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

Michael Teague  |

The 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) 133.19 -0.68 -0.51 2,392,438 Trade
KEY KeyCorp 16.79 -0.38 -2.21 19,536,454 Trade
C Citigroup Inc. 69.67 -0.68 -0.97 13,513,780 Trade
FITB Fifth Third Bancorp 27.50 -0.21 -0.76 7,824,873 Trade
MS Morgan Stanley 47.55 -0.71 -1.47 19,906,525 Trade
AXP American Express Company 113.67 1.91 1.71 6,186,823 Trade
AGO.P.B Assured Guaranty Ltd. 26.84 0.07 0.24 2,758 Trade
GS Goldman Sachs Group Inc. (The) 205.91 -1.99 -0.96 2,874,292 Trade
BBT BB&T Corporation 49.35 -0.49 -0.98 6,678,957 Trade
BAC Bank of America Corporation 30.03 0.00 0.00 61,796,624 Trade
COF Capital One Financial Corporation 88.11 0.19 0.22 1,413,898 Trade
USB U.S. Bancorp 51.21 0.54 1.07 8,816,250 Trade
BK Bank of New York Mellon Corporation (The) 48.41 0.06 0.12 8,317,332 Trade
RF Regions Financial Corporation 15.25 -0.51 -3.24 24,412,296 Trade
WFC Wells Fargo & Company 47.58 0.03 0.06 22,416,772 Trade
STI SunTrust Banks Inc. 63.49 -0.28 -0.44 4,269,173 Trade
JPM JP Morgan Chase & Co. 113.46 -0.84 -0.73 12,501,949 Trade

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