Banking Dividends: Fact or Fiction?

Includes: BAC, JPM, PNC, USB, WFC
by: Jim Trippon

PNC Financial & Wells Fargo Dividend Hikes Fact or Fiction? JPMorgan Chase (NYSE: JPM) started a real trend in the banking sector: The trend of dividend hike teasing. The second-largest U.S. bank has been widely believed to be the first of the big banks that slashed their dividends last year to restore at least part of its payout. That will probably happen, but later this year. Bank of America (NYSE: BAC) followed suit with even less visibility on its own dividend increase and US Bancorp (NYSE:USB) basically said it would like to raise its dividend...eventually.

PNC Financial & Wells Fargo Dividend Hikes Fact or Fiction?

Add PNC Financial (NYSE: PNC) and Wells Fargo (NYSE: WFC) to list of banks that talk like they want to raise their dividends, but aren't quite ready to do so. At his company's annual shareholders meeting, PNC CEO James Rohr said he would like to see more “stability” in the economy and more clarity from regulators regarding capital reserves before PNC bolsters its payout, which was cut by 85% during the financial crisis.

Wells Fargo CEO John Stumpf, the highest paid U.S. bank CEO in 2009, said his bank, the fourth-largest in the U.S., may raise its dividend as the economy improves and once it has sufficient capital to appease regulators. He did add that the dividend is a “high priority item” for the board. It sounds like Mr. Rohr and Mr. Stumpf went to the Jamie Dimon School of Public Relations.

Curious is the fact that both PNC and Wells Fargo took billions in TARP funds while they were cutting their dividends and those funds were used to make acquisitions. PNC acquired National City and Wells Fargo acquired Wachovia, which Stumpf said was one of the hardest decisions he has had to make while at the helm of Wells Fargo.

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