- Regions Financial (RF) of Birmingham, Ala., has gone through a major transition this year, as the company redeemed all $3.5 billion in TARP preferred shares during second quarter, after selling its Morgan Keegan subsidiary and raising $900 million in common equity during the first quarter. The company is currently paying a nominal quarterly dividend of a penny a share. Following the stress tests, Siegenthaler expects regions to increase its quarterly dividend payout to four cents a share, and for the company to buy back $249 million worth of shares during 2013. Shares of Regions Financial closed at $6.25 Wednesday, returning 46% year-to-date, following a 38% decline in 2011. If the quarterly payout were raised to four cents, the dividend yield based on Wednesday's closing price would be 2.56%.
- Zions Financial (ZION) of Salt Lake City in September, repaid its remaining $700 million in TARP preferred shares, having repaid $700 million in TARP money during the first quarter. The company is currently paying a quarterly dividend of a penny a share, and following the stress tests, Siegenthaler expects the dividend to be increased to seven cents, and for Zions to be approved to buy back $44 million in common shares during 2013. Zions has seen its stock return 19% year-to-date through Wednesday's close at $19.33, following a 33% decline last year. If the quarterly dividend were increased to seven cents, the shares would have a dividend yield of 1.45%.
- SunTrust (STI) of Atlanta had its initial 2012 capital plan rejected by the Federal Reserve, while the company's revised plan didn't include any increased capita return to investors. SunTrust in September took major steps to strengthen its balance sheet, including the sale of its stake in Coca-Cola, which resulted in a third-quarter pre-tax gain of $1.9 billion, as well as transferring about $3 billion in loans to held-for-sale, including some nonperforming loans. These actions and others led to lumpy third-quarter results that raised the company's Tier 1 common equity ratio to 9.80% as of Sept. 30, from 9.40% the previous quarter. SunTrust's shares closed at $25.44 Wednesday, returning 45% year-to-date. Following the stress tests, Siegenthaler expects the company to raise its quarterly dividend to 18 cents a share, which would make for a yield of 2.83% based on Wednesday's closing price. The analyst also expects SunTrust to receive approval to buy back $374 million worth of shares in 2013.
- Bank of Hawaii (BOH) pays a quarterly dividend of 45 cents a share, for a dividend yield of 4.28%, based on Wednesday's closing price of $42.04. With $81 million in dividends and buybacks of $85 million expected for 2012, Siegenthaler expects the company to pay out 100% of its earnings in 2012. The analyst expects the dividend to remain unchanged next year, with buybacks declining to $68 million, for a combined payout ratio of 97% in 2013.
- Fulton Financial (FULT) of Lancaster, Pa., pays a quarterly dividend of eight cents a share, for a dividend yield of 3.46%, based on Wednesday's closing price of $9.26. Siegenthaler expects the company's total payout ratio for 2012 to be 66%, including $60 million in dividends and $44 million in buybacks. The analyst expects the company to raise its quarterly dividend slightly next year, with total dividends of $62 million and buybacks rising to $77 million, for a total payout ratio of 90%.
- Valley National Bancorp (VLY) of Wayne N.J., pays a quarterly dividend of 16 cents, for a yield of 7.34%, based on Wednesday's closing price of $8.72. Siegenthaler estimates the company's 2012 total payout ratio will be 85%, with $126 million in dividends and no buybacks The analyst expects the payout to remain the same in 2013, again with no buybacks, but that the payout ratio will climb to 92% as earnings decline slightly.
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