The Federal Reserve announced the results of its Comprehensive Capital Analysis and Review, or Stress Test, on Wednesday. Thirty-four bank holding companies took part in the stress test, which is now in its 7th year.
The Stress test operates in two parts: the quantitative, and the qualitative, according to an official statement by the Fed.
“When considering a firm's capital plan, the Federal Reserve considers both quantitative and qualitative factors. Quantitative factors include a firm's projected capital ratios under a hypothetical scenario of severe economic and financial market stress. Qualitative factors include the strength of the firm's capital planning process, which incorporate risk management, internal controls, and governance practices that support the process.”
Out of the 34 banks, 13 were subject to both the quantitative and the qualitative portion of the test, while the remaining 21 were rated only on quantitative factors. Out of the total test group, the Fed did not object to a single banks’ capital plan. One bank, however—Capital One Financial Corporation—will be required to resubmit its capital plan by the end of 2017, although they were still given a pass.
The Fed found that U.S. firms’ common equity capital ratio has more than double, rising to 12.5 percent at the end of Q1 2017 from 5.5 percent in Q1 2009, a total increase of $750 billion to $1.25 trillion.
As a result, most major banks, including Wells Fargo, Bank of America, SunTrust Banks, JPMorgan, American Express, and Discover Financial Services are raising their dividends. CitiBank doubled its dividends. After hours trading barely slowed down once the market closed—Fifth Third Bancorp showed a 3.10 percent increase, while SunTrust boasted a 2.51 percent increase and Discover’s percent change was at 2.38 percent.
Read below to find a complete list of the banks that participated in the stress test:
Ally Financial, Inc.; American Express Company; BancWest Corporation; Bank of America Corporation; The Bank of New York Mellon Corporation; BB&T Corporation; BBVA Compass Bancshares, Inc.; BMO Financial Corp.; Capital One Financial Corporation; CIT Group Inc.; Citigroup, Inc.; Citizens Financial Group; Comerica Incorporated; Deutsche Bank Trust Corporation; Discover Financial Services; Fifth Third Bancorp; Goldman Sachs Group, Inc.; HSBC North America Holdings, Inc.; Huntington Bancshares, Inc.; JP Morgan Chase & Co.; Keycorp; M&T Bank Corporation; Morgan Stanley; MUFG Americas Holdings Corporation; Northern Trust Corp.; The PNC Financial Services Group, Inc.; Regions Financial Corporation; Santander Holdings USA, Inc.; State Street Corporation; SunTrust Banks, Inc.; TD Group US Holdings LLC; U.S. Bancorp; Wells Fargo & Company; and Zions Bancorporation.