Wells Fargo Issues Statement Regarding the Federal Reserve’s Stress Test Feedback
June 29 2020 - 3:35PM
Business Wire
Wells Fargo & Company (NYSE: WFC) today commented on the
results of the Federal Reserve Board’s (FRB) Dodd-Frank Act stress
test and related Comprehensive Capital Analysis and Review (CCAR),
including the FRB’s instructions regarding capital distributions
through the end of third quarter 2020.
The FRB is requiring the nation’s largest banks, including Wells
Fargo, to update and resubmit their capital plans within 45 days
after the FRB provides updated scenarios. Requiring resubmission
will prohibit each bank from making any capital distribution
(excluding any capital distribution arising from the issuance of a
capital instrument eligible for inclusion in the numerator of a
regulatory capital ratio), unless otherwise approved by the FRB.
Through the end of the third quarter of 2020, the FRB is
authorizing each bank to:
- Make share repurchases relating to issuances of common stock
related to employee stock ownership plans.
- Provided that the bank does not increase the amount of its
common stock dividends, pay common stock dividends that do not
exceed an amount equal to the average of the bank’s net income for
the four preceding calendar quarters, unless otherwise specified by
the FRB.
- Make scheduled payments on additional tier 1 and tier 2 capital
instruments.
Based on these instructions, the company expects its common
stock dividend in third quarter 2020 will be reduced from the
current level of $0.51 per share. The company expects that the
level of the third quarter dividend will be announced when it
releases second quarter financial results on July 14, 2020.
In addition, following the FRB’s final publication of the CCAR
results, the company expects its stress capital buffer to be 2.5%.
The stress capital buffer represents a percentage amount of excess
capital the company must hold above its minimum capital
requirements beginning in October 2020. The stress capital buffer
of 2.5% reflects a reduction in quarterly common stock dividends
for the stress capital buffer period from the company’s current
level of $0.51 per share.
“There remains great uncertainty in the path of the economic
recovery and though it’s difficult to accurately predict the
ultimate impact on our credit portfolio, our economic assumptions
have changed significantly since last quarter. Accordingly, we
expect our second quarter results will include an increase in the
allowance for credit losses substantially higher than the increase
in the first quarter,” said CEO Charlie Scharf. “Wells Fargo
continues to have one of the strongest capital positions relative
to regulatory minimums among the world’s financial services firms
as demonstrated by our stress test results. These are certainly
extremely challenging times for many and we remain committed to
supporting our customers and communities, and we will continue to
take appropriate measures to maintain strong capital and liquidity
levels and to improve the earnings capacity of the company.”
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.98 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
investment and mortgage products and services, as well as consumer
and commercial finance, through 7,400 locations, more than 13,000
ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 31 countries and territories to support customers who
conduct business in the global economy. With approximately 263,000
team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 30 on
Fortune’s 2020 rankings of America’s largest corporations. News,
insights and perspectives from Wells Fargo are also available at
Wells Fargo Stories.
Cautionary Statement about Forward-Looking Statements
This news release contains forward-looking statements about our
future regulatory capital levels and possible future capital
actions, including common stock dividends and common share
repurchases. Forward-looking statements speak only as of the date
made, and we do not undertake to update them. Actual capital levels
and capital actions may vary materially from expectations due to a
number of factors, including those described in our reports filed
with the Securities and Exchange Commission and available at
www.sec.gov. The amount and timing of any future common stock
dividends or repurchases will depend on the earnings, cash
requirements and financial condition of the Company, market
conditions, capital requirements (including under Basel capital
standards), common stock issuance requirements, applicable law and
regulations (including federal securities laws and federal banking
regulations), and other factors deemed relevant by the Company’s
Board of Directors, and may be subject to regulatory approval or
conditions.
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version on businesswire.com: https://www.businesswire.com/news/home/20200629005820/en/
Media Peter Gilchrist, (704) 715-3213
Peter.gilchrist@wellsfargo.com
Investor Relations John Campbell, (415) 396-0523
john.m.campbell@wellsfargo.com
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