Our shareholders deserved to be rewarded for the support, confidence and patience they have shown over the last few years as the banking industry has confronted an uncertain economy, said Richard K. Davis, chairman, president and CEO.
The announcement comes on the heels of the Feds approval of the banks comprehensive capital plan.
Banks can increase dividends if they pass stress tests showing that they can weather another recession.
The Fed said it had completed those tests and expects that some firms will increase or resume dividend payments, buy back shares or repay government capital.
U.S. Bancorp also said today that its board had authorized the repurchase of up to 50 million shares of the banks common stock. Stock repurchase plans tend to underpin or boost stock prices.
All of the 19 largest banks overseen by the Fed were subject to the stress examinations. Those banks include Citigroup, Regions Financial Corp., Bank of America, JPMorgan Chase & Co. and Wells Fargo among others.
During the financial crisis banks slashed dividends to build capital cushions to absorb losses. Regulators barred banks from boosting dividends without obtaining approval.
By increasing payments, banks may be able to attract new investors. JPMorgan Chase is among other banks interested in boosting dividend payments.
A green light from the Fed on bigger dividend payments also would signal that banks are in better financial shape overall.
Federal regulators have been working closely with banks to strengthen operations and get lending flowing more normally again after the worst financial crisis in the United States since the 1930s.
The Fed said today that the 19 banks had increased common equity by more than $300 billion from the end of 2008 to the end of 2010. Overall, both the banks amount and mix of capital have improved since the financial crisis, the Fed concluded.
Under the stress tests, banks had to show that they could weather another recession. That was defined as a scenario in which U.S. economic activity would shrink 1.5 percent this year and unemployment would spike to 11 percent.
The U.S, unemployment rate is just below 9 percent at the moment.
The Fed did not publicly release the results of its latest round of stress tests. It is keeping the information confidential, which is standard practice in bank exams.
The Associated Press contributed to this story.Comments | Share your thoughts »Related StoriesMore Business News headlinesJapan disaster batters U.S. airlinesDollar General reports record profits in 2010Delta to cut Memphis departures by 25 percentHewlett-Packard CEO has vision for company's futureFCC Commissioner Robert McDowell in Nashville next weekSelected for you by a sponsor:ADVERTISEMENT
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