JPMorgan's Dimon Likes Buybacks, Just Not Now
NEW YORK (TheStreet) -- JPMorgan Chase(JPM) may not end up buying back too much stock this year, if the current strength in the stock persists.
In his annual letter to shareholders, CEO Jamie Dimon said the bank's appetite for buying back stock at current levels of around $45 is "not as great", as shares now trade well above tangible book value per share.
"If you like our businesses, buying back stock at tangible book value is a very good deal. So you can assume that we are a buyer in size around tangible book value," Dimon wrote. "Unfortunately, we were restricted from buying back more stock when it was cheap - below tangible book value - and we did not get permission to buy back stock until it was selling at $45 a share."
JPMorgan's tangible book value in 2011 was $33.69, according Dimon's letter.
The CEO said the bank will continue to buy back the amount of stock they issue to employees as compensation as a "good discipline" practice.
"As for the excess capital, we will either find good investments to make or simply use it to more quickly achieve our new Basel III targets. Rest assured, the Board will continuously reevaluate our capital plans and make changes as appropriate but will authorize a buyback of stock only when we think it is a great deal for you, our shareholders," he wrote.
JPMorgan spent nearly $9 billion in buy backs in 2011, but the strategy largely backfired as the bank bought back stock at higher prices. Dimon ended up apologizing for the poor timing of the buybacks later last year.
--Written by Shanthi Bharatwaj in New York
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