REUTERS - JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon said on Wednesday that the company is inclined to restrict its stock buybacks when its shares are trading above $45.
At $45, buybacks still increase earnings per share but are only a break even proposition to stockholders in terms of tangible book value, Dimon wrote in an annual letter to shareholders. Above $45, he said, the company is likely to buy back only as much stock as necessary to offset shares issued to pay employees.
JPMorgan shares closed on Wednesday at $44.41, down 2.2 percent.
“Our appetite for buying back stock is not as great (of course) at higher prices,” Dimon wrote. “Currently, above $45 a share, we plan to continue to buy back the amount of stock that we issue every year for employee compensation - we think this is just good discipline.”
Dimon lamented that regulators did not allow the bank to buy back more stock when the shares were cheaper. JPMorgan shares traded below $40 the last five months of 2011.
Last month, JPMorgan received permission to buy back more stock when the Federal Reserve tested the financial strength of major banks to withstand severe economic stress.
Dimon said he does not usually comment on the company’s stock price. He said he made an exception in the letter because the company has bought back a lot of shares “and there are many concerns about investing in bank stocks.”
JPMorgan spent $9 billion buying back its own stock in 2011.
Reporting by David Henry in New York; Editing by Tim Dobbyn