JPMorgan Chase: Financial Winner (Update 1)

Updated to include JPMorgan's announced plans for deploying excess capital through the first quarter of 2014.

NEW YORK ( TheStreet) -- JPMorgan Chase ( JPM) was the winner among the largest U.S. banks on Thursday, with shares rising 2% to close at $51.00.

The broad indices all ended with solid gains, after the Department of Labor said initial unemployment claims for the week ended March 9 declined to 332,000, from an upwardly revised 342,000 the previous week. The consensus among economists was for initial jobless claims to rise to 350,000. The four-week moving average for unemployment claims was 346,750, declining from the previous week's revised average of 349,500.

Bank stocks pretty much moved in line with the broad market, heading into the Federal Reserve's 4:30 p.m. EST, announcement of results from the Comprehensive Capital Analysis and Review, which was the second half of the regulator's annual stress test process.

The KBW Bank Index ( I:BKX) rose 1% to close at 57.28, with all but five of the 24 index components showing gains for the session.

The Federal Reserve last Thursday announced the results of the first part of the stress tests, with 17 of 18 large financial holding companies projected to continue operating through a severe recession beginning in 2013, remaining well capitalized with Tier 1 common ratios of at least 5.0%. The only company to fail the stress tests was Ally Financial.

The CCAR applied the same "severely adverse scenario" for economic disaster to the banks' capital plans, which include requests for Fed approval for deployment of excess capital through dividend increases, share buybacks, or acquisitions. The Federal Reserve late on Thursday announced that it had approved 16 of the 18 capital plans submitted.

Please see TheStreet's full summary of the CCAR results for more information on the big banks' announcements of dividend increases and share buybacks.

JPMorgan Chase


JPMorgan's shares have returned 17% this year, following a 36% return during 2012. The shares trade for 1.3 times tangible book value, according to Thomson Reuters Bank Insight, and for 8.8 times the consensus 2014 earnings estimate of $5.81 a share, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $5.48.

Based on a quarterly payout of $0.30, the shares have a dividend yield of 2.35%.

Most analysts expected JPMorgan to make a much smaller request for buyback approvals than the bank did during the 2012 stress test process, when it was approved to buy back $15 billion in shares through the first quarter of 2013. The buyback program was suspended last May, when JPMorgan CEO James Dimon first announced the hedge trading losses that the company later said totaled over $6 billion.

After the Fed's announcement, JPMorgan said in a press release that it would increase the dividend to $0.38 a share, in the second quarter, and would repurchase up to $6.0 billion in shares, through the first quarter of 2014.

JPM Chart JPM data by YCharts

Interested in more on JPMorgan Chase? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

RELATED STORIES:







Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

More from Investing

Caterpillar Erases Gains Despite Strong Quarterly Results and Raised Forecast

Caterpillar Erases Gains Despite Strong Quarterly Results and Raised Forecast

Spotify Announces Major Upgrade to Free Mobile App

Spotify Announces Major Upgrade to Free Mobile App

Looks like Coca-Cola's M&A Strategy Is Paying Off

Looks like Coca-Cola's M&A Strategy Is Paying Off

Eli Lilly CEO Expresses Confidence in New Rheumatoid Arthritis Drug

Eli Lilly CEO Expresses Confidence in New Rheumatoid Arthritis Drug

Harley-Davidson CEO: Bold Actions to Boost Performance Coming This Summer

Harley-Davidson CEO: Bold Actions to Boost Performance Coming This Summer