More than two dozen banks unveiled plans to repurchase shares or issue dividends after all passed the Federal Reserve’s annual stress test.

The largest banks, including JPMorgan Chase and Bank of America, disclosed details of their planned stock buybacks or dividends on Wednesday afternoon, following the Fed’s release of the results of its Comprehensive Capital Analysis and Review stress test. All 34 banks examined met minimum capital requirements under severely adverse economic conditions.

Only Capital One Financial in McLean, Va., received directions to resubmit its capital plan later this year, to address weaknesses in its capital planning processes.

Jamie Dimon, chairman and CEO of JPMorgan Chase
Victory lap
“We are pleased to further increase capital returns to our shareholders while continuing to invest in our businesses for long-term profitability,” said Jamie Dimon, chairman and CEO of JPMorgan Chase. Bloomberg News

The $349 billion-asset Capital One said in a Wednesday news release that it will maintain its 40 cents-per-share quarterly dividend and that it plans to repurchase up to $1.85 billion of common stock.

“We … are fully committed to addressing the Federal Reserve’s concerns with our capital planning process in a timely manner,” Chairman and CEO Richard Fairbank said in the release.

Fairbank added that Capital One expects to affirm or update its earnings guidance when it releases second-quarter earnings on July 20.

Stress tests are far from a routine exercise, but some of the banks examined have had recent events that inserted an additional layer of uncertainty over the approval of their capital plans.

The $100 billion-asset Huntington Bancshares in Columbus, Ohio, for example, in August bought FirstMerit in Akron, Ohio, for $3.4 billion. Even with that large capital outlay, regulators did not object to Huntington’s plan to boost its quarterly dividend 38% and to repurchase more than $300 million of its common stock.

The stress-test results “illustrate continued strong risk management at Huntington and the extent to which we have rebuilt capital after the FirstMerit acquisition,” Chairman and CEO Stephen Steinour said in a news release issued Wednesday afternoon. Huntington’s capital plans require company board approval.

The subprime lender Santander Consumer USA Holdings has recently dealt with investigations into its lending practices, and a Fed enforcement action that required the Dallas company to strengthen oversight. Santander Consumer also faced qualitative objections from the Fed in the 2015 and 2016 stress tests.

Still, the Fed issued a nonobjection to Santander Consumer’s intention to pay a 3-cent per-share dividend in the fourth quarter and a 5-cent dividend in the first and second quarters next year.

“We see today's events as continued positive progress for the Company,” CEO Jason Kulas said in a release.

In other banks’ plans, JPMorgan plans to raise its quarterly dividend 12% to 56 cents a share, starting in the third quarter. JPMorgan also plans to buy back up to $19.4 billion of its stock during a 12-month period starting July 1.

“Given the financial strength of the company and the significant capital and liquidity advancements we have made over the last several years, we are pleased to further increase capital returns to our shareholders while continuing to invest in our businesses for long-term profitability,” Chairman and CEO Jamie Dimon said in a news release.

Bank of America will boost its dividend 60% to 12 cents a share, also starting in the third quarter. B of A will also launch a $12 billion stock-buyback program. B of A’s share-purchase program will include an additional $900 million to cover the cost of shares issued through equity-based compensation packages.

Citigroup will raise its dividend to 32 cents and embark on a $15.6 billion share-buyback initiative.

“This year's CCAR results demonstrate that Citi has the ability to withstand a severe economic scenario and remain well capitalized, while also substantially increasing our level of capital return,” CEO Michael Corbat said in a press release, noting that Citi “for some time [has] retained a significant amount of capital in excess of what is needed to prudently operate and invest in the firm.”

Wells Fargo will raise its dividend 3% to 38 cents a share starting in the third quarter. It plans to repurchase up to $11.5 billion of common stock over a 12-month period.

"We are pleased by today’s CCAR result, which demonstrates the strength of our diversified business model, strong capital position and our continued focus on risk management,” CEO Tim Sloan said in a release.

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Andy Peters

Andy Peters

Andy Peters writes about regional banks, consumer finance and debt collections for American Banker.