This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Capital One, Wells Fargo Rise While Most Big Bank Stocks Fall

NEW YORK (TheStreet) -- Capital One (COF) and Wells Fargo (WFC) was the sector winners on a rough day for large-cap bank stocks, with shares of both companies rising by 1.2%.

Capital One's stock closed at $75.88 and Wells Fargo closed at $49.10.

The Dow Jones Industrial Average was down slightly, while the S&P 500 ended with a 0.2% decline and the NASDAQ Composite ended 0.5% lower, after the Bureau of Economic Analysis made its third and final estimate of fourth-quarter U.S. GDP growth, to an annual rate of 2.6%, up from the previous estimate of 2.4%. The revised estimated was slightly below the consensus 2.7% estimate among analysts polled by Thomson Reuters.

Also on Thursday, the Department of Labor said initial unemployment claims for the week ended March 22 came in at a seasonally adjusted 311,000, down 10,000 from 321,000 the previous week. Economists had expected new claims to come in at 322,000. The four-week moving average for unemployment claims declined by 9,500 to 317,750.

The KBW Bank index (I:BKX) was down 1.3% to 71.07, with all 24 index components seeing declines, except for Capital One, Wells Fargo and JPMorgan Chase, which was up slightly to close at $59.92.

The major banking industry news was the completion of the Federal Reserve's two-part annual stress tests for the 30 largest U.S. banks. The Comprehensive Capital Analysis and Review incorporated banks' submitted plans to deploy capital into the same "severely adverse" economic scenario that was run in the first round of stress tests, completed last week. The Fed approved 25 of the 30 banks' capital plans.

The regulator objected to the plans submitted by Citigroup (C), Zions Bancorporation (ZION) of Salt Lake City, and to plans submitted by three foreign-held bank holding companies, including HSBC North America Holdings (a unit of HSBC (HSBC)), RBS Citizens Financial Group (held by Royal Bank of Scotland (RBS)) and Santander Holdings USA (held by Banco Santander (SAN)).

The rejection of Zions Bancorporation's capital plan wasn't particularly surprising, since Zions was the only bank to fail the first round of stress tests last week with a minimum Tier 1 common equity ratio of 3.6% through the Fed's nine-quarter test scenario. The minimum ratio needed to pass was 5.0%. Following that failure, Zions chose not to "take a mulligan" and submit a revised capital plan, but to stick with its original plan that included a common equity raise of $400 million. That raise would have raised the bank's minimum Tier 1 common equity ratio through the stress-test scenario to 4.5%. Zions plans to submit a revised capital plan to the Federal Reserve by April 30.

Please see Citigroup and the 'Straw That Broke the Camel's Back' for details on Citi's CCAR failure on "qualitative" grounds and the company's reaction, and Here's What Wall Street's Saying About the Fed's Capital Plan Reviews for sell-side analysts' opinions on which banks fared best and worst from the stress tests.

Capital One

Capital One passed the first round of stress tests with a solid minimum Tier 1 common equity ratio of 7.8%. The company late Wednesday announced it would maintain its quarterly dividend of 30 cents a share and that the Fed had approved its plan to buy back up to $2.5 billion in shares from the second quarter of 2014 through the first quarter of 2015.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs