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After hours movers in the banks: JPM -2.5% and GS -2.1% after the two had their capital...

  • Thursday, March 14, 5:14 PM ET
    After hours movers in the banks: JPM -2.5% and GS -2.1% after the two had their capital proposals approved but were asked to submit new plans "to address weakness in their capital planning processes." WFC +0.4%, BAC +3.8% after no dividend hike, but a whopping $10.5B in share repurchases and redemption of high-yielding preferreds. Morgan Stanley +0.9%. The XLF +0.1%.
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This news story has 18 comments:

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    Awesome news for BAC, shows that the banks balance sheet is healthy, and that the Fed doesnt think BAC is going to get caught by any of these big lawsuits. I bet there are editors at the NY Times freaking out about how awful this is right now!!!
    14 Mar, 05:19 PM Reply Like
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    Any move away from Socialism drives the NY Times crazy.
    15 Mar, 10:52 AM Reply Like
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    Yippee!! Finally, old man BAC is getting off its butt and moving again. Time for some real action. I expect $14 tomorrow if buybacks are aggressive, so now's the time to pick up some more if you can.
    14 Mar, 06:42 PM Reply Like
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    Good news for BAC longs....now how can the media make this a bad management decision by the bank? They'll figure a way somehow.
    14 Mar, 07:06 PM Reply Like
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    why is TD dipping among the Canadian banks?
    14 Mar, 09:17 PM Reply Like
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    BAC's book value is about $20. Apart from a zillion branches in every nook and corner of the country, it owns the very prestigious Merrill Lynch. With the stock market movements and expansion in money management business, ML should add to the bottom line. After settling all the housing mortgage issues, now Countrywide is ready to enhance the bottom line too. Bac is to buyback in a huge way and will regularly increase dividends. In two years, the stock should be about $25. Back up your truck and fill her up.
    14 Mar, 10:19 PM Reply Like
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    Glad I got into BAC when it dipped down below $12 earlier this week, made a nice tidy 10% return in a few days! :)
    15 Mar, 05:34 AM Reply Like
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    jleo...keep your positions and resist any temptation to take profits, as it'll clear $13 easily. $15 will face strong resistance, as profit-taking will be strong, so you can wait until after $14 to take profits if you wish. I'm holding out until $14.50 at least, which should take a few weeks if not earlier.
    15 Mar, 03:15 PM Reply Like
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    Although I am happy that the fed allowed such a large repurchase of shares I was hoping that it would be divided between repurchase and dividend. Then the dividend could be increase each year as the amount of repurchase declined. Maybe this is just a 12 month delay in a this strategy.
    15 Mar, 06:51 AM Reply Like
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    With shares below book value, buybacks are a much, much more effective use of capital. I think the market would have reacted less favorably to a dividend bump.
    15 Mar, 08:24 AM Reply Like
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    Personally:

    If they increased the dividend I would have just reinvested it anyway to increase my ownership of the company. I'm happy to let the company do the same thing for me by repurchasing and retiring shares, which reduces the total share count and also increases my ownership.

    ~Colin
    15 Mar, 09:32 AM Reply Like
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    Dividend would be nice...but right now the stock is dirt cheap. Buybacks will give the best bang for the buck in these companies right now. Dividends will come.
    15 Mar, 10:54 AM Reply Like
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    Buybacks are not a good sign. They do put a floor under the price but it also enables the larger shareholders to get out without collapsing the price.
    15 Mar, 11:35 AM Reply Like
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    Buybacks are a fantastic sign with the stock below book value. It increases the book value per share of all the remaining shares outstanding, and raises the potential future dividends per share. Any company trading below book that is paying a meaningful dividend and not buyback shares needs to re-evaluate how they are spending shareholders capital.
    15 Mar, 12:05 PM Reply Like
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    Mike : There are plenty of studies that invalidate the myth that buybacks are somehow going to increase stock prices. Believe what you wish but perhaps do some research using Google before buying into a company that has a buyback plan. I have done well by avoiding those that do.
    15 Mar, 01:19 PM Reply Like
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    Buying back stock when the stock trades below book value per share increases the book value per share of the remaining shares. That's a mathematical fact. The merit of a buyback of course has to take into account the price of a stock, and where it trades relative to book value. Financial companies buying back large blocks of stock trading at 2x book is clearly a worse move than the same company buying back stock trading at 0.75x book.

    Believe what you wish, but stock buybacks by financial companies whose shares are below book value are accreative to book, which is good for the remaining shareholders. Thats why the mREITs buy back stock if its below book, and issue new shares when its above book, that's why ACAS is buying back stock rather than paying a dividend, and that's why Warren Buffet has a buyback that only buys Berkshire shares when they trade at a discount to book.
    15 Mar, 02:42 PM Reply Like
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    Eagle's spot on, back up the truck at your peril ...
    15 Mar, 03:35 PM Reply Like
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    Yeah, after $11 trillion, banks are solvent again! good for us we get to be ripped off some more...
    15 Mar, 05:17 PM Reply Like
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