WASHINGTON—A first-of-its-kind deadline is approaching for
midsize U.S. banks to disclose results of their internal "stress
tests" later this month, though the findings are unlikely to pack
the kind of market-moving punch as those released by the biggest
Wall Street banks.
The Federal Reserve and other bank overseers issued a reminder
Tuesday about the disclosures, which are required to happen between
June 15 and June 30. Banks with between $10 billion and $50 billion
in assets are required under the 2010 Dodd-Frank law to run the
tests, which simulate each bank's performance during a hypothetical
recession.
Banks like New York Community Bancorp Inc. and CIT Group Inc.
must disclose a description of the risks included in their stress
tests, their losses, revenue, and capital levels under a "severely
adverse" economic scenario, and other details, the banking
regulators said.
But investors in those banks won't have to stress as much as
investors in Citigroup Inc., Bank of America Corp. and other big
banks.
Unlike the "stress tests" for larger firms, regulators won't
issue a public judgment approving or disapproving the midsize
banks' results and won't run their own simulation of how each bank
would fare. The results also won't be a prerequisite for regulatory
approval of banks' plans to reward shareholders with dividends and
other payouts.
"The company-run stress tests are hypothetical results and are
not intended to be forecasts or expected outcomes, and the agencies
will not make any public statements about the results," the Fed,
the Office of the Comptroller of the Currency, and the Federal
Deposit Insurance Corp. said in a news release Tuesday.
The disclosures will be required annually in 2016 and future
years.
Write to Ryan Tracy at ryan.tracy@wsj.com
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