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.