Stock dividends

The Federal Reserve's “midcycle” assessment — conducted in light of the COVID-19 pandemic — said the path of the economic recovery is still uncertain even though the banks that were evaluated maintained adequate capital levels under hypothetical scenarios.

As with most things related to 2020, COVID-19 will be a deciding factor as the Federal Reserve considers whether banks are able to increase their dividends or resume share buybacks.

The central bank issued a proposal aligning recent stress testing changes with supervisory standards that are tailored to an institution's size and complexity.

The Federal Reserve will continue its ban on share repurchases for banks with more than $100 billion of assets into the fourth quarter and will cap dividend payments using a formula based on recent income.

The agency has scheduled an extra assessment of institutions' strength to incorporate more recent economic data during the pandemic.

The agencies completed steps to ease a community bank capital measure temporarily and to delay a new credit-loss accounting standard.

With big banks largely shunning the program, small banks see an opening to grab more market share in commercial lending.

The Fed’s recent action capping dividend payments might prove inadequate once the coronavirus crisis really hits banks’ capital.

As PPP enters forgiveness phase, some banks see outsourcing as best move; after the Fed’s stress tests, Wells Fargo to cut dividend while other big banks boost capital buffer; Supreme Court strikes down CFPB leadership structure; and more from this week’s most-read stories.

While elevated loan-loss provisions are expected to eat into all banks’ earnings, midsize banks could suffer more than their big-bank rivals because they have fewer revenue drivers. Meanwhile, investors will be watching closely for any signs of dividend cuts stemming from the Federal Reserve’s caps on payouts.