State Street Corporation (NYSE:STT) today announced its preliminary inaugural stress capital buffer (SCB) requirement of 2.5% beginning in the fourth quarter of 2020 and the intention to continue its quarterly common stock dividend of $0.52 per share in the third quarter subject to consideration and approval by its Board of Directors.
State Street’s calculated SCB under this year’s supervisory stress test was well below the 2.5% minimum, preliminarily resulting in an SCB at that floor. The firm’s capital position remains strong amid the considerable economic uncertainty created by the COVID-19 pandemic. Accordingly, the Company will consider a full range of capital actions, including the potential resumption of share repurchases, in upcoming quarters but will do so commensurate with economic conditions at the time, the importance of safety and soundness, the review of the supplemental CCAR scenarios to be established by the Federal Reserve, and subject to any interim regulatory limitations. The Company is suspending share repurchases for the third quarter of 2020, consistent with the Federal Reserve’s instructions to all large banks.
“We are pleased with our 2020 CCAR results and the inaugural determination of our stress capital buffer at the minimum 2.5% level. The COVID-19 pandemic has provided an unprecedented, real-time, stress test and our strong capital position has enabled us to operate effectively, help stabilize the financial markets and support our employees, clients and communities. While the environment remains uncertain, State Street’s performance under the Federal Reserve’s severely adverse scenario is another reminder of our business model’s resiliency and capital stability,” said Chairman and Chief Executive Officer Ron O’Hanley.
State Street’s Board of Directors will consider the common stock dividend at a regularly scheduled board meeting in the third quarter of 2020. State Street’s third quarter 2020 common stock and other stock dividends, including the declaration, timing and amount, remain subject to consideration and approval by State Street’s Board of Directors at the relevant times.
The Company also announced today the results of its 2020 annual stress test, with its disclosure available on the Investor Relations section of its website at: http://investors.statestreet.com.
Consistent with section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the results of State Street’s 2020 annual stress test released today are based on the supervisory severely adverse scenario and incorporate prescribed Dodd-Frank capital actions. State Street, like other institutions covered by the provisions of section 165 of the Dodd-Frank Act, is required to conduct company-run stress tests annually under its own methodology and to disclose summary results of those company-run stress tests under the severely adverse scenario.
This release follows the earlier announcement of the Federal Reserve’s supervisory stress test results for covered institutions, including State Street, based on its own methodology. Those results can be found at: https://www.federalreserve.gov.