Publications

In the most recent Comprehensive Capital Analysis and Review (CCAR) cycle completed in June 2020, the Federal Reserve imposed share buyback and dividend restrictions on the CCAR banks, including a requirement that quarterly dividends not exceed the lesser of the prior quarter dividend and the banking organization’s average earnings over the prior four quarters, to preserve capital during the current period of economic uncertainty. The Federal Reserve has now issued updated supervisory guidance regarding dividend payments by non-CCAR banking organizations. This updated guidance does not impose the CCAR restrictions on non-CCAR banking organizations, but reiterates the long-standing guidance that banking organizations should consult with their local Reserve Bank before declaring dividends in excess of earnings for the corresponding quarter. The updated guidance now indicates, however, that banking organizations meeting certain earnings, capital and asset quality criteria may expect an expedited response to the consultation (within two business days). Banking organizations not meeting these criteria should expect a lengthier and more burdensome consultation process requiring more submissions to the Federal Reserve, and potentially a greater challenge to receive non-objection from the Federal Reserve.