Jamie Dimon Sees No Need To Wait For Stress Test Release: Announces Dividend Hike, Stock Buyback
Update: And so they come storming in, as the WSJ reports that Bank of America is the next to frontrun the Fed's public announcement, and announce it passed the stress test. However, unlike JPM it says it has not asked for new buybacks, or dividend increases. No surprise there.
There was a time when banks would at least pretend to pay lip service to the Fed. Those days are gone. Two days before the Fed is scheduled to release stress test results, JP Morgan's Jamie Dimon has decided to show the folks at Liberty 33, but more importantly the world, that it is "good enough" and has proceeded with announcing a $0.05 dividend hike as well as a $15 billion stock buyback (in effect increasing its leverage further by reducing its statutory equity). Since we are now obviously replaying the entire credit crisis, from beginning to end, must as well go all in. Now - who's next? And perhaps just as importantly, who isn't.
From the Press Release:
JPMorgan Chase & Co. (NYSE: JPM - News) today announced the following actions taken by its Board of Directors:
- Declared a quarterly dividend of $0.30 per share on the corporation's common stock, an increase of $0.05 per share. The dividend is payable on April 30, 2012 to stockholders of record at the close of business on April 5, 2012
- Authorized a new $15 billion equity repurchase program, of which up to $12 billion is approved for 2012 and up to an additional $3 billion is approved through the end of the first quarter of 2013
Remarking on the dividend action and repurchase authorization, Jamie Dimon, Chairman and CEO, said, "We are pleased to be in a position to increase our dividend and to establish a new equity repurchase program. We expect to generate significant capital and deploy that capital to the benefit of our shareholders. JPMorgan Chase continues to invest in our substantial organic growth opportunities as our top priority and best use of capital. We expect to repurchase, at a minimum, approximately the same amount of shares that we issue for employee stock-based incentive awards. Beyond this, we intend to repurchase equity only when we are generating capital in excess of what we need to fund our organic growth and when we think it provides excellent value to our existing shareholders."
The Federal Reserve has informed the Firm that it completed its 2012 Comprehensive Capital Analysis and Review (“CCAR”) and that it did not object to the Firm’s proposed capital distributions submitted pursuant to CCAR.
The timing and exact amount of common stock and warrant purchases will be consistent with the Firm’s capital plan and will depend on various factors, including market conditions, the Firm's capital position, internal capital generation, and organic investment opportunities. The new repurchase program does not include specific price targets, may be executed through open market purchases or privately negotiated transactions, including utilizing Rule 10b5-1 programs, and may be suspended at any time. The equity repurchase program replaces the prior $15 billion program that had approximately $6.05 billion of remaining authorization.