Thursday Is Capital Return Day
The Federal Reserve on Thursday at 4:30 p.m. EST, will announce the results of the Comprehensive Capital Analysis and Review of the banks' capital plans through the first quarter of 2014. At roughly the same time, most of the nation's large banks are expected to announce plans to return capital to investors through dividend increases or share buybacks. Returning capital to investors is the order of the day for banks, with soft loan demand in most areas except for commercial and industrial lending, "which is looking pretty frothy," says Tom Day, a senior director at Moody's Analytics. Since bank's "don't have asset allocation choices" in the low rate environment, Day says "the choice you have is to give money back to shareholders or look for acquisitions." But for banks looking for deals, "the multiples are not exactly where they want them, because Bernanke has done a great job destroying deposit premiums completely," he says.