OCC Issues New Stress Testing Tools for Smaller Banks, Thrifts


On October 18, the Office of the Comptroller of the Currency (OCC) provided guidance to national banks and federal savings associations with assets of $10 billion or less (community banks) on using stress testing to assess risk in their loan portfolios.

The guidance is contained in OCC Bulletin 2012-33, Community Bank Stress Testing: Supervisory Guidance.

The guidance "provides an example of a simple stress test framework to consider. The OCC expects all banks to have the capacity to analyze the potential impact of adverse outcomes on their financial condition in order to establish and support their risk appetite and tolerances, set concentration limits, adjust strategies, and appropriately plan for and maintain adequate capital levels." The guidance specifically states that "stress tests do not need to involve sophisticated analysis or third-party consultative support. Effective methods can range from a single spreadsheet analysis to a more sophisticated model, depending on portfolio risk and the complexity of the bank."

In addition, the OCC is making a new portfolio level stress test tool for income producing commercial real estate (CRE) loans available to national banks and federal savings associations through BankNet. The Microsoft Office Excel™-based tool "is designed to provide bankers a simple method to perform portfolio stress testing on income producing CRE loans, particularly in institutions with significant CRE loan concentrations."

The OCC plans to host a teleconference for bankers on December 3 to discuss the new guidance.

Read more.


Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Katten Muchin Rosenman LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.