- Bank of America (BAC). The quarterly dividend will remain 1 cent a share. The company was approved for common share buybacks of up to $5.0 billion, and for $5.5 billion in buybacks of preferred shares.
- Bank of New York Mellon (BK). A "15 percent increase" in the quarterly dividend from 13 cents, and up to $1.35 billion in share buybacks.
- Capital One Financial (COF). An increase in the quarterly dividend to 30 cents a share from 5 cents.
- Fifth Third Bancorp (FITB) of Cincinnati. A "potential increase" in the quarterly dividend from 10 cents, with approval for the potential repurchase of up to $750 million in trust preferred securities. The company also received approval for the potential conversion of $398 million in convertible preferred shares to common shares. If the conversions are completed, the company has Federal reserve approveal for common share buybacks totaling up to $984 million.
- JPMorgan Chase. An increase in the quarterly dividend to 38 cents a share from 30 cents, with buybacks totaling up to $6.0 billion.
- KeyCorp (KEY) of Cleveland. An increase in the quarterly dividend to 5.5 cents a share from 5 cents, and up to $426 million in share buybacks.
- Morgan Stanley (MS). The company didn't announce any increased capital return to investors, but did say that its capital plan included the "cash acquisition of the remaining 35% interest in Morgan Stanley Smith Barney," from Citigroup.
- PNC Financial Services Group (PNC) of Pittsburgh. The company said its board of directors would "consider an increase" in the dividend from 40 cents a share, at the next board meeting on April 4.
- Regions Financial (RF) of Birmingham, Ala. An increase in the quarterly dividend to 3 cents a share from 1 cents, with buybacks totaling up to $350 million. The company's plan also allows it to repurchase up to $500 million in trust preferred securities.
- State Street (STT) of Boston. An increase in the quarterly dividend to 26 cents a share from 24 cents, and up to $2.1 billion in share buybacks.
- SunTrust (STI) of Atlanta. An increase in the quarterly dividend to 10 cents a share from 5 cents, with buybacks totaling up to $200 million.
- U.S. Bancorp (USB) of Mineapolis. An increase in the quarterly dividend to 23 cents a share from 19.5 cents, and up to $2.25 in share buybacks.
- Wells Fargo (WFC). An increase in the quarterly dividend to 30 cents a share from 25 cents, and approval for "a proposed increase in common stock repurchase activity for 2013 compared with 2012," when the company's share repurchases totaled $4.0 billion.
Updated from 5 p.m. with capital return announcements from most banks subject to the Federal Reserve's stress tests, now including BB&T and Goldman Sachs, and with commentary from White & Case Partner Ernie Patrikis, a former general counsel and chief operating officer of the Federal Reserve Bank of New York. NEW YORK ( TheStreet) -- The Federal Reserve's 2013 bank stress test process has finally ended, with the regulator after Thursday's market close announcing approval for 15 of 17 large banks capital plans, but "objecting" to the capital plans submitted by BB&T ( BBT) of Winston-Salem, N.C., and Ally Financial. JPMorgan Chase ( JPM) and Goldman Sachs ( GS) both received "conditional approval" for their capital plans, with the Fed requiring both companies to submit revised capital plans "by the end of the third quarter to address weaknesses in their capital planning processes." Goldman Sachs CEO Lloyd Blankfein said in a statement that the firm was "pleased to continue to have the flexibility to return capital to shareholders," but the company released no further details on its capital plan. The Comprehensive Capital Analysis and Review was the second part of the Fed's annual stress test process. The first part of the process ended last Thursday, when the Federal Reserve said 17 of 18 large financial holding companies could weather a nasty recession beginning in 2013 and remain well capitalized through the end of 2014. Ally Financial was the only bank to fail the first round of stress tests, with the Federal Reserve projecting the company would lose $9.3 billion before taxes from a severe recession through the end of 2014, with a Tier 1 common equity ratio dropping as low as 1.5%, far from the 5.0% required to be considered well capitalized. Ally Financial is the former GMAC, and its ownership structure is 74% controlled by the U.S. Treasury, following several bailout investments for GMAC in 2008 and 2009. The CCAR completed the stress tests, this time including the banks' submitted capital and applying the same severely adverse scenario, which includes an increase in the U.S. unemployment rate to over 12% in the second half of 2013, with a 50% drop in equity prices and a 20% decline in real estate prices. Needless to say, Ally Financial didn't request Federal Reserve approval any dividends on common shares, or for share buybacks, but the Fed still wasn't happy. The regulator said Ally Financial's capital plan was rejected "both on quantitative and qualitative grounds," while BB&T's capital plan was rejected based on "a qualitative assessment conducted by the Federal Reserve." BB&T submitted financial statements to the Fed prior to the Feb. 6 deadline, but later on March 4 "disclosed publicly that it had reevaluated its process related to calculating risk-weighted assets and determined that certain adjustments, primarily related to the presentation of certain unfunded lending commitments, were required in order to conform to regulatory guidance."
Neither Ally nor BB&T are allowed to implement plans for capital deployment, and both are required to submit revised capital plans to the Fed, following "remediation" of deficiencies, the regulator said. BB&T in a press release on Thursday said that the company "does not believe these objections are related to the company's capital strength, earnings power or financial condition." The company recently raised its quarterly dividend to $0.23 a share from $0.20. BB&T CEO Kelly King said in the press release that "we are pleased to have increased our dividend 15% in the first quarter. This reflects the strength of our financial position. We remain strongly committed to our shareholders and are proud to have one of the strongest dividend yields and highest payout rates in the industry." Based on Thursday's closing price of $31.57, BB&T's shares have a dividend yield of 2.91%. Ally Financial said in a press release last week that the Federal Reserve "has not provided details" on how it actually conducts the stress tests, and there have been reports that the Fed doesn't want to release too much details, out of fear that banks may manage themselves simply to pass the stress tests and have their capital plans approved. "If someone games the system it means they are doing the right thing," according to White & Case Partner Ernie Patrikis, who is a former general counsel and chief operating officer of the Federal Reserve Bank of New York, and also a former deputy general counsel and alternate member of the Federal Open Market Committee. Patrikis believes that "the Fed should be more transparent about how it conducts the stress tests," and that "there should be no surprises," with companies like Ally Financial and BB&T being singled out in a regulatory press release. "I don't like the Fed approving dividends and share buybacks -- that is not the government's job," he adds. "If someone is above the minimum
capital ratio threshold, the answer should be, 'you are above the minimum, and you are responsible'." Citigroup ( C) jumped the gun last Thursday, by announcing it had requested Federal Reserve approval for a relatively paltry $1.2 billion in share buybacks through the first quarter of 2014, with no increase to its nominal quarterly dividend of $0.01 a share. The Federal Reserve approved Citigroup's capital plan. American Express came close to having its capital plan rejected. The Federal reserve projected that under American Express's original plan, its Tier 1 common equity ratio would have slipped to 4.97% under the severely adverse scenario, just below the 5.0% threshold for the company to be considered well-capitalized. Under American Express's revised capital plan that was approved by the Fed, the minimum Tier 1 common ratio was projected to be 6.42%. American Express later announced it would raise its quarterly dividend to 23 cents a share from 20 cents, and repurchase up to $3.2 billion in common shares this year beginning in the second quarter, with up to $1.0 billion in additional buybacks during the first quarter of 2014. Now that the stress tests for 2013 have been completed, Patrikis says, "CCAR shows a pretty strong financial system. These banks are strong. What the Fed is saying is that in really bad financial conditions, we have taken your portfolio, marked it to market in a horrible market, and you still have a minimum of 5.0% equity. That's pretty damned good." Here's a quick rundown of other announcements made by banks subject to the CCAR of dividend increases beginning in the second quarter, and share repurchases from the second quarter through the first quarter of 2014: