With formal approval from the Federal Reserve, banks raced out of the gate to announce dividend boosts and share repurchase plans on Friday.
The biggest move came from JPMorgan Chase & Co, which raised its dividend from a nickel to a quarter a share and announced a two year stock repurchase plan of $15 billion. At a minimum, Chief Executive Jamie Dimon said, the company would buy back at least the same number of shares as it issues in employee compensation.
Wells Fargo & Co., meanwhile, issued a special dividend of 7 cents a share, more than doubling its first-quarter payout to 12 cents. The company will also repurchase up to 200 million of its shares.
U.S. Bancorp is boosting its dividend 150% to 50 cents a share on an annualized basis. It also is laying plans to repurchase 50 million shares starting sometime later this year, after final Basel III capital guidelines are published. A quarterly common stock dividend of 12.5 cents a share will be payable April 15 to shareholders of record as of March 31. The stock buyback authorization announced by the Minneapolis company's board will expire in December.
"Our first priority is the dividend, but a stock buyback program is also an important component of our Comprehensive Capital Plan, giving us added flexibility to efficiently return capital to our shareholders," Chairman and CEO Richard K. Davis said. "We will continue to reassess the dividend rate going forward as earnings grow, moving us closer to reaching our longer-term commitment of returning the majority of our earnings to shareholders."
BB&T Corp, which had not cut its 15 cent dividend, also got a more symbolic approval, increasing its dividend by one cent and announcing a one-cent special dividend in the second quarter.
PNC Financial Services Group Inc., meanwhile, said it has received approval to increase its dividend, though it has held off making an announcement.
Several banks that did not increase their dividends on Friday took concrete steps toward it.
SunTrust Banks Inc. announced it would issue $1 billion in equity and $1 billion in debt in preparation for repaying $4.85 billion in government funds. KeyCorp said it will raise $625 million to repay its TARP funding.
Bank stocks rallied in Friday trading, though much of the increases occurred before the announcements.
