The Federal Reserve Weighs In: Which Banks Can Pay Bigger Dividends? – Wells Fargo & Co. (WFC), Citigroup Inc. (C)

This time last week, bank investors were reveling in the results of the Dodd-Frank stress tests, which showed that most major U.S. banks have solid, recession-resistant balance sheets. This week, the Federal Reserve took the stress testing process to the next level and evaluated which banks can proceed with their capital plans.

While the specifics of the individual banks’ capital plans can vary considerably, what most investors are focused on is the banks’ requests to pay higher dividends and launch share buyback plans.

Citigroup Inc. (NYSE:C) ruined much of the suspense last week when it pre-emptively announced that it wouldn’t be seeking a higher dividend, but would ask for a small-ish share buyback authorization. There wasn’t much suspense around Ally Financial, either. The former GMAC was hopping mad after the Fed flunked it during the Dodd-Frank round of tests.

For most banks though, yesterday was the day to find out — in most cases — exactly what kind of capital distributions they could hope for in the year ahead. For Bank of America Corp. (NYSE:BAC) shareholders, the answer was up to $5 billion in share buybacks. For Wells Fargo & Co. (NYSE:WFC), it’s a potential 20% dividend bump and more share buybacks. And while the news was good for most banks, the answer for BB&T Corporation (NYSE:BBT) was a thumbs-down from the Fed as it rejected the bank’s capital plan.

To help you get the inside view on how each company fared, we’ve put together a comprehensive run-down on each company (aside from Ally) that participated in the tests. Click the links below to find out which banks passed and what their shareholders can look forward to in 2013.

The Big Four Regional Banks Others
Bank of America BB&T American Express
Citigroup Fifth Third Bank of New York Mellon
JPMorgan Chase KeyCorp Capital One
Wells Fargo PNC Financial Goldman Sachs
Regions Financial Morgan Stanley
SunTrust State Street
U.S. Bancorp

The article The Federal Reserve Weighs In: Which Banks Can Pay Bigger Dividends? originally appeared on

Matt Koppenheffer owns shares of Bank of America and Morgan Stanley. The Motley Fool recommends Goldman Sachs and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, Fifth Third Bancorp, JPMorgan Chase, KeyCorp, PNC Financial Services, and Wells Fargo.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.