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Six regional banks have reported their stress-test results under Dodd-Frank for the first time, projecting Tier 1 common equity ratios ranging from 8.04% to 11.4% after an economic shock. However, several also projected multimillion-dollar losses during the stressful period.
June 16 -
Banks with assets totaling between $10 billion and $50 billion have begun publishing the results of their Dodd-Frank Act mandated stress tests this week and will continue to do so through the end of the month, providing a new window into the workings of regional institutions.
June 16 -
Regulators pressed for more flexibility when it comes to stress tests, among other things, as lawmakers consider changes to the Dodd-Frank Act.
March 19
BOK Financial in Tulsa, Okla., and Webster Financial in Waterbury, Conn., each reported that its Tier 1 common equity ratio would remain above regulators' minimum guideline, as regional banks continue to disclose Dodd-Frank Act stress-test results.
Banks with assets between $10 billion and $50 billion are reporting for the first time the results of company-run stress tests. The DFAST process requires testing based on "severely adverse" economic conditions, over a cumulative nine-quarter period ending in the fourth quarter of 2016.
The $30 billion-asset BOK said Wednesday that its Tier 1 common equity ratio
Although the banks' DFAST results do not include an official statement of regulators' approval or rejection, banks are required to hold at least 5% Tier 1 common equity at all times.
BOK would report a cumulative net income of $34 million for the nine-quarter period under the "severely adverse" scenario.
Regional banks' DFAST reports will vary, as each institution is mandated to adjust for variables such as geography and business models. BOK, for example, said that the Southwestern U.S. states in which it operates performed better than the rest of the country through the financial crisis. But for the DFAST process, BOK did not assume favorable regional conditions and included factors such as "additional energy prices."
For the $23 billion-asset Webster, its Tier 1 common equity ratio would
Webster's "regulatory capital ratios continue to significantly exceed well-capitalized levels throughout the nine-quarter stress-test period," the company said late Tuesday.
Webster also projected a cumulative $95.3 million net loss for the time period. A primary driver of the loss was a cumulative $444.6 million provision for loan and lease losses that it would expect under this kind of economic shock.
Regional banks are required to report their DFAST results by June 30. A total of 42 banks will issue reports during the period.
