Updated with stock price action
NEW YORK ( TheStreet) -- A recurrent theme among banks is the Federal Reserve stress tests and plans to return capital to shareholders in 2012.
Almost all banks declared confidently at a recent Goldman Sachs Financial Services Conference in New York that they will pass the stress tests, and many reiterated their intention to increase dividends and buybacks to shareholders as a reward for having suffered through
Still, some analysts remain concerned that the Fed would rein in the ability of banks to increase dividends substantially as the regulator would like the banks to maintain additional buffers against an uncertain economic environment.
Goldman Sachs analysts on the other hand are more bullish. Even with capital continuing to build, the analysts expect banks in a position to return capital to reach a payout ratio of 50% in 2012. They expect majority of the increased capital returns to come in the form of buybacks, with dividend increases expected to be more nominal. American Express (AXP), Wells Fargo (WFC - Get Report), State Street (STT) and U.S. Bancorp (USB - Get Report) are best positioned, according to Goldman. Among the big four banks, investors also have great expectations from Citigroup (C - Get Report) which has been promising to boost dividends starting in 2012. Buckingham Research analyst Jim Mitchell expects the