U.S. Bancorp Releases 2022 Dodd-Frank Act Stress Test Results; Receives Preliminary Stress Capital Buffer of 2.5 percent

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.