8-KOther EventsExhibits & Filings

US BANCORP \DE\ 8-K Report, Corporate Update (Jun 30, 2020)

Filed June 30, 2020For Securities:USBUSB-PHUSB-PPUSB-PRUSB-PQUSB-PSUSB-PA

Summary

U.S. Bancorp (USB) has announced its preliminary 2020 Stress Capital Buffer (SCB) from the Federal Reserve System (FRB). The preliminary SCB is set at 2.5% for the period from October 1, 2020, to September 30, 2021. This SCB level is a key component in determining a bank's capital requirements, directly impacting how much capital the bank must hold relative to its risk-weighted assets. The announcement follows the completion of the 2020 Dodd-Frank Act stress tests and Comprehensive Capital Analysis and Review (CCAR), which assess the resilience of large banks to severe economic downturns. In conjunction with the SCB announcement, U.S. Bancorp also indicated that management expects to recommend maintaining its current quarterly common dividend of $0.42 per share. However, as part of broader regulatory actions to ensure capital preservation across large banks in light of the COVID-19 pandemic's economic impact, the FRB will require the suspension of share repurchase programs. The company will continue to monitor economic conditions and adjust capital distributions as necessary and in line with regulatory guidance.

Key Highlights

  • 1U.S. Bancorp received its preliminary 2020 Stress Capital Buffer (SCB) of 2.5% from the Federal Reserve.
  • 2The preliminary SCB will be in effect from October 1, 2020, to September 30, 2021.
  • 3Management intends to recommend maintaining the current quarterly common dividend of $0.42 per share.
  • 4The Federal Reserve is requiring all large banks, including U.S. Bancorp, to suspend their share repurchase programs.
  • 5The company will continue to monitor economic conditions and adjust capital distributions accordingly.
  • 6These actions are a response to the 2020 Dodd-Frank Act stress tests and CCAR, and the economic impact of COVID-19.

Frequently Asked Questions

The Stress Capital Buffer (SCB) is a requirement set by the Federal Reserve that determines a bank's minimum capital levels based on the results of stress tests. It adds an additional buffer of capital on top of standard regulatory requirements to ensure banks can withstand severe economic shocks.

A preliminary SCB of 2.5% means that U.S. Bancorp will need to maintain a certain level of capital as a buffer against potential losses during a severe economic downturn, specifically during the period from October 1, 2020, to September 30, 2021. This is a component of their overall capital adequacy requirements.

Management expects to recommend maintaining the current quarterly common dividend of $0.42 per share. However, the company will monitor economic conditions and regulatory requirements, and may adjust capital distributions if circumstances warrant.

Share repurchases are being suspended at the direction of the Federal Reserve to ensure that large banks preserve capital during the economic uncertainty caused by the COVID-19 pandemic. This measure aims to bolster the resilience of the financial system.