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Today the Federal Reserve disclosed the results of the 2014 Comprehensive Capital Analysis and Review (“CCAR”). After a review of the Company’s CCAR results, the Federal Reserve did not object to the Company’s plan to increase its capital distributions over the next four fiscal quarters. The Federal Reserve’s CCAR disclosure included its estimate of U.S. Bancorp’s minimum capital ratios for the period from the fourth quarter of 2013 through the fourth quarter of 2015 under the Supervisory Severely Adverse Scenario and the Supervisory Adverse Scenario, including the dividends and buybacks proposed by the Company under the more likely base case scenario.
As a result of the Federal Reserve’s non-objection to U.S. Bancorp’s plan to increase its dividend rate, the Company will recommend in June that its board of directors approve an increase to the annual dividend rate beginning with the second quarter dividend payable in July 2014. The Company expects to recommend a second quarter dividend of $0.245 per common share, a 6.5 percent increase over the current dividend rate. At this quarterly dividend rate, the annual dividend will be equivalent to $0.98 per common share.
Additionally, the board of directors of U.S. Bancorp has approved a one-year authorization to repurchase up to $2.3 billion of its outstanding stock, beginning on April 1, 2014, to replace the current authorization, which expires on March 31, 2014. U.S. Bancorp’s common stock may be repurchased through March 2015 in the open market or in privately negotiated transactions. The acquired common shares will be held as treasury shares and may be reissued for various corporate purposes.
“We are very pleased to receive the Federal Reserve’s non-objection to our plan to increase our dividends and authorize a new share repurchase program,” said Richard K. Davis, chairman, president, and chief executive officer of U.S. Bancorp. “The Company’s CCAR results demonstrate our ability to generate capital, even under extraordinarily adverse economic conditions. Our goal is to return 60 to 80 percent of our earnings each year to shareholders through dividends and share buybacks, and our planned capital actions will allow us to, once again, achieve that goal in 2014.”