The Federal Reserve rejected the capital plans on Ally Financial (GMA) and BB&T (BBT) late Thursday, but granted approval to a slew of others including American Express (AXP), Bank of America (BAC) and Citigroup (C).
The Fed’s release of its full review on major U.S. bank’s capital plans and stress tests caused a wave of companies to unveil their capital plans after the bell Thursday, from dividends and stock repurchases to acquisitions.
Morgan Stanley (MS), which submitted its proposal to the Federal Reserve on Jan. 7 for review, said its plan includes the company’s potential cash acquisition of the remaining 35% interest in Morgan Stanley Smith Barney. The completion of the deal remains subject to regulatory approvals.
American Express said late Thursday it was raising its dividend by 15% to 23 cents and repurchasing up to $800 million of its shares in the first quarter of 2013 under its 2012 capital plan.
U.S. Bancorp (USB) authorized a new $2.25 billion share repurchase program and declared a first-quarter dividend of 19.5 cents a share. It expects to increase its dividend by 18% to 23 cents in the second quarter.
Fifth Third Bancorp (FITB) said its plan calls for a potential repurchase of up to $750 million in trust preferred securities. The plan, it says, includes a potential increase in its quarterly dividend.
PNC Financial Services (PNC) said the Fed approved of its plan to increase the quarterly dividend in the second quarter of 2013, though it did not provide details on the payout.
Bank of America’s (BAC) board authorized a new $5 billion buyback plan and the redemption of about $5.5 billion in preferred stock. BofA said the capital plan did not include a request to increase the quarterly dividend by a penny per share. Shares of BofA ticked up about 4% after hours to $12.60.
"We have simplified our company and we have more than adequate capital to support our strategic plans,” BofA CEO Brian Moynihan said in a statement. “We are well positioned to return excess capital to our shareholders.”
Wells Fargo (WFC) said its plan, approved by the Federal Reserve, includes declaring a second-quarter dividend of 30 cents and increasing repurchase activity.
Citigroup (C) confirmed late Thursday CEO Michael Corbats 2012 compensation of $12.8 million and former CEO Vikram Pandit’s 2012 pay of $9.6 million. Its capital plan approved by the government includes a $1.2 billion buyback through the first quarter of 2014 and the maintenance of current common stock dividends of a penny a share per quarter.
BB&T’s shares slumped nearly 3% in extended trading after the Fed objected “certain elements” of its capital proposal. The bank in a statement said it does not believe the objections are related to the company’s capital strength, earnings power or financial condition. BB&T said it is allowed to continue offering quarterly dividends of 23 cents, which was raised by 15% in the first quarter over 2012.
On March 7, the supervisory stress test results showed BB&T as the most well capitalized traditional bank even after being subjected to the hypothetical supervisory severely adverse scenario.
Shares of Ally Financial, which will be allowed to declare a dividend, were flat after hours. The company in a statement said it disagreed with the Federal Reserve’s analysis and sought “additional transparency” into the Fed’s assumptions and modeled results.
“Ally continues to have strong capital levels and ample liquidity to support its automotive finance operations,” Ally said.
Last week, the company called the Dodd-Frank Act stress tests “fundamentally flawed” and claimed that using such assumptions could have “lasting adverse impacts on the economy.”
The government has asked that New York-based J.P. Morgan submit an additional capital plan by the end of the third quarter addressing the weaknesses identified in the firm’s capital planning processes.
In a statement, J.P. Morgan, which has been allowed to buy an additional $6 billion shares between April 1, 2013 and March 31, 2014 and increase its dividend in the second quarter by eight cents to 38 cents a share, said it is “fully committed” to meeting all the Fed’s requirements.
Following its review, however, the Federal Reserve may require the firm to modify its capital distributions.
Goldman Sachs did not immediately respond to FOX Business regarding the Fed’s decision.