Most big banks pass Fed's stress tests

Updated: 6:50 p.m. ET

Banks announced dividend increases and stock buybacks late today as the Federal Reserve released the results of stress tests designed to see if they have enough capital resources to withstand a major financial crisis.

Fifteen of 19 institutions that the Fed looked at passed its capital requirements. The expectation that the results would show a relatively healthy financial industry provided an extra push to an already-robust stock market rally today. The Dow Jones industrials ($INDU) finished up 218 points to 13,178. 

JPMorgan Chase (JPM) jumped the gun in announcing a 20% dividend increase and a $15 billion share repurchase plan. Shares finished up $2.85 to $43.39 but slipped 39 cents to $43 after hours.

The banking giant's announcement was followed by announcements from US Bancorp (USB), Wells Fargo (WFC) and American Express (AXP).

Wells Fargo now has a 22-cent dividend, up 10 cents from January's 12 cents. US Bancorp raised its annual dividend to 78 cents from 50 cents and will buy back up to 100 million shares.

Wells Fargo was up 17 cents, or 0.5%, to $33.50 after hours. The shares had climbed $1.82 to $33.33. US Bancorp was off 2 cents after hours to $30.99. The shares had risen $1.33 to $31.01 in regular trading. American Express rose 30 cents to $54.55 after hours. The stock had jumped $1.48 to $54.25 in regular trading.

Three banks missed the minimum 5% capital ratio -- Citigroup (C), SunTrust (STI) and Ally Financial, the privately held successor to General Motors Acceptance.

Citigroup had been expected to pass the test and start boosting its dividend, now at a penny a share. It is believed that a huge exposure to mortgages weighed on its test results.

Shares were off $1.18 to $35.28 after rising $2.16 to $36.45. Citigroup released a statement saying it would submit a revised capital plan later this year.

MetLife (MET) missed another measure of capital -- and wasn't happy about it. The insurance giant insisted that the criteria -- it used the phrase "bank-centric" -- were not applicable to insurance companies. MetLife insisted an insurance company is not a bank.

JPMorgan's decision to release its plan for a dividend increase and share buyback was widely seen as CEO Jamie Dimon's thumbing his nose at Fed Chairman Ben Bernanke. Dimon has disagreed loudly with efforts to regulate banks more closely in the wake of the 2008 financial crash.

The stress test asked, in the most extreme case, what would happen to a financial institution's financial condition if there is a severe recession that sends unemployment to 13%, cuts stock prices by 50% and pushes home prices down 21%.

Here is how the stress-test results affected the 19 institutions.

Ally Financial: Supports the Fed's stress tests but has differences with how the Fed looks at the company's mortgage risks, its efforts at cleaning up past problems and contingent capital that already exists. Will submit a new dividend a buyback plan.

American Express: Will spend $4 billion on share repurchases in 2012 and an additional $5 billion in the first quarter of 2013.

Bank of America (BAC): Passed the stress tests but did not ask to boost its dividend or buy back shares.

Bank of New York Mellon (BNY): A $1.16 billion share buyback and continuation of its dividend, now at 13 cents a quarter.

BB&T Corp. (BBT): Boosted its dividend to 20 cents a share from 16 cents. Will redeem $3.2 billion of preferred shares.

Capital One Financial (COF): Passed test. Did not ask to boost its dividend or buy shares.

Citigroup: Will submit a new capital plan this year.

Fifth Third Bancorp: Passed stress test. No comment on plans.

Goldman Sachs (GS): Expects to buy back shares and boost its dividend. The dividend is now 35 cents a quarter.

JPMorgan Chase: Boosted its quarterly dividend 5 cents to 30 cents a share. Will buy in $15 billion in common shares.

Keycorp (KEY): Will buy back $344 million in shares and may boost its dividend.

MetLife: Disappointed that it missed meeting a capital threshold but also disagrees with the Fed's analysis. Wants to buy back $2 billion in stock and raise its quarterly dividend to 27.5 cents a share. The dividend is now 18.5 cents.

Morgan Stanley (MS): Will buy an additional 14% of Morgan Stanley Smith Barney and will continue its current common and preferred dividends.

PNC Financial Services (PNC): Expects to boost its common dividend in the second quarter and may start a "modest" share repurchase plan.

 
Regions Financial (RF): Will sell $900 million of common stock to help finance buying back $3.5 billion in preferred shares sold to the government in 2008 during the worst of the financial crisis.

State Street (STT). Passed tests. Will announce plans Wednesday.

SunTrust Banks (STI). Failed test. No comment.

US Bancorp: Boosted its quarterly dividend to 19.5 cents a quarter from 12.5 cents. Will buy back up 100 million common shares.

Wells Fargo: Boosted its dividend to 22 cents from 12 cents. May buy in shares.