Winners and Losers of the Fed's Latest Bank Stress Test

Michael Teague |

Winners and Losers of the Fed's Latest Bank Stress TestThe results of the Federal Reserve’s second round of stress tests for 18 banks were released on Thursday afternoon, with almost no surprises.

American Express (AXP), Bank of America (BAC), the Bank of New York (BK), Capital One (COF), Citigroup (C), Fifth Third Bank Corp (FITB), KeyCorp (KEY), Morgan Stanley (MS), PNC Financial Services Group (PNC), Regions Financial Corp. (RF), State Street Corp. (STT), Sun Trust Banks (STI), US Bancorp (USB) and Wells Fargo (WFC) will surely be happy to be able to announce dividend payouts and share buybacks to their shareholders as soon as possible.  Many of them already have.

Ally Financial’s original plan was rejected last week, and so it is not entirely surprising that this was also the case with their revised plan.  According to the Fed, the bank’s capital ratios would not meet requirements in a worst-case-scenario, nor was its capital planning process found to be sufficient.

BB&T's (BBT) rejection by the fed was much more of a surprise.  Though the bank’s capital met the Fed’s threshold requirements, their dividend payout and stock buyback plans were sent back based on problems with the capital planning process.  The Fed has not explained this decision, but the bank itself has said only that it would have to reconsider “unfunded lending commitments” in order to meet with regulatory requirements.

J.P. Morgan Chase (JPM) and Goldman Sachs (GS) passed, sort of, but must retool their share distribution plans by the end of the third quarter.  In the meantime, their plans were given “conditional approval”, according to a senior Fed official.  Failure to resubmit the plans, however, could result in them ultimately being rejected.

In afterhours trading, J.P. Morgan’s shares dipped 1.92 percent to $50.02, while Goldman’s were down 1.77 percent to 151.30.  BB&T lost just over 3 percent, to $30.77.

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Companies

Symbol Name Price Change % Volume
AGO.P.B Assured Guaranty Ltd. 26.32 -0.03 -0.11 13,822
AXP American Express Company 64.22 -0.06 -0.09 3,580,082
BAC Bank of America Corporation 15.38 0.09 0.59 66,076,402
BBT BB&T Corporation 37.65 0.25 0.67 3,133,851
BK Bank of New York Mellon Corporation (The) 39.50 0.00 0.00 8,115,856
C Citigroup Inc. 46.87 0.50 1.08 15,871,608
COF Capital One Financial Corporation 71.75 -0.05 -0.07 2,498,563
FITB Fifth Third Bancorp 20.54 -0.05 -0.24 8,417,062
GS The Goldman Sachs Group Inc. 163.45 0.56 0.34 1,678,107
JPM JP Morgan Chase 66.71 0.35 0.53 11,278,036
KEY KeyCorp 12.24 0.09 0.74 11,451,505
MS Morgan Stanley 31.77 0.42 1.34 7,425,143
PNC PNC Financial Services Group Inc. (The) 89.41 0.86 0.97 3,313,054
RF Regions Financial Corporation 9.83 0.12 1.24 12,901,748
STI SunTrust Banks Inc. 43.59 0.26 0.60 2,495,702
USB U.S. Bancorp 42.81 0.19 0.45 4,482,646
WFC Wells Fargo & Company 45.31 0.22 0.49 28,220,297

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