We have prepared visuals (available here) of the Federal Reserve’s 2014 supervisory Dodd-Frank Act stress test (“DFAST“) results. Update: We have updated these visuals to reflect the company-run DFAST results and the Federal Reserve’s 2014 Comprehensive Capital Analysis and Review (“CCAR“) results.
Background: On March 20, 2014, the Federal Reserve published results of the 2014 supervisory DFAST for 30 U.S. bank holding companies with $50 billion or more in total consolidated assets (“Large BHCs“). Under its DFAST regulations, the Federal Reserve conducts annual supervisory stress tests to assess the potential impact of various hypothetical economic scenarios on the consolidated earnings, losses and regulatory capital of each Large BHC over a nine-quarter planning horizon.
As part of the supervisory DFAST, the Federal Reserve projects each Large BHC’s balance sheet, net income, and resulting post-stress capital levels, regulatory capital ratios, and a Tier 1 Common risk-based capital ratio under three scenarios (baseline, adverse and severely adverse) using data as of September 30. Our visuals of the Federal Reserve’s 2014 stress test scenarios are available here.
Company-run DFAST: The DFAST regulations also require Large U.S. BHCs as well as U.S. banking organizations with >$10 billion and < $50 billion in total consolidated assets (“mid-size banking organizations“) to conduct company-run DFASTs. Specifically, Large U.S. BHCs must conduct two company-run DFASTs each year. In contrast, mid-size banking organizations are required to conduct one company-run DFAST each year. Our comparison of DFAST requirements for large and mid-size banking organizations is available here.