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U.S. Bancorp Proposes to Boost Quarterly Dividend by 2% to $0.50 Amidst New Stress Capital Buffer Regulations
ByAinvest
Saturday, Jun 29, 2024 7:48 am ET1min read
U.S. Bancorp (NYSE:USB) is set to increase its quarterly dividend by 2% to $0.50, pending approval from its Board of Directors. The move follows an anticipated preliminary stress capital buffer (SCB) of 3.1% from the Federal Reserve for the period starting October 1, 2024. The bank's capital adequacy is deemed sufficient with a planned dividend increase and a CET1 ratio of 10% as of March 31, 2023. The suspension of common stock repurchases remains in effect.
In a move demonstrating confidence in its financial health and resilience, U.S. Bancorp (NYSE: USB) announced plans to increase its quarterly dividend by 2% to $0.50 per share, subject to approval from the Board of Directors (1). This decision comes on the heels of the Federal Reserve's preliminary stress test results, which indicate a projected stress capital buffer (SCB) of 3.1% for U.S. Bancorp starting October 1, 2024 (1).
The SCB, combined with the existing Basel III Common Equity Tier 1 (CET1) capital to risk-weighted assets ratio minimum of 4.5%, requires U.S. Bancorp to maintain a CET1 ratio of at least 7.6% throughout this period (1). The company's strong capital position was underscored by its March 31, 2023, CET1 capital to risk-weighted assets ratio of 10.0% (1).
Despite these positive developments, U.S. Bancorp's common stock repurchases, with the exception of those tied to its stock-based compensation programs, remain suspended (1). The company will assess its share repurchases in light of potential capital requirements, regulatory capital rules, and the overall regulatory landscape.
Andy Cecere, Chairman and CEO of U.S. Bancorp, expressed his confidence in the bank's financial strength, stating, "The results of this year's stress test demonstrate that we are well-capitalized, have a healthy balance sheet, and remain prepared to manage potential industry stress and withstand a severe economic downturn" (1).
Sources:
[1] U.S. Bancorp Releases Dodd-Frank Act Stress Test Results. Business Wire. June 28, 2024. https://www.businesswire.com/news/home/20240628005996/en/
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