Late last week, on October 18, 2012, the Office of the Comptroller of the Currency (“OCC”) published OCC Bulletin 2012-33, Community Bank Stress Testing Supervisory Guidance. The Bulletin effectively requires “every bank, regardless of size, or risk profile, to have an effective internal process to (1) assess its capital adequacy in relation to its overall risks, and (2) to plan for maintaining appropriate capital levels.” The nature of the testing will vary substantially, depending on the size and diversification of a bank.

This guidance comes on the heels of the final regulations earlier this month for stress testing by banking organizations with more than $10 billion in consolidated assets. Earlier this year, the OCC and the other federal banking agencies clarified that those stress testing requirements did not apply to community banks, although the OCC continues to suggest that larger community banks may find this earlier guidance instructive.