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
PNC PNC Financial Services Group Inc. (The) 111.08 -1.52 -1.35 2,449,353
KEY KeyCorp 17.90 0.04 0.22 17,003,701
C Citigroup Inc. 56.02 -1.25 -2.18 25,110,311
FITB Fifth Third Bancorp 25.89 -0.55 -2.08 8,486,962
MS Morgan Stanley 41.83 -0.33 -0.78 11,288,363
JPM JP Morgan Chase 81.60 -0.19 -0.23 16,931,504
AXP American Express Company 71.86 -0.67 -0.92 2,959,077
AGO.P.B Assured Guaranty Ltd. 25.50 -0.16 -0.63 3,210
GS The Goldman Sachs Group Inc. 223.36 -3.27 -1.44 5,297,420
BBT BB&T Corporation 45.21 -0.63 -1.37 4,718,970
BAC Bank of America Corporation 21.23 -0.27 -1.26 128,468,708
COF Capital One Financial Corporation 86.00 -0.61 -0.70 5,086,842
USB U.S. Bancorp 50.00 -0.39 -0.77 5,864,800
BK Bank of New York Mellon Corporation (The) 47.65 -0.95 -1.95 4,578,940
RF Regions Financial Corporation 13.74 -0.10 -0.72 22,137,737
WFC Wells Fargo & Company 53.58 -0.76 -1.40 21,894,686
STI SunTrust Banks Inc. 52.04 -0.67 -1.27 3,788,783

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