The financial industry has been among the weakest performers of the S&P's 10 most dominant sectors. But could things finally be turning around for the ailing sector? We may have a better sense very soon.

The Fed is just about to announce a new set of regulatory guidelines, established to determine which banks are healthy enough to boost dividends and buy back shares.

These new regulations could mean good news for a number of banks, anxious for some time now to boost shareholder payouts. Clearances for dividend increases will likely be interpreted as an indicator of overall improvement in the sector, a huge relief for the sector's investors.

Then again, in order to boost dividends, banks will need to have a detailed plan in place to meet the international banking requirements established at last month's summit in Switzerland, plus the capital standards under the new Dodd-Frank financial reform law.

And under the weight of all of the new regulations, some banks may actually find themselves unable to raise dividends after all is said and done.

It's hard to say whether or not the sickly sector is finally on the mend. But you can try to find out which banks have what it takes to pass regulatory muster.

One way to do this is to see which banking stocks are seeing institutional buying. Institutional investors are always going to do their homework before they buy into a stock, so it's not a bad idea to pay attention to their trades.

Here is a list of eight banking stocks attracting significant institutional buying over the last three months. (Click here to access free tools to analyze the banking stocks mentioned in this article.)

Institutional data sourced from Reuters. The list has been sorted by change in ownership.

Company

Shares Held by Inst. Investors Today

Shares Held by Inst. Investors 3 Months Ago

% Change in Ownership

Oritani Financial (Nasdaq: ORIT)

12,444,383

9,917,745

25.48%

S&T Bancorp (Nasdaq: STBA)

13,354,455

11,834,885

12.84%

Oriental Financial Group (NYSE: OFG)

34,638,342

30,755,490

12.62%

Renasant (Nasdaq: RNST)

9,333,336

8,323,183

12.14%

First Interstate Bancsystem (Nasdaq: FIBK)

9,915,572

9,264,373

7.03%

Washington Trust Bancorp (Nasdaq: WASH)

8,456,922

8,073,992

4.74%

WSFS Financial (Nasdaq: WSFS)

6,230,862

5,975,268

4.28%

CVB Financial (Nasdaq: CVBF)

67,654,609

64,889,102

4.26%

Interactive Chart: Press Play to see how analyst opinion has changed on all the stocks mentioned above.


Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

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