{"id":28466,"date":"2012-03-22T11:05:01","date_gmt":"2012-03-22T15:05:01","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/03\/22\/u-s-banks-in-2012-share-buybacks-and-high-dividends\/"},"modified":"2012-03-22T11:05:01","modified_gmt":"2012-03-22T15:05:01","slug":"u-s-banks-in-2012-share-buybacks-and-high-dividends","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/03\/22\/u-s-banks-in-2012-share-buybacks-and-high-dividends\/","title":{"rendered":"U.S. Banks in 2012: Share Buybacks and High Dividends"},"content":{"rendered":"<div align=\"left\"><script type=\"text\/javascript\">\ntweetmeme_style = 'compact';\n<\/script><br \/>\n<script type=\"text\/javascript\" src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\"><\/script>\n<\/div>\n<div><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-28436 \" title=\"U.S. Banks in 2012: Share Buybacks and High Dividends\" src=\"http:\/\/www.investmentu.com\/wp-content\/uploads\/2012\/03\/us-banks-in-2012.jpg\" alt=\"U.S. Banks in 2012: Share Buybacks and High Dividends\" width=\"220\" height=\"220\" \/><\/p>\n<p>These five U.S. banks are not only financially fit&#8230; they&#39;re on track for share buybacks and high dividends in 2012.<\/p>\n<\/div>\n<p>In January, bank regulators voted to release a proposal for how banks with more than $10 billion in assets should conduct stress tests annually. The purpose of the tests is to gauge whether or not individual banks can withstand another major economic downturn.<\/p>\n<p>The tests are now a required cost of doing business due to the 2010 Dodd-Frank financial oversight law. Stress tests have become a key component of how regulators will assess the health of the banking industry.<\/p>\n<p>The Federal Reserve also decided to put banks with more than $50 billion in assets through separate tests to gauge whether they have sufficient capital. The results of these tests came out last week\u2026<\/p>\n<p>Such tests presented a worst-case scenario under which the <a title=\"Can Monthly Jobs Data Make You a Better Investor?\" href=\"http:\/\/www.investmentu.com\/2012\/February\/monthly-jobs-data.html\">unemployment rate<\/a> peaks at 13%, the equity market dives 50 % (which would put the S&amp;P 500 at 685) and housing prices could somehow be more awful and decline by 21%.<\/p>\n<p>Another of these differing scenarios includes a \u201csupervisory stress scenario,\u201d meant to capture the likely environment if another U.S. recession would affect banks with simultaneous slowdowns in other major economies, like those of Western Europe or <a title=\"Investing in Chinese Stocks: Capture Growth and Manage Risk\" href=\"http:\/\/www.investmentu.com\/2012\/January\/investing-in-chinese-stocks.html\">China<\/a>.<\/p>\n<h2><strong>Withstanding Financial Shock<\/strong><\/h2>\n<p>The Fed is attempting to ensure that banks have enough capital reserves on the books to withstand a financial shock like the one back in 2008 and be able to withstand it without that venomous phrase \u201cgovernment bailout.\u201d<\/p>\n<p>\u201cStrong capital levels are critical to ensuring that <a title=\"Wall Street\u2019s Greed: How to End Big Banks\u2019 Grip on the U.S. Economy\" href=\"http:\/\/www.investmentu.com\/2010\/January\/wall-streets-greed.html\">banking organizations<\/a> have the ability to lend and to continue to meet their financial obligations, even in times of economic difficulty,\u201d the Fed said, noting that U.S. firms have rebuilt their capital levels on its watch since the first government stress tests of early 2009.<\/p>\n<p>And the public will be made privy to much of the information from these tests. The Fed expects to release bank-by-bank results based on the projections \u2013 as it did in 2009, but did not last year. <a title=\"QE3 to Open Up New Investment Opportunities\" href=\"http:\/\/www.investmentu.com\/2012\/February\/qe3-investment-opportunities.html\">The Fed<\/a> said the results will consider losses, revenue, expenses, and capital ratios over the planning horizon.<\/p>\n<h2><strong>Investing opportunities?<\/strong><\/h2>\n<p>The Federal Reserve also said it will allow a number of the big U.S. banks to raise dividends to a ceiling of as much as 26% of earnings as part of the latest round of stress test results released last week.<\/p>\n<p>\u201cEven with stressful scenarios, the stress tests will demonstrate that banks are in a stronger place, far stronger than in 2008,\u201d said Fred Cannon, Director of Research at Keefe, Bruyette &amp; Woods Inc. in Washington. \u201cWe think companies like <strong>J.P. Morgan Chase<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=JPM\" target=\"_blank\">JPM<\/a>), <strong>Wells Fargo<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=WFC\" target=\"_blank\">WFC<\/a>) and <strong>U.S. Bancorp<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=USB\" target=\"_blank\">USB<\/a>) will show meaningful increases in dividend and share repurchase plans.\u201d<\/p>\n<p>The big news for investors is that how the institutions graded on this last set of tests determined the possible extent to which they can provide dividends and share buybacks.<\/p>\n<p>Well, the grades are in\u2026<\/p>\n<p>And here are a few of the 15 out of the 19 banks that passed who have already made known their fairly aggressive stock buyback plans and increased dividend:<\/p>\n<ul>\n<li><strong>American Express<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=AXP\" target=\"_blank\">AXP<\/a>) \u2013 Passed stress test with 10.8% capital ratio. Raised dividend to $0.20, from $0.18, and authorized $4 billion 2012 buyback, up to $1 billion in 2013.<\/li>\n<li><strong>Bank of New York Mellon<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=BK\" target=\"_blank\">BK<\/a>) \u2013 Passed stress test with 13 % capital ratio and said it will move ahead with $1.16 billion stock repurchase. Also affirmed dividend of $0.13 per share.<\/li>\n<li><strong>BB&amp;T <\/strong>(NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=BBT\" target=\"_blank\">BBT<\/a>) \u2013 Passed stress test with 6.4% capital ratio. Upped dividend 25% to $0.20 and said Fed did not object to planned redemption of $3.2 billion in trust preferred securities.<\/li>\n<li><strong>J.P. Morgan Chase<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=JPM\" target=\"_blank\">JPM<\/a>) \u2013 Passed stress test with 5.4% capital ratio under stressed scenario, including proposed capital actions through 2013. <a href=\"http:\/\/www.businesswire.com\/news\/home\/20120313006857\/en\/JPMorgan-Chase-Increase-Quarterly-Common-Stock-Dividend\" target=\"_blank\">Increased its dividend<\/a> 20% to $0.30 per share, from $0.25 and authorized a $15 billion stock buyback.<\/li>\n<li><strong>Regions Financial<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=RF\" target=\"_blank\">RF<\/a>) \u2013 Passed stress test with 6.6% capital ratio, announced $900 million common stock offering to go toward repurchasing $3.5 billion in preferred shares owned by the Treasury Department dating back to loans from the Troubled Asset Relief Program (TARP).<\/li>\n<\/ul>\n<p>Good Investing,<\/p>\n<p>Jason Jenkins<\/p>\n<div>\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=BIhvZUNxIRM:zHVkFn2Lc-8:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=BIhvZUNxIRM:zHVkFn2Lc-8:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=BIhvZUNxIRM:zHVkFn2Lc-8:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=BIhvZUNxIRM:zHVkFn2Lc-8:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=BIhvZUNxIRM:zHVkFn2Lc-8:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=BIhvZUNxIRM:zHVkFn2Lc-8:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=BIhvZUNxIRM:zHVkFn2Lc-8:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=BIhvZUNxIRM:zHVkFn2Lc-8:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/BIhvZUNxIRM\" height=\"1\" width=\"1\" \/><\/p>\n<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>These five U.S. banks are not only financially fit&#8230; they&#39;re on track for share buybacks and high dividends in 2012. In January, bank regulators voted to release a proposal for how banks with more than $10 billion in assets should conduct stress tests annually. The purpose of the tests is to gauge whether or not &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/fx\/2012\/03\/22\/u-s-banks-in-2012-share-buybacks-and-high-dividends\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;U.S. Banks in 2012: Share Buybacks and High Dividends&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-28466","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28466","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=28466"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28466\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=28466"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=28466"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=28466"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}