Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Annual Stress Testing (DFAST)

CCAR is an annual exercise by the Federal Reserve Board (FRB) to ensure that institutions have well-defined and forward-looking capital planning processes that account for their unique risks and sufficient capital to continue operations through times of economic and financial stress.

As part of the CCAR, the FRB evaluates capital adequacy, internal capital adequacy assessment processes and plans to make capital distributions, such as dividend payments or stock repurchases. The CCAR includes a supervisory stress test to support the FRB’s analysis of the adequacy of capital. Boards of directors are required each year to review and approve capital plans before submitting them to the FRB.

Section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) requires all financial institutions with total consolidated assets of more than $10 billion to conduct annual stress tests. On Oct. 9, 2012, the OCC, FDIC and FRB published its final annual stress test rules, which set out definitions and rules for scope of application, scenarios, reporting and disclosure. The results of the company-run stress tests provide the regulators with forward-looking information that will be used in bank supervision and will assist the agencies in assessing the company’s risk profile and capital adequacy. These stress test results are also expected to support ongoing improvement in a covered institution’s stress testing practices with respect to its internal assessments of capital adequacy and overall capital planning.

We understand the importance of measuring capital adequacy, stress testing and loss reserve estimation reporting and bring an extensive background in modeling, banking, risk management and simulation to our clients.