JPMorgan Chase & Co. (JPM) Will This Bank’s Reputation Take Another Hit?

The results set to be released tomorrow are based on how the institution would fare under the adverse scenario based on its current capital deployment plan. While investors will surely use these stress tests results as a proxy for a relatively consistent snapshot-comparison across banks, forward-looking shareholders will undoubtedly be placing a greater emphasis on the Fed’s release of the Comprehensive Capital Analysis and Review (CCAR) results next Thursday, the 14th. Banks’ submissions for the CCAR incorporated planned strategies to return capital to shareholders. As a forward-looking mechanism, the market responds to future strategy changes. Following Dimon’s declaration of increases in dividend payouts and share repurchases in March 2012, shares of JPMorgan Chase & Co. (NYSE:JPM) climbed higher.

Comparing the two above graphs, the market has shown the tendency to value the bank in line with its capital strength. When capital ratios have weakened, share price has followed suit.

Back and ready for more
Although events in 2012 undoubtedly damaged the reputation of both Dimon and his management team, they have attacked the situation proactively and realigned the bank to continue marching toward higher capital ratios in preparation for tomorrow results, and more importantly, next Thursday’s CCAR results. After his compensation and ego took a hit, Jamie Dimon is surely eager to show the investment community that his bank is ready to return more capital to shareholders, and that he is still the most competent CEO on Wall Street.

The article Will This Bank’s Reputation Take Another Hit? originally appeared on Fool.com and is written by David Hanson.

David Hanson has no position in any stocks mentioned. The Motley Fool owns shares of Bank of America, Citigroup, and JPMorgan Chase.

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