholders in dividends and buyback next year," he said.

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U.S. Bancorp, with $352 billion in assets as of Sept. 30, 2012, is the parent company of U.S. Bank, the 5th largest commercial bank in the United States. Net income attributable to U.S. Bancorp was $1,474 million for the third quarter of 2012, 15.8 percent higher than the $1,273 million for the third quarter of 2011. Shares of the company are up over 20 percent year-to-date.

Hudson City Bancorp is the largest thrift institution headquartered in New Jersey. Hudson City Savings currently operates a total of 135 branch offices in the New York metropolitan and surrounding areas. The company currently offers investors an annual dividend of $0.32 per share for a yield of roughly 3.92 percent. Hudson City Bancorp is up over 30 percent year-to-date.

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