Wells Fargo & Co., the biggest U.S. home lender, increased its stock-buyback program by 200 million shares, valued at about $6.9 billion based on yesterday’s closing price.
The authorization was disclosed in a statement today by the San Francisco-based bank, which has about 5.3 billion shares outstanding. Wells Fargo fell as much as 2.5 percent today and then erased some of the loss after the announcement, ending at $33.87 at the close of regular trading in New York.
Fifteen straight quarters of profit helped make Wells Fargo the most valuable U.S. bank by market capitalization and is allowing Chief Executive Officer John Stumpf, 59, to boost shareholder payouts this year as firms including Citigroup Inc. and Bank of America Corp. refrain from increases. Wells Fargo’s results have been buoyed by higher fees in U.S. mortgages, where the bank accounted for 1 in 3 home loans at midyear.
JPMorgan Chase & Co., the largest U.S. bank by assets, has said it hopes to resume stock repurchases in the first quarter. It suspended buybacks in May after disclosing mounting losses on credit derivatives that have cost the bank $6.25 billion through this year’s first nine months. The New York-based bank’s 30-cent quarterly dividend wasn’t affected.
Wells Fargo also declared its regular 22-cent quarterly dividend, unchanged from the previous period. Investors who own stock on Nov. 9 will be paid on Dec. 1. Berkshire Hathaway Inc., controlled by billionaire Warren Buffett, is the bank’s biggest shareholder.
The largest U.S. banks must receive approval from the Federal Reserve each year to distribute capital to shareholders through buybacks and dividends. The Fed didn’t object to Wells Fargo’s 2012 capital plan, which included a dividend increase and “a higher level of common-share repurchase activity in 2012 versus 2011,” the bank said in a March 13 statement. The statement didn’t specify how many shares may be repurchased.
Wells Fargo repurchased $2.6 billion of common shares through the first nine months of the year, according to a statement.