SunTrust Banks, Inc
) announced that its capital deployment plan, submitted under
Comprehensive Capital Analysis and Review (CCAR), has been
approved by the Federal Reserve. Consequently, the company is
expected to announce a dividend increase and has already
authorized a new share repurchase program.
SunTrust authorized to repurchase $200 million shares. The
repurchase will be completed between the second quarter of 2013
and the first quarter of 2014.
Further, SunTrust is contemplating a 100% hike in its quarterly
dividend to 10 cents per share. It is expected to announce a
dividend increase and payment of preferred dividend in Apr 2013.
These initiatives will help SunTrust gain investors' confidence.
In 2012, SunTrust failed to clear the stress test. As a result,
the company did not enhance shareholder value and maintained its
quarterly common stock dividend at 5 cents per share.
Moreover, in Jan 2011, SunTrust got authorization from the Fed to
raise capital to repay TARP money of $4.85 billion, which it
repaid in Mar, 2011. Alongside, SunTrust received authorization
to hike its dividend by 400% from 1 cent per share.
In Jan 2013, along with SunTrust, 18 other banks submitted
capital plans to the Federal Reserve for the stress test. Of the
18, the Federal Bank approved capital plans of 16 banks. Though
) passed the stress test, its capital plan was not approved by
the Federal Reserve and therefore it was barred from paying
dividends or buying back shares.
However, after the approval of capital plan,
Wells Fargo & Company
Bank of America Corporation
) announced their capital deployment activities. Wells Fargo
plans to increase its dividend by 20% to 30 cents per share.
Further, it plans to increase its share repurchase in 2013.
Moreover, BofA plans to repurchase stock worth $5 billion in
2014. Further, it will purchase $5.5 billion worth of preferred
shares. However, it has no plans to increase its dividend
SunTrust currently retains a Zacks Rank # 3 (Hold).
BANK OF AMER CP (BAC): Free Stock Analysis
BB&T CORP (BBT): Free Stock Analysis
SUNTRUST BKS (STI): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
To read this article on Zacks.com click here.