Ripples from the Federal Reserve's stress tests carried over Wednesday to a group of banks outside of the country's 19 largest institutions.
Several banks that were also stress-tested by the Federal Reserve but whose results were not made public announced that they have passed their tests. Some, including Comerica Inc., Huntington Bancshares Inc. and Discover Financial Services, plan to free up trapped capital by repurchasing stock and increasing dividend payments to investors. Another, Zions Bancorporation, intends to use capital it has accumulated to exit the Troubled Asset Relief Program.
Most of the attention surrounding the long-awaited stress tests has been focused on the 19 bank holding companies whose results were made public Tuesday, but the Fed also ran similar tests on roughly a dozen other institutions that have more than $50 billion of assets. The Fed had said it would not reveal results for those firms, but some individual institutions that received passing grades were quick to publicize the news.
The $61 billion-asset Comerica, based in Dallas, said Wednesday it has received approval to buy back up to $375 million worth of its shares over the next 12 months, more than triple what it repurchased last year. It also intends to redeem $25 million of trust-preferred securities when they are callable and said its board will consider raising the quarterly dividend from 10 cents to 15 cents at its next meeting in April.
"Our ability to execute our plan reaffirms our company's strong capital position and improved financial performance," Ralph W. Babb, Comerica's chairman and chief executive, said in a news release Wednesday.
The $54 billion-asset Huntington of Columbus, Ohio, said it plans to repurchase up to $182 million of its shares over the next year while the $68 billion-asset Discover said it it will double its authorized buyback program, to $2 billion, over the next two years.
The $52 billion-asset Zions of Salt Lake City is not planning any buybacks or dividend hikes, but it said it the Fed has approved its plan to repay the $1.4 billion it received from Tarp in two separate installments. Zions, a multi-bank holding company, said it repay the first $700 million as soon as it receives approval from the Treasury Department and will pay the balance in the second half of the year, provided its financial condition remains stable. The company said it intends to issue about $600 million in senior debt but would not need to raise additional capital by selling common or preferred shares.
Zions' shares soared on news that it passed its stress test. In mid-morning trading the stock was up 7.5%, to $20.99.
Huntington's and Discover's shares were up slightly in morning trading while Comerica's shares were down seven cents, to $31.70.
The other regionals that were also stress-tested were Northern Trust Corp. of Chicago; M&T Bank Corp. in Buffalo; HSBC North America Holdings Inc. in New York; UnionBanCal Corp. in San Francisco; BBVA USA Bancshares Inc. in Birmingham; BMO Financial Corp. in Chicago; and Citizens Financial Group Inc. in Providence, R.I.
Among that group, only M&T had made any announcement regarding the stress tests. It said Wednesday that the Fed expressed no concern with its current or prospective capital levels, but added that if it wishes to increase its dividend above its annual $2.80 per share, repurchase its stock or redeem its remaining $381.5 million in Tarp preferred stock then it must submit another capital plan to the Fed.