U.S. Bancorp (NYSE: USB) commented on the results of the Federal
Reserve’s Dodd-Frank Act Stress Test (“DFAST”) conducted in
accordance with the Dodd-Frank Wall Street Reform and Consumer
Protection Act.
Based on its strong 2022 stress test results, the company
expects to be subject to a preliminary stress capital buffer
(“SCB”) of 2.5 percent, unchanged from the current level, for the
period beginning October 1, 2022, and ending on September 30, 2023.
The Federal Reserve has stated that it expects to finalize the SCB
for all firms by August 31, 2022. The SCB, when added to the Basel
III Common Equity Tier 1 (CET1) minimum of 4.5 percent, requires
the company to maintain a CET1 ratio above 7 percent through this
period. The company’s CET1 ratio was 9.8 percent as of March 31,
2022, under transitional regulatory capital requirements related to
the current expected credit losses (CECL) methodology.
Given the strong performance of this year’s stress tests,
additional capital distributions, whether through a potential
common stock dividend increase or resumption of share repurchases
under U.S. Bancorp’s existing share repurchase program, will be
determined after closing of the company’s acquisition of MUFG Union
Bank’s core regional banking franchise. As previously disclosed,
U.S. Bancorp suspended all common stock repurchases at the
beginning of the third quarter of 2021, except for those done
exclusively in connection with its stock-based compensation
programs, due to the pending acquisition. Any additional capital
distributions remain subject to the approval of U.S. Bancorp’s
Board of Directors and compliance with regulatory requirements.
“The results of this year’s stress test demonstrate that we are
well-capitalized and remain prepared to withstand a severe economic
downturn,” said Andy Cecere, Chairman, President and CEO of U.S.
Bancorp. “Our highly diversified business mix, well-established
financial discipline, and conservative risk profile demonstrates
our unwavering commitment to create and deliver value for our
shareholders.”
In addition, the company has published its company-run DFAST
results, which are available on the company’s website at
www.usbank.com under “About Us,” “Investor Relations,” “Financial
information” and “Dodd-Frank Act Stress Test results.”
The company’s DFAST results may differ from those calculated and
published by the Federal Reserve Board largely due to, but not
limited to, differences in models, methodologies, assumptions and
applicable capital and accounting rules.
About U.S. Bank
U.S. Bancorp, with nearly 70,000 employees and $587 billion in
assets as of March 31, 2022, is the parent company of U.S. Bank
National Association. The Minneapolis-based company serves millions
of customers locally, nationally and globally through a diversified
mix of businesses: Consumer and Business Banking; Payment Services;
Corporate & Commercial Banking; and Wealth Management and
Investment Services. The company has been recognized for its
approach to digital innovation, social responsibility, and customer
service, including being named one of the 2022 World’s Most Ethical
Companies and Fortune’s most admired superregional bank. Learn more
at usbank.com/about.
Forward-looking statements
“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995:
This press release contains forward-looking statements about
U.S. Bancorp. Statements that are not historical or current facts,
including statements about beliefs and expectations, are
forward-looking statements and are based on the information
available to, and assumptions and estimates made by, management as
of the date hereof. The forward-looking statements contained in
this press release include anticipated U.S. Bancorp capital
distributions by dividends and share repurchases. There can be no
assurance that U.S. Bancorp will return this or any amount of
capital to its shareholders in the form of dividends or share
repurchases in the future. Forward-looking statements often use
words such as “anticipates,” “targets,” “expects,” “hopes,”
“estimates,” “projects,” “forecasts,” “intends,” “plans,” “goals,”
“believes,” “continue” and other similar expressions or future or
conditional verbs such as “will,” “may,” “might,” “should,” “would”
and “could.”
Forward- looking statements involve inherent risks and
uncertainties, including the following risks and uncertainties and
the risks and uncertainties more fully discussed in the section
entitled “Risk Factors” of Exhibit 13 to U.S. Bancorp’s Annual
Report on Form 10-K for the year ended December 31, 2021, which
could cause actual results to differ materially from those
anticipated. Continued deterioration in general business and
economic conditions or turbulence in domestic or global financial
markets could adversely affect U.S. Bancorp’s revenues and the
values of its assets and liabilities, reduce the availability of
funding to certain financial institutions, lead to a tightening of
credit, and increase stock price volatility. In addition, changes
to statutes, regulations, or regulatory policies or practices could
affect U.S. Bancorp in substantial and unpredictable ways. U.S.
Bancorp’s results could also be adversely affected by changes in
interest rates; the impacts of the COVID-19 pandemic on its
business, financial position, results of operations, liquidity and
prospects; increases in unemployment rates; deterioration in the
credit quality of its loan portfolios or in the value of the
collateral securing those loans; deterioration in the value of its
investment securities; legal and regulatory developments;
litigation; increased competition from both banks and non-banks;
civil unrest; the effects of climate change; changes in customer
behavior and preferences; breaches in data security, including as a
result of work-from-home arrangements; failures to safeguard
personal information; the impacts of international hostilities or
geopolitical events; effects of mergers and acquisitions and
related integration; effects of critical accounting policies and
judgments; and management’s ability to effectively manage credit
risk, market risk, operational risk, compliance risk, strategic
risk, interest rate risk, liquidity risk and reputation risk. In
addition, U.S. Bancorp’s proposed acquisition of MUFG Union Bank
presents risks and uncertainties, including, among others: the risk
that the cost savings, any revenue synergies and other anticipated
benefits of the proposed acquisition may not be realized or may
take longer than anticipated to be realized; the risk that U.S.
Bancorp’s business could be disrupted as a result of the
announcement and pendency of the proposed acquisition and diversion
of management’s attention from ongoing business operations and
opportunities; the possibility that the proposed acquisition,
including the integration of MUFG Union Bank, may be more costly or
difficult to complete than anticipated; delays in closing the
proposed acquisition; and the failure of required governmental
approvals to be obtained or any other closing conditions in the
definitive purchase agreement to be satisfied.
For discussion of these and other risks that may cause actual
results to differ from those described in forward-looking
statements, refer to U.S. Bancorp’s Annual Report on Form 10-K for
the year ended December 31, 2021, on file with the Securities and
Exchange Commission, including the sections entitled “Corporate
Risk Profile” and “Risk Factors” contained in Exhibit 13, and all
subsequent filings with the Securities and Exchange Commission
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934. In addition, factors other than these risks also could
adversely affect U.S. Bancorp’s results, and the reader should not
consider these risks to be a complete set of all potential risks or
uncertainties. Readers are cautioned not to place undue reliance on
any forward-looking statements. Forward-looking statements speak
only as of the date hereof, and U.S. Bancorp undertakes no
obligation to update them in light of new information or future
events.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220627005796/en/
Investors: Jennifer Thompson, U.S. Bancorp Investor Relations
612.303.0778, jen.thompson@usbank.com Media: Jeff Shelman, U.S.
Bancorp Public Affairs and Communications 612.303.9933,
Jeffrey.shelman@usbank.com
US Bancorp (NYSE:USB)
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