Ten banks repay $68 billion in bailout funds to exit TARP
JPMorgan Chase (JPM), Goldman Sachs (GS), Morgan Stanley (MS), U.S. Bancorp (USB), BB&T (BBT), American Express (AXP), Capital One Financial (COF), Bank of New York Mellon (BK), State Street (STT) and Northern Trust (NT) said they'd bought back the preferred shares they sold under Treasury's Troubled Asset Relief Program, or TARP.
Eight of the banks cleared the regulators' stress tests of bank balance sheets last month, while Morgan Stanley was determined to need $1.8 billion in additional capital and Northern Trust wasn't subject to the tests.
In addition to buying back the preferred shares they'd sold to the government, most of the companies said they notified Treasury that they intended to buy back warrants issued along with them. The warrants give the government the right to buy common shares of the banks. Analysts and finance professors have estimated it could cost $5 billion to repurchase the warrants at fair market value.
Some of the banks provided details on final payments of dividends on the preferred shares. JPMorgan said it would pay $795 million in dividends (along with $25 billion to buy back its preferred shares) and Goldman Sachs (which paid $10 billion for its preferreds) said it would pay $425 million.
Of course, freedom has a price, and those dividend payments will hurt results this quarter. At Goldman, second quarter earnings per share will suffer by 77 cents, the company said.