Many large regional banks didn’t have to have their capital plans reviewed by the Federal Reserve Board this year—the Fed exempted most of them.
Instead, the board focused on 18 behemoth U.S. banks, including Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), and Morgan Stanley (MS).
But after the Fed gave the big banks the thumbs-up on June 27 on their plans to repurchase shares and pay dividendsin the next 12 months as part of its Comprehensive Capital Analysis and Review process, some of the regional banks joined the party as well.
These smaller banks, which each have assets totaling under $250 billion, will be included in the capital-planning reviews every other year starting in 2020.
One of those banks, Huntington Bancshares (HBAN), announced on June 27 that it expects to boost its quarterly dividend by a penny, or 7%, to 15 cents a share in the third quarter. All of these proposed capital-return moves require the approval of each bank’s board.
Huntington, based in Columbus, Ohio, and sporting a recent yield of 4%, also said it has proposed buying back $513 million of its common stock over the next four quarters.
Discover Financial Services ’ (DFS) capital plan includes a quarterly dividend of 44 cents a share, up 10% from 40 cents. It also plans to repurchase up to $1.63 billion of its shares, or about 6% of its market value. The stock recently yielded 2%.
Other banks were more a little more circumspect in their announcements.
Citizens Financial Group (CFG) is targeting a medium-term payout ratio of 35%-40%, CEO Bruce Van Saun said in a release. The bank, based in Providence, R.I., has been authorized to buy back up to $1.275 billion of its stock, about 8% of its market value, over the next year.
Last year the company’s payout ratio—the percentage of earnings paid out in dividends—was about 28%. The stock was recently yielding 3.6%.
Similarly, Regions Financial (RF), based in Birmingham, Ala., is targeting a payout ratio of 35-45%. Last year it was about 34%. The stock was recently yielding 3.7%. The company’s board has authorized the bank to buy back up to $1.37 billion of its stock, about 9% of its recent market value, over the next 12 months.
Fifth Third Bancorp (FITB) said its “current projections include the ability to distribute approximately $2 billion in capital through common share repurchases and increased common dividends.” The stock yields 3.4%.
M&T Bank (MTB) said its capital plan includes about $1.9 billion of net capital distributions—but it doesn’t specify the amounts it intends to return via dividends and buybacks. Its board “may consider an increase in the common stock dividend” in the next 12 months, according to a release. The stock yields 2.4%.
Meanwhile, BB&T (BBT), which plans to merge with SunTrust Banks (STI), said in April that it expects to ask its board to raise the quarterly dividend to 45 cents a share, up from 40.5 cents, for an 11% increase. When it announced the proposed merger with SunTrust in February, BB&T suspended share buybacks until after the tie-up was completed “and management evaluates its capital position,” according to a BB&T spokesman.
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