01—Abstract
Summary
Summary of the 8-K filed June 28, 2024. Cited figures are marked; the original filing is the authoritative source.
JPMorgan Chase (JPM) furnished an 8-K on June 28, 2024 (Item 8.01, with the press release attached as Exhibit 99) announcing capital return actions tied to its preliminary Stress Capital Buffer (SCB) from the Federal Reserve.
The Board intends to raise the quarterly common dividend to $1.25a per share from $1.15 for the third quarter of 2024, which the Firm describes as its second dividend increase this year. The Board also authorized a new $30 billion common share repurchase program effective July 1, 2024, to be used at management's discretion. The preliminary SCB requirement rises to 3.3% from 2.9%, lifting the Standardized CET1 requirement including buffers to 12.3% from 11.9%.
The Firm cautioned that, given its disclosure on June 26 about potentially higher stress losses, the final requirement could be modestly above 12.3%b if the Federal Reserve modifies its stress results. The Fed will provide the final SCB by August 31, 2024, effective October 1, 2024 through September 30, 2025.
Management stated that capital planning already accounts for SCB variability, so no significant changes to overall capital planning are expected. For investors, the announcement signals higher shareholder distributions alongside a meaningfully higher regulatory capital floor, with the net effect depending on the final SCB and the pace of buybacks.
02—Key points
Key Highlights
- Intended quarterly common dividend increase to $1.25 per share from $1.15 (about 8.7%), for Q3 2024, subject to future Board declaration.
- New $30 billion common share repurchase authorization effective July 1, 2024, executed at management's discretion.
- Preliminary Stress Capital Buffer rises to 3.3% from 2.9%.
- Standardized CET1 requirement including regulatory buffers rises to 12.3% from 11.9%, with a risk that the final figure is modestly higher.
- Final SCB due from the Federal Reserve by August 31, 2024; effective October 1, 2024 through September 30, 2025.
- Management says capital planning already reflects SCB variability, so no significant changes to overall capital planning are expected.
- Exhibit 99 press release is deemed 'filed' under the Exchange Act, and the filing references a June 26, 2024 disclosure on potentially higher stress losses.
03—Questions
Frequently Asked Questions
How much is the dividend increasing and when does it take effect?
The Board intends to raise the quarterly common stock dividend to $1.25 per share from $1.15, for the third quarter of 2024. Dividends remain subject to Board approval when they are customarily declared, so the increase is not yet final.
What is the new share buyback program?
JPMorgan authorized a new $30 billion common share repurchase program effective July 1, 2024. Management will decide how and when to use it, and the actual timing and amount of repurchases will depend on various considerations.
Why is the capital requirement going up?
The Federal Reserve's preliminary Stress Capital Buffer increased to 3.3% from 2.9%, which lifts the Standardized CET1 requirement including buffers to 12.3% from 11.9%. The Firm also noted that the Fed could modify its stress results, which would likely push the requirement modestly above 12.3%.
Will these changes affect JPMorgan's overall capital planning?
Management says no significant changes are anticipated, because its capital planning already accounts for SCB variability and regulatory uncertainty. The Firm also says it holds substantial excess capital and runs hundreds of stress tests weekly beyond the single annual CCAR test.
When will the final stress capital buffer be known?
The Federal Reserve will provide the final SCB requirement by August 31, 2024. It will take effect on October 1, 2024 and remain in force until September 30, 2025.
04—Continue