10 Midwest Bank Stocks Finally Paying Off

NEW YORK (TheStreet) -- We've repeatedly said that the group of 10 Midwest Bank Stocks TheStreet has tracked since March of last year were "long-term" choices for investors, and the group is bearing fruit this year.

Eight of the 10 saw negative returns during 2011, when the The KBW Bank Index (I:BKX) declined 25%. It's no surprise to see all 10 with positive returns so far this year, with the KBW Bank Index rising 26% through Friday's close.

The banking sector has been on fire, with continued positive indications from U.S. Labor Department unemployment reports, and of course, signs of a manufacturing resurgence, especially for the automobile manufacturers, bodes well for the entire Midwest.

The Federal Reserve's annual stress tests have also served as a catalyst for the group, with several of the larger Midwest bank holding companies announcing capital actions last week, including dividend increases and share buybacks.

When we last looked at the group in November, shares of the largest Midwest banking players were facing major pressure as investors anticipated fourth-quarter revenue hits from the Federal Reserve's new caps on debit card interchange fees, as required by the Durbin Amendment to the Dodd-Frank bank reform legislation.