12 CFR Part 325 - CAPITAL MAINTENANCE

The Federal Deposit Insurance Corporation (the Corporation or FDIC) is issuing a final rule that implements proposed revisions to regulations regarding the annual stress testing requirements for state nonmember banks and state savings associations with total consolidated assets of more than $10 billion (covered banks). The regulations, which implement section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), require covered banks to conduct annual stress tests, report the results of such stress tests to the Corporation and the Board of Governors of the Federal Reserve System (the Board), and publicly disclose a summary of the results of the required stress tests. The final rule revises the 2016 stress test cycle and for years thereafter to begin on January 1 of the calendar year rather than October 1, as is provided for by the current rule. Additionally, the final rule modifies the “as of” dates for financial data (that covered banks will use to perform their stress tests) as well as the reporting dates and public disclosure dates of the annual stress tests for both $10 billion to $50 billion covered banks and over $50 billion covered banks.

The Federal Deposit Insurance Corporation (the “Corporation” or “FDIC”) requests comment on this proposed rule that revises FDIC Rules and Regulations regarding the annual stress testing requirements for state non-member banks and state savings associations with total consolidated assets of more than $10 billion (“covered banks”). Our regulations, which implement section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), requires covered banks to conduct annual stress tests and report the results of such stress test to the Corporation and the Board of Governors of the Federal Reserve System (“Board”) and publicly disclose a summary of the results of the required stress tests. The FDIC proposes to modify the “as-of” dates for financial data (that covered banks will use to perform their stress tests) as well as the reporting dates and public disclosure dates of the annual stress tests for both $10 billion to $50 billion covered banks and $50 billion covered banks. The revisions to our regulations would become effective January 1, 2016.

The Board, FDIC, and OCC, (collectively, the agencies) are issuing this guidance, which outlines principles for implementation of the stress tests required under section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act or DFA stress tests), applicable to all bank and savings and loan holding companies, national banks, state member banks, state nonmember banks, Federal savings associations, and state-chartered savings associations with more than $10 billion but less than $50 billion in total consolidated assets (collectively, the $10-50 billion companies). The guidance discusses supervisory expectations for DFA stress test practices and offers additional details about methodologies that should be employed by these companies.

Section 165(i) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Section 165(i)”) requires the Federal Deposit Insurance Corporation (the “FDIC” or “Corporation”) to issue regulations that mandate FDIC-insured state nonmember banks and FDIC-insured state-chartered savings associations with total consolidated assets of more than $10 billion (“covered banks”) to conduct annual stress tests, report the results of such stress tests to the Corporation and the Board of Governors of the Federal Reserve System (“Board of Governors”), and publish a summary of the results of the stress tests. On October 15, 2012, the FDIC published in the Federal Register a final rule implementing the requirements of Section 165(i) (the “Stress Test Rule”). Under the Stress Test Rule covered banks are required to conduct annual stress tests using a minimum of three stress test scenarios (baseline, adverse, and severely adverse) provided by the FDIC. On November 20, 2012, the FDIC published in the Federal Register interim guidance setting forth the general processes and factors to be used by the FDIC in developing and distributing the stress test scenarios. The FDIC is now adopting the interim guidance as final without change, except for two technical corrections.

The Board, FDIC and OCC, (collectively, the “agencies”) are issuing this guidance, which outlines high-level principles for implementation of section 165(i)(2) of the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (“DFA”) stress tests, applicable to all bank and savings-and-loan holding companies, national banks, state-member banks, state non-member banks, Federal savings associations, and state chartered savings associations with more than $10 billion but less than $50 billion in total consolidated assets (collectively, the “$10-50 billion companies”). The guidance discusses supervisory expectations for DFA stress test practices and offers additional details about methodologies that should be employed by these companies. It also underscores the importance of stress testing as an ongoing risk management practice that supports a company's forward-looking assessment of its risks and better equips the company to address a range of macroeconomic and financial outcomes.

This interim guidance sets forth the general processes and factors to be used by the FDIC in developing and distributing the stress test scenarios for the annual stress tests required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 as implemented by the Annual Stress Test final rule (“Stress Test Rule”) published on October 15, 2012. 1 Under the Stress Test Rule FDIC-insured state nonmember banks and FDIC-insured state-chartered savings associations with total consolidated assets of more than $10 billion are required to conduct annual stress tests using a minimum of three scenarios (baseline, adverse and severely adverse) provided by the FDIC. The Stress Test Rule specified that the FDIC will provide the required scenarios to the covered banks no later than November 15th of each year. 1 77 FR 62417 (Oct. 15, 2012).

The Federal Deposit Insurance Corporation (the “Corporation” or “FDIC”) is issuing a final rule that implements the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) regarding stress tests (“final rule”). The Dodd-Frank Act requires the Corporation to issue regulations that require FDIC-insured state nonmember banks and FDIC-insured state-chartered savings associations with total consolidated assets of more than $10 billion to conduct annual stress tests, report the results of such stress tests to the Corporation and the Board of Governors of the Federal Reserve System (“Board”), and publish a summary of the results of the stress tests. The final rule requires large covered banks to conduct annual stress tests beginning on the effective date of this final rule. The Corporation, however, will delay implementation of the annual stress test requirements under the final rule for institutions with total consolidated assets of more than $10 billion but less than $50 billion until September 30, 2013. The final rule requirement for public disclosure of a summary of the stress testing results for these institutions will be implemented starting with the 2014 stress test, with the disclosure occurring during the period starting June 15 and ending June 30 of 2015.

On January 23, 2012, the FDIC published in the Federal Register a notice of proposed rulemaking for public comment to implement the requirements in Section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) 1 by requiring state nonmember banks and state savings associations supervised by the Corporation with total consolidated assets of more than $10 billion to conduct annual stress tests. 1 Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376 (2010). Due to the scope and complexity of the rulemaking, the FDIC has determined that an extension of the comment period until April 30, 2012, is appropriate. This action will allow interested persons additional time to analyze the proposed rules and to prepare their comments.