Wells Fargo & Company (NYSE: WFC) today released the results of its company-run stress test conducted in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA).
The results can be found at: https://www.wellsfargo.com/about/investor-relations/stress-test-reports/
The Federal Reserve Board (FRB) has published the results of its supervisory-run DFA stress tests for the nation’s largest banks, including Wells Fargo. Wells Fargo’s estimates may differ from the FRB’s estimates, including because the FRB stress tests assumed no common stock dividends, while Wells Fargo’s company-run stress test used the Dodd-Frank Capital Actions1 distribution requirements.
In light of the impact on the global economy of the COVID-19 pandemic and the measures taken in response to the pandemic, the FRB has determined that the changes in financial markets or the macroeconomic outlook could have a material effect on banks’ risk profile and financial condition and require updated capital plans. As such, 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.
These provisions may be extended by the FRB quarter-by-quarter.
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, which will be an important factor in determining the extent we may pay common stock dividends and repurchase common stock. 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.
1. Capital actions that are prescribed by the DFA stress test rule, which included estimated Q1 2020 capital actions taken by the Company, and for quarters two through nine of the test horizon, no issuance of regulatory capital other than assumed issuance of common stock for employee compensation; payments of common stock dividends equal to the quarterly average dollar amount paid by the Company from Q2 2019 through Q1 2020; payments on all other regulatory capital instruments equal to the stated dividend, interest, or principal due during the quarter; and no capital redemptions or purchases.
Peter Gilchrist, (704) 715-3213
John Campbell, (415) 396-0523