Daily News: May 21, 2012

Agencies Clarify Stress Testing for Community Banks


The FDIC issued a statement on behalf of the Fed, FDIC and OCC to provide clarification of supervisory expectations for stress testing by community banks. The agencies understand that these initiatives for larger organizations are raising some questions on the part of community bankers regarding supervisory expectations for stress testing by community banks.

Community banks – those with $10 billion or less in total assets – are not required or expected to conduct the types of stress testing specifically articulated in the initiatives noted above, which are directed at larger organizations. In particular, community banks are not required or expected to conduct the enterprise-wide stress tests required of larger organizations under the capital plan rule, the proposed rules implementing Dodd-Frank Act stress testing requirements, or as described in the stress testing guidance for organizations with more than $10 billion in total consolidated assets.

The agencies continue to emphasize that all banking organizations, regardless of size, should have the capacity to analyze the potential impact of adverse outcomes on their financial condition.

To read the full FDIC statement, click here.