Stress test passed, PNC raises dividend by 10 percent
As telegraphed by PNC Financial Services Group in mid-March, the bank's board of directors increased its quarterly common stock dividend on Thursday — a result of the bank passing government stress tests.
PNC is raising the dividend to 44 cents a share, up 4 cents per share, or 10 percent, from 40 cents. The new dividend will be paid on May 6 to shareholders as of April 16.
The bank said three weeks ago it might raise its dividend rate when PNC received approval from the Federal Reserve to return more capital to shareholders.
The central bank put PNC and 17 other major U.S. banks through stress tests — the second round since the financial crisis of 2008-09 — to determine how well the biggest banks would survive another deep recession. The scenario included such economic stresses as a 12.1 percent unemployment rate and a 50 percent drop in stock prices.
PNC was paying a 66-cent-a-share quarterly dividend before the crisis, but slashed the rate to 10 cents in April 2009 in order to conserve capital. It remained there until April 2011, when it was bumped back up to 35 cents.
“Today's board actions significantly increase our shareholder return,” said CEO James Rohr. “Our strong capital levels and our financial performance demonstrate PNC's ability to support our clients, invest in our businesses and deliver long-term shareholder value.”
Bank of New York Mellon Corp., which also passed the Fed's stress test, likewise said weeks ago its board might raise the bank's quarterly dividend rate, which stands at 13 cents a share. Meanwhile, the bank will start buying back up to $1.35 billion of common stock by first-quarter 2014.
Thomas Olson is a staff writer for Trib Total Media; 412-320-7854 or email@example.com.