Bank Stocks Continue Higher Ahead of Official Stress Test Results (XLF, BAC, WFC)

After yesterday's 8% move higher in financial stocks, as represented by ETF Financial Select Sector SPDR (NYSE: XLF), today the sector is up another 1% as investors continue to feel better about the health of the banks following the leaked results of the stress test. Official results of the stress test are due tonight at 5PM ET.

19 banks are being subjected to the government's stress test which is basically trying to boosts the banks capital buffer to cover future losses anticipated under weak economic conditions. Banks that need to boost their capital will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan.

The stress test capital buffer for each banks was sized to achieve a Tier 1 risk-based ratio of at least 6% and a Tier 1 Common risk-based ratio of at least 4% at the end of 2010, under a more adverse macroeconomic scenario than is currently anticipated.

Here are how the 19 banks are expected to stack up as a results of the tests:Likely Need More Capital:

• Bank of America (NYSE: BAC) may need another $35 billion capital buffer
  
• Wells Fargo (NYSE: WFC) may need another $15 billion capital buffer
  
• GMAC (NYSE: GM) - may need another $11.5 billion capital buffer
  
• Citigroup (NYSE: C) - may need another $5 billion capital buffer
  
• Morgan Stanley (NYSE: MS) - may need another $1.5 billion capital buffer
  
• Regions Financial (NYSE: RF) - may need more capital but unsure how much.

Likely Don't Need More Capital:

• JP Morgan (NYSE: JPM)
  
• Goldman Sachs (NYSE: GS)
  
• BB&T (NYSE: BBT)
  
• American Express Company (NYSE: AXP)
  
• Capital One (NYSE: COF)
  
• MetLife (NYSE: MET)
  
• Bank of New York Mellon Corporation (NYSE: BK)

Unsure:

• State Street (NYSE: STT): Some reports suggest the company needs more capital, others say it won't.
  
• Fifth Third (Nasdaq: FITB): Likely needs more capital, but no leaks
  
• KeyCorp (NYSE: KEY): Likely needs more capital, but no leaks
  
• PNC (NYSE: PNC): Likely needs more capital, but no leaks
  
• SunTrust (NYSE: STI): Likely needs more capital, but no leaks
  
• US Bank Corp (NYSE: USB): Likely needs more capital, but no leaks

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