--Bank of America, Wells Fargo among several banks that unveiled
plans for stock buybacks and/or dividends Thursday
--Several large U.S. banks received the green light on their
capital plans from the Fed following the latest stress-test
round
--Ally Financial and BB&T had their plans rejected by the
Fed, while J.P. Morgan and Goldman Sachs are required to resubmit
their plans later this year
(Adds further details in paragraphs five, 14, 15, 17, 18 and
21.)
By Tess Stynes
A number of big U.S. banks Thursday unveiled plans for dividends
and stock buybacks following the latest round of the Federal
Reserve's stress tests.
In all, 14 of the 18 largest U.S. banks received unconditional
approval from the Fed for their plans to distribute capital to
shareholders as part of the second step in the central bank's
annual stress test of the biggest banks.
Two companies, Ally Financial Inc. and BB&T Corp. (BBT), had
their plans rejected.
The Fed also dealt a blow to J.P. Morgan Chase & Co. (JPM)
and Goldman Sachs Group Inc. (GS), citing weaknesses in their
capital planning that require "immediate attention," which could
affect their plans to return capital to shareholders. While the Fed
didn't explicitly reject the two banks' plans to distribute
capital, both companies are required to resubmit their plans to the
central bank later this year.
Goldman on Thursday said it plans to resubmit its plans to the
Fed by the end of the third quarter, which it says will incorporate
"certain enhancements to its stress test processes."
Among the largest U.S. banks, Bank of America Corp. (BAC) said
its board approved the repurchase of $5 billion of its shares and
the redemption of about $5.5 billion in preferred stock. The
lender's capital plan didn't include a request to raise its
quarterly dividend.
J.P. Morgan said it was authorized to buy back an additional $6
billion of stock starting in April and the board plans to raise the
company's quarterly dividend to 38 cents a share as of the second
quarter.
Wells Fargo & Co. (WFC) said its capital plan was approved
and confirmed it includes a proposed quarterly dividend of 30 cents
a share for the second quarter and stepped up share repurchases
over 2012 levels, which were about nearly $4 billion of its
stock.
Morgan Stanley (MS) said the go-ahead from the Fed allows the
company to buy the rest of its wealth-management joint venture from
Citigroup Inc. (C).
Among regional lenders, BB&T said it will be permitted to
pay a 23-cents-a-share dividend in the first quarter, up 15%, and
also will be able to continue its preferred dividend. However, the
Winston-Salem, N.C., lender also said it doesn't think the Fed's
objections are related to the company's capital strength, financial
condition or earnings performance.
Cincinnati-based Fifth Third Bancorp's (FITB) plans include the
potential repurchase of up to $750 million in trust preferred
securities, the possible repurchase of as much as $984 million in
stock and a possible increase in its quarterly stock dividend.
SunTrust Banks Inc. (STI) affirmed its plans to repurchase as
much as $200 million of its shares starting in the second quarter.
The Atlanta bank also aims to double its quarterly dividend to 10
cents a share.
Comerica Inc. (CMA) plans to buy back up to $288 million in
equity. The lender, which serves the South, West and Midwest, also
intends to redeem $25 million of subordinated notes due 2018 when
callable later this year.
Huntington Bancshares Inc. (HBAN) said it is raising its
quarterly dividend by 25% to five cents a share, effective in the
second quarter. The parent of Huntington National Bank also may buy
back as much as $227 million of its stock.
Cleveland-based KeyCorp's (KEY) board authorized stock buybacks
of up to $426 million. The bank, with branches ranging from upstate
New York to Alaska, also potentially may raise its quarterly
dividend to 5.5 cents a share, an increase of half a penny, pending
board approval. Key reiterated it plans to file an updated plan
with the Fed, seeking to use an anticipated gain upon the closing
of its pending sale of its Victory Capital investment management
and broker dealer units to private-equity firm Crestview
Partners.
Among U.S. trust banks--a group that includes State Street Corp.
(STT) and Northern Trust Corp. (NTRS)--Bank of New York Mellon
Corp.'s (BK) board approved the repurchase of $1.35 billion of its
stock, starting in the second quarter. The lender said that its
capital plan includes a 15% increase in its second-quarter stock
dividend, which the board is expected to consider next month.
State Street's board authorized stock buybacks of up to $2.1
billion, an increase from its 2012 stock buyback program of about
$1.8 million. The company previously had announced its quarterly
dividend increase to 26 cents a share, up two cents a share.
Northern Trust's board approved plans to raise its quarterly
dividend to 31 cents a share, up by a penny a share. The company's
capital plan also includes potential stock buybacks of as much as
$400 million.
Among credit-card lenders, American Express Co. (AXP) plans to
raise its quarterly dividend to 23 cents and repurchase as much as
$3.2 billion of its stock during the last three quarters of
2013.
Capital One Financial Corp. (COF) plans to boost its quarterly
dividend to 30 cents a share from the previous nickel a share
starting with the first quarter, subject to final board
approval.
Discover Financial Services' (DFS) board approved a share
buyback program of up to $2.4 billion and the credit-card company
also plans to raises its quarterly dividend to 20 cents a share, an
increase of six cents a share, starting in the second quarter. The
latest stock repurchase program replaces Discover Financial's
previous $2 billion stock buyback plan, which had about $600
million remaining.
The Fed last week said the annual stress test showed 17 of the
18 largest U.S. banks have enough capital to keep lending in a
hypothetical sharp economic downturn, a sign the financial system
is better prepared to weather the storm far better than during the
financial crisis. The signs of the financial industry's improving
health also potentially cleared the way for large U.S. banks to
funnel tens of billions of dollars to investors through increased
dividend payments and share buybacks.
Write to Tess Stynes at tess.stynes@dowjones.com