This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

56929 

Vol. 84, No. 206 

Thursday, October 24, 2019 

1Public Law 111–203, section 165(i)(2), 124 Stat. 

1376, 1430–31 (2010). 

2 77 FR 62417 (October 15, 2012). The Board and 

the Office of the Comptroller of the Currency 

contemporaneously issued comparable regulations. 

See 77 FR 62380 (October 12, 2012) (Board); 77 FR 

61238 (October 9, 2012) (OCC). 

3Public Law 115–174, 132 Stat. 1296–1368 

(2018). 4 83 FR 13880 (April 2, 2018). 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 325 

RIN 3064–AE84 

Company-Run Stress Testing 

Requirements for FDIC-Supervised 

State Nonmember Banks and State 

Savings Associations 

AGENCY: Federal Deposit Insurance 

Corporation. 

ACTION: Final rule. 

SUMMARY: The Federal Deposit 

Insurance Corporation (FDIC) is 

adopting a final rule to amend the 

FDIC’s company-run stress testing 

regulations applicable to state 

nonmember banks and state savings 

associations, consistent with section 401 

of the Economic Growth, Regulatory 

Relief, and Consumer Protection Act 

(EGRRCPA). Specifically, the final rule 

revises the minimum threshold for 

applicability from $10 billion to $250 

billion, revises the frequency of required 

stress tests by FDIC-supervised 

institutions, and reduces the number of 

required stress testing scenarios from 

three to two. The final rule also makes 

certain conforming and technical 

changes. 

DATES: The final rule is effective 

November 25, 2019. 

FOR FURTHER INFORMATION CONTACT: 

Ryan Sheller, Section Chief, (202) 412– 

4861, RSheller@FDIC.gov, Large Bank 

Supervision, Division of Risk 

Management Supervision; or Benjamin 

Klein, Counsel, (202) 898–7027, bklein@

FDIC.gov; Legal Division, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

I. Policy Objective 

The policy objective of the final rule 

is to conform the FDIC’s regulations to 

section 401 of EGRRCPA, which raises 

the applicability threshold for companyrun stress testing required by section 

165(i)(2) of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(Dodd-Frank Act) from $10 billion to 

$250 billion, revises the required 

periodicity of such stress testing from 

‘‘annual’’ to ‘‘periodic,’’ and removes 

the requirement that such stress testing 

include an ‘‘adverse’’ scenario. 

II. Background 

Prior to the enactment of EGRRCPA, 

section 165(i)(2) of the Dodd-Frank Act 

required a financial company, including 

an insured depository institution, with 

total consolidated assets of more than 

$10 billion and regulated by a primary 

federal regulatory agency to conduct 

annual stress tests and submit a report 

to the Board of Governors of the Federal 

Reserve System (Board) and to its 

primary federal regulatory agency.1

Section 165(i)(2)(C) required each 

primary federal regulator to issue 

consistent and comparable regulations 

to: (1) Implement the stress testing 

requirements, including establishing 

methodologies for conducting stress 

tests that provided for at least three 

different sets of conditions, including 

baseline, adverse, and severely adverse; 

(2) establish the form and content of the 

required reports, and (3) require 

companies to publish a summary of the 

stress test results. 

In October 2012, the FDIC published 

in the Federal Register its rule 

implementing the Dodd-Frank Act stress 

testing requirement.2 The FDIC 

regulation at 12 CFR part 325 

implements the company-run stress test 

requirements of section 165(i)(2) of the 

Dodd-Frank Act with respect to state 

nonmember banks and state savings 

associations with more than $10 billion 

in assets (covered banks). Although 12 

CFR part 325 applies to all covered 

banks that exceed $10 billion in assets, 

the regulation differentiates between 

‘‘$10 billion to $50 billion covered 

banks’’ and ‘‘over $50 billion covered 

banks.’’ 

EGRRCPA, enacted on May 24, 2018,3

amended certain aspects of the 

company-run stress-testing 

requirements in section 165(i)(2) of the 

Dodd-Frank Act. Specifically, section 

401 of EGRRCPA raises the minimum 

asset threshold for the company-run 

stress testing requirement from $10 

billion to $250 billion; replaces the 

requirement for banks to conduct stress 

tests ‘‘annually’’ with the requirement to 

conduct stress tests ‘‘periodically;’’ and 

no longer requires the ‘‘adverse’’ stress 

testing scenario, thus reducing the 

number of required stress testing 

scenarios from three to two. The 

EGRRCPA amendments to the section 

165(i)(2) stress testing requirements are 

effective eighteen months after 

enactment. 

Prior to the enactment of EGRRCPA, 

on April 2, 2018, the FDIC issued a 

notice of proposed rulemaking that also 

proposed certain revisions to the FDIC 

stress testing regulations (April 2018 

NPR).4 Certain changes proposed in the 

April NPR, particularly those 

establishing a stress testing transition 

process for ‘‘over $50 billion covered 

banks’’ are no longer relevant as a result 

of EGRRCPA’s increase in the stress 

testing asset threshold to $250 billion. 

However, other revisions originally 

proposed in the April NPR remain 

necessary to ensure the FDIC’s stress 

testing regulations remain consistent 

with those of the Board and the Office 

of the Comptroller of the Currency 

(OCC). 

III. Proposed Rule 

On December 28, 2018, the FDIC 

published in the Federal Register a 

notice of proposed rulemaking 

(proposed rule or proposal) to amend 12 

CFR part 325 consistent with section 

401 of EGRRCPA. Specifically, the 

proposal would have raised the 

applicability threshold for covered 

banks required to conduct stress tests 

from $10 billion to $250 billion, 

reduced the frequency by which 

covered banks would generally be 

required to conduct stress tests from 

annually to biennially, and eliminated 

the requirement that covered banks use 

the ‘‘adverse’’ scenario when 

conducting stress tests. The proposal 

also included various technical changes 

to facilitate the above revisions, a 

proposed transition period, and 

proposed revisions to the regulation’s 


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56930 Federal Register / Vol. 84, No. 206 / Thursday, October 24, 2019 / Rules and Regulations 

5One commenter recommended that the FDIC, 

OCC, and FRB (agencies) not include the adverse 

scenario in the 2019 stress tests. The FDIC did not 

consider it necessary to do so, and notes that the 

EGRRCPA amendments to the Dodd-Frank Act’s 

company-run stress testing requirements are 

effective November 24, 2019. 

6See ‘‘Prudential Standards for Large Bank 

Holding Companies and Savings and Loan Holding 

Companies,’’ 83 FR 61408 (Nov. 29, 2018). 

7A Category III holding company would be a 

holding company that is not a Category II holding 

company and that has (1) $250 billion or more in 

average total consolidated assets or (2) $100 billion 

reservation of authority. The proposed 

rule also included certain provisions 

initially proposed in the April 2018 

NPR, such as extending the as-of date 

range for trading and counterparty 

components for covered banks with 

significant trading activities. 

The FDIC received six comments in 

response to the proposed rule. With 

respect to raising the applicability 

threshold from $10 to $250 billion, 

some commenters supported raising the 

threshold, others acknowledged that 

such a revision was statutorily required, 

and others expressed concern that 

eliminating stress testing requirements 

for banks under $250 billion may raise 

prudential concerns. Similarly, some 

commenters supported the proposed 

rule’s elimination of the ‘‘adverse’’ 

scenario, positing that the adverse 

scenario is of limited utility,5 some 

acknowledged that removing the 

‘‘adverse’’ scenario is statutorily 

required, and others expressed concern 

that eliminating the ‘‘adverse’’ scenario 

may reduce the efficacy of company-run 

stress testing. The FDIC appreciates the 

concerns raised by commenters, but 

does not believe that they warrant 

changes to the proposal, and is 

finalizing without change the proposal 

to align the regulatory threshold for 

company-run stress testing by covered 

banks with the statutory threshold of 

$250 billion established by section 401 

of EGRCCPA, and to eliminate the 

‘‘adverse’’ scenario requirement, 

consistent with section 401 of 

EGRCCPA. 

With respect to the proposed rule’s 

requirement that covered banks 

generally be subject to biennial stress 

testing, some commenters supported 

biennial stress testing as being an 

appropriate frequency for most covered 

banks, while others contended that 

reducing the frequency from annual to 

biennial would not be appropriate. 

Among the concerns highlighted by 

these commenters was that such a 

reduction in the frequency of stress 

testing could lead to complacency by 

covered banks in managing risk, and 

that biennial stress tests would not be 

sufficiently current to be credible. One 

commenter specifically suggested that a 

data-driven empirical analysis should 

support the change from annual to 

biennial stress testing, and that biennial 

stress testing would not be appropriate 

since firms make choices about 

dividends and repurchases on an annual 

basis. This commenter also suggested 

that the risks associated with reducing 

the frequency of stress testing would be 

amplified by other regulatory proposals 

addressing capital and liquidity 

requirements. 

Based on its experience in overseeing 

and reviewing the results of companyrun stress testing, the FDIC believes that 

biennial stress testing would be 

appropriate under most conditions for 

covered banks. The FDIC expects 

biennial stress testing to sufficiently 

satisfy the purposes of stress testing, 

including assisting in an overall 

assessment of a covered bank’s capital 

adequacy, identifying risks and the 

potential impact of adverse financial 

and economic conditions on a covered 

bank’s capital adequacy, and 

determining whether additional 

analytical techniques and exercises 

would be appropriate for a covered bank 

to employ in identifying, measuring, 

and monitoring risks to the soundness 

of the covered bank. In addition, the 

FDIC would continue to review the 

covered bank’s stress testing processes 

and procedures. Under the final rule, all 

covered banks that conduct stress tests 

on a biennial basis are required to 

conduct stress tests in the same 

reporting year (i.e., the reporting years 

for biennial stress testing covered banks 

would be synchronized). By requiring 

these covered banks to conduct their 

stress tests in the same reporting year, 

the final rule allows the FDIC to make 

comparisons across banks for 

supervisory purposes and assess 

macroeconomic trends and risks to the 

banking industry. The FDIC also notes 

that it retains the ability to require more 

frequent stress testing pursuant to its 

reservation of authority under 12 CFR 

325.1(c). 

IV. Final Rule 

The FDIC is adopting without change 

the proposed revisions to the FDIC’s 

stress testing rule, as described in detail 

below. 

A. Covered Banks 

Section 401 of EGRRCPA amended 

section 165 of the Dodd-Frank Act by 

raising the minimum asset threshold for 

banks required to conduct stress tests 

from $10 billion to $250 billion. The 

final rule implements this change by 

eliminating the two existing 

subcategories of ‘‘covered bank’’—‘‘$10 

to $50 billion covered bank’’ and ‘‘over 

$50 billion covered bank’’—and revising 

the term ‘‘covered bank’’ to mean a state 

nonmember bank or state savings 

association with average total 

consolidated assets that are greater than 

$250 billion. In addition, the final rule 

makes certain technical and conforming 

changes to 12 CFR part 325 in order to 

consolidate requirements, such as those 

related to reporting and publication, 

that are currently referenced separately 

with respect to $10 billion to $50 billion 

covered banks and over $50 billion 

covered banks. 

B. Frequency of Stress Testing 

Section 401 of EGRRCPA also 

changed the requirement under section 

165 of the Dodd-Frank Act to conduct 

stress tests from ‘‘annual’’ to ‘‘periodic.’’ 

Consistent with proposals by the Board 

and the OCC, the final rule provides 

that, in general, an FDIC-supervised 

institution that is a covered bank as of 

December 31, 2019, is required to 

conduct, report, and publish a stress test 

once every two years, beginning on 

January 1, 2020, and continuing every 

even-numbered year thereafter (i.e., 

2022, 2024, 2026, etc.). The final rule 

also adds a new defined term, 

‘‘reporting year,’’ to the definitions at 12 

CFR 325.2. A covered bank’s reporting 

year is the year in which a covered bank 

must conduct, report, and publish its 

stress test. As noted above, the 

‘‘reporting year’’ for most covered banks 

would generally be every evennumbered year. 

Certain covered banks may be 

required to conduct stress tests annually 

under the final rule. This subset of 

covered banks is limited to those that 

are consolidated under holding 

companies that are required to conduct 

stress tests more frequently than once 

every other year. On November 29, 

2018, the Board published a proposed 

rule that would establish risk-based 

categories for determining the 

application of prudential standards, 

including stress testing.6 The proposed 

rule would distinguish between four 

risk-based categories for holding 

companies. Three of these categories— 

‘‘global systemically important BHCs,’’ 

‘‘Category II bank holding companies,’’ 

and ‘‘Category III bank holding 

companies’’—would be required to 

conduct company-run stress tests. 

Category I holding companies and 

Category II holding companies would be 

required to conduct company-run stress 

tests annually, while Category III 

holding companies would be required to 

conduct company-run stress tests 

biennially.7


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Federal Register / Vol. 84, No. 206 / Thursday, October 24, 2019 / Rules and Regulations 56931 

or more in average total consolidated assets and $75 

billion or more in total consolidated assets in one 

of three risk indicators. 8 12 CFR 325.1(c). 

9 12 CFR 325.4(c). 

10 82 FR 9308 (Feb. 3, 2017). 

11 83 FR 7951 (Feb. 23, 2018). 

12 83 FR 13880 (April 2, 2018). 

Because the FDIC’s final stress testing 

rule would require a covered institution 

to conduct stress tests annually if its 

parent holding company is required to 

do so under Board regulations, the 

FDIC’s stress testing regulation would 

adopt by reference any potential 

changes to stress testing frequency in 

the Board’s regulations, including from 

the Board’s proposed rule. This 

treatment aligns with the FDIC’s, OCC’s, 

and Board’s long-standing policy of 

applying similar standards to holding 

companies and their subsidiary banks, 

and reflects the FDIC’s expectation that 

covered banks that would be required to 

stress test on an annual basis would be 

subsidiaries of the largest and most 

systemically important banking 

organizations, (i.e., under the Board’s 

proposed rule, subsidiaries of global 

systemically important bank holding 

companies or bank holding companies 

that have $700 billion or more in total 

assets or cross-jurisdictional activity of 

$75 billion). There are currently no 

FDIC-supervised covered banks that are 

subsidiaries of bank holding companies 

that would be required to conduct 

annual company-run stress tests under 

the Board’s proposed rule. 

For covered banks that are required to 

conduct stress tests biennially or 

annually, the dates and deadlines in the 

FDIC’s stress testing rule applies for 

each reporting year for a covered bank. 

For example, a biennial stress testing 

covered bank preparing its 2022 stress 

test would rely on financial data 

available as of December 31, 2021; use 

stress test scenarios that would be 

provided by the FDIC no later than 

February 15, 2022; provide its report of 

the stress test to the FDIC by April 5, 

2022; and publish a summary of the 

results of its stress test in the period 

starting June 15 and ending July 15 of 

2022. 

C. Removal of ‘‘Adverse’’ Scenario 

As enacted by the Dodd-Frank Act, 

section 165(i)(2)(C) required the FDIC to 

establish methodologies for conducting 

stress tests and further required the 

inclusion of at least three different 

stress-testing scenarios: ‘‘Baseline,’’ 

‘‘adverse,’’ and ‘‘severely adverse.’’ 

EGRRCPA amended section 165(i) to no 

longer require the FDIC to include an 

‘‘adverse’’ stress-testing scenario and to 

reduce the minimum number of 

required stress test scenarios from three 

to two. Given that the ‘‘adverse’’ stresstesting scenario has provided limited 

incremental information to the FDIC 

and market participants beyond what 

the ‘‘baseline’’ and ‘‘severely adverse’’ 

stress testing scenarios provide, the final 

rule removes the ‘‘adverse’’ scenario in 

the FDIC’s stress testing rule and 

maintains the requirement to conduct 

stress tests under the ‘‘baseline’’ and 

‘‘severely adverse’’ stress testing 

scenarios. The final rule also amends 

the definition of ‘‘severely adverse 

scenario’’ so that the term is defined 

relative to the ‘‘baseline scenario,’’ 

rather than relative to the ‘‘adverse 

scenario.’’ 

D. Transition Process for Covered Banks 

Currently, 12 CFR 325.3 provides for 

a transition period between when a 

bank becomes a covered bank and when 

the bank must report its first stress test. 

The final rule revises the transition 

period in 12 CFR 325.3 to conform to 

the other changes in this final rule. 

Accordingly, paragraph (a)(2) generally 

requires a state nonmember bank or 

state savings association that becomes a 

covered bank after December 31, 2019, 

to conduct its first stress test under this 

part in the first reporting year that 

begins more than three calendar 

quarters after the date the state 

nonmember bank or state savings 

association becomes a covered bank. For 

example, if a covered bank that 

conducts stress tests on a biennial basis 

becomes a covered bank on March 31 of 

a non-reporting year (e.g., 2023), the 

bank would report its first stress test in 

the subsequent calendar year (i.e., 

2024), which is its first reporting year. 

If the same bank becomes a covered 

bank on April 1 of a non-reporting year 

(e.g., 2023), it would skip the 

subsequent reporting calendar year and 

the following, non-reporting calendar 

year, and would report its first stress 

test in the next reporting year (i.e., 

2026). As with other aspects of the 

stress test rule, the rule reserves to the 

FDIC the authority to change the 

transition period for a particular 

covered bank, as appropriate in light of 

the nature and level of the activities, 

complexity, risks, operations, and 

regulatory capital of the covered bank, 

in addition to any other relevant 

factors.8

The final rule does not establish a 

transition period for covered banks that 

move from a biennial stress testing 

requirement to an annual stress testing 

requirement. Accordingly, a covered 

bank that becomes subject to annual 

stress testing would be required to begin 

stress testing annually as of the next 

reporting year. The FDIC expects that 

covered banks would anticipate and 

make arrangements for this 

development. To the extent that 

particular circumstances warrant the 

extension of a transition period, the 

FDIC would do so based on its 

reservation of authority and supervisory 

discretion. 

E. Review by Board of Directors 

Currently, 12 CFR 325.5(b)(2) requires 

a covered bank’s board of directors, or 

a committee thereof, to approve and 

review the policies and procedures of 

the stress testing processes as frequently 

as economic conditions or the bank’s 

condition may warrant, but no less than 

annually. The final rule revises the 

frequency of this requirement from 

‘‘annual’’ to ‘‘once every reporting year’’ 

in order to make review by the board of 

directors consistent with the covered 

bank’s stress testing cycle. 

F. Reservation of Authority 

12 CFR 325.1(c) currently includes a 

reservation of authority, pursuant to 

which the FDIC may revise the 

frequency and methodology of the stress 

testing requirement as appropriate for a 

particular covered bank. The final rule 

amends the reservation of authority by 

clarifying the FDIC’s authority to 

exempt a covered bank from the 

requirement to conduct a stress test in 

a particular reporting year. 

G. New Range of As-of Dates for Trading 

Scenario Component 

Under 12 CFR 325.4(c), the FDIC may 

require a covered bank with significant 

trading activities to include trading and 

counterparty components in its adverse 

and severely adverse scenarios. The 

trading data to be used in this 

component is as of a date between 

January 1 and March 1 of a calendar 

year.9 On February 3, 2017, the Board 

published a final rule that extended this 

range to run from October 1 of the 

calendar year preceding the year of the 

stress test to March 1 of the calendar 

year of the stress test.10 On February 23, 

2018, the OCC published a final rule 

making the same change to its stress 

testing regulation.11 On April 2, 2018, 

the FDIC issued a notice of proposed 

rulemaking that proposed such a 

change, and the proposed rule reproposed this provision.12 No 

comments were received regarding this 

aspect of the proposal. The final rule 

adopts the same change to the FDIC’s 

stress testing regulation, extending the 

range of as-of dates from October 1 of 


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56932 Federal Register / Vol. 84, No. 206 / Thursday, October 24, 2019 / Rules and Regulations 

13 79 FR 69365 (Nov. 21, 2014). 

14 83 FR 17737 (Apr. 24, 2018). Additional 

technical amendments to part 325 were recently 

proposed in a notice of proposed rulemaking to 

implement the current expected credit losses 

methodology for allowances. 83 FR 22312 (May 14, 

2018). 

15See Interagency Statement Clarifying the Role 

of Supervisory Guidance, Financial Institution 

Letter 49–2018 (Sep. 11, 2018). 

16 12 U.S.C. 4802. 

17 5 U.S.C. 601 et seq. 

18The SBA defines a small banking organization 

as having $600 million or less in assets, where ‘‘a 

financial institution’s assets are determined by 

averaging the assets reported on its four quarterly 

financial statements for the preceding year.’’ See 13 

CFR 121.201 (as amended by 84 FR 34261, effective 

August 19, 2019). ‘‘SBA counts the receipts, 

employees, or other measure of size of the concern 

whose size is at issue and all of its domestic and 

foreign affiliates.’’ See 13 CFR 121.103. Following 

these regulations, the FDIC uses a covered entity’s 

affiliated and acquired assets, averaged over the 

preceding four quarters, to determine whether the 

covered entity is ‘‘small’’ for the purposes of RFA. 

19FDIC-supervised institutions are set forth in 12 

U.S.C. 1813(q)(2). 

20FDIC Call Report, June 30, 2019. 

the preceding calendar year to March 1 

of the calendar year of the stress test. 

Extending the as-of date range ensures 

consistency with the Board and OCC 

rules and increases the FDIC’s flexibility 

to choose an appropriate as-of date. 

H. Other Changes 

As originally proposed in the April 

NPR and in the proposed rule, the final 

rule removes certain obsolete 

transitional language in 12 CFR 325.3 

that was included to facilitate a 2014 

shift in the dates of the annual stress 

testing cycle.13 That transition is now 

complete and the regulatory transition 

language is no longer necessary. 

Additionally, in order to update and 

standardize the language used in part 

325, references to ‘‘this subpart’’ is 

changed to ‘‘this part’’ following the 

redesignation of the FDIC’s stress test 

rule from Subpart C of 12 CFR part 325 

to occupy all of part 325.14 Lastly, the 

final rule eliminates the reference to 

supervisory guidance in 12 CFR 

325.5(b)(1).15

IV. Regulatory Analysis 

A. Riegle Community Development and 

Regulatory Improvement Act of 1994 

The RCDRIA requires that the FDIC, 

in determining the effective date and 

administrative compliance requirements 

of new regulations that impose 

additional reporting, disclosure, or other 

requirements on insured depository 

institutions (IDIs), consider, consistent 

with principles of safety and soundness 

and the public interest, any 

administrative burdens that such 

regulations would place on depository 

institutions, including small depository 

institutions, and customers of 

depository institutions, as well as the 

benefits of such regulations.16 In 

addition, in order to provide an 

adequate transition period, new 

regulations that impose additional 

reporting, disclosures, or other new 

requirements on IDIs generally must 

take effect on the first day of a calendar 

quarter that begins on or after the date 

on which the regulations are published 

in final form. 

The final rule imposes no additional 

reporting, disclosure, or other 

requirements on IDIs, including small 

depository institutions, nor on the 

customers of depository institutions. 

The final rule reduces the frequency of 

company-run stress tests for a subset of 

banks, raises the threshold for covered 

banks from $10 billion to $250 billion, 

and reduces the number of required 

stress test scenarios from three to two 

for all covered banks. The requirement 

to conduct, report, and publish a 

company-run stress testing is a 

previously existing requirement 

imposed by section 165(i) of the DoddFrank Act. Accordingly, RCDRIA does 

not apply to the final rule. 

The final rule is effective 30 days after 

publication in the Federal Register. 

B. The Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

5 U.S.C. 601 et seq., generally requires 

an agency, in connection with a final 

rule, to prepare and make available for 

public comment a final regulatory 

flexibility analysis that describes the 

impact of a final rule on small entities.17

However, a regulatory flexibility 

analysis is not required if the agency 

certifies that the rule would not have a 

significant economic impact on a 

substantial number of small entities. 

The Small Business Administration 

(SBA) has defined ‘‘small entities’’ to 

include banking organizations with total 

assets of less than or equal to $600 

million that are independently owned 

and operated or owned by a holding 

company with less than $600 million in 

total assets.18 For the reasons described 

below and under section 605(b) of the 

RFA, the FDIC certifies that this 

proposed rule would not have a 

significant economic impact on a 

substantial number of small entities. 

The FDIC has considered the potential 

impact of the final rule on small entities 

in accordance with the RFA. The FDIC 

supervises 3,424 depository 

institutions,19 of which, 2,665 are 

defined as small banking entities by the 

terms of the RFA.20 As discussed in the 

Background Section, 12 CFR part 325 

implements company-run stress test 

requirements for all state nonmember 

banks and state savings associations 

with more than $10 billion in assets 

(covered banks). The final rule raises the 

threshold for covered banks required to 

conduct company-run stress testing 

from $10 billion to $250 billion. No 

FDIC-supervised institutions with total 

consolidated assets of $600 million or 

less are subject to 12 CFR part 325. 

Therefore, the final rule would not 

affect any small, FDIC-supervised 

institutions. 

C. The Paperwork Reduction Act 

The FDIC has determined that this 

final rule involves a collection of 

information pursuant to the provisions 

of the Paperwork Reduction Act of 1995 

(the PRA) (44 U.S.C. 3501 et seq.). 

A Federal agency may not conduct or 

sponsor, and an organization is not 

required to respond to, this information 

collection unless the information 

collection displays a currently valid 

Office of Management and Budget 

(OMB) control number. The FDIC has 

obtained an OMB control number for 

this information collection (3064–0189) 

and will make a submission to OMB in 

connection with the final rule. The FDIC 

did not receive any comments on its 

estimated total annual burden for the 

stress testing rule. The estimates are as 

follows: 

Revised Information Collection Title: 

Stress Test Reporting Templates and 

Documentation for Covered Banks with 

Total Consolidated Assets of $250 

Billion or More. 

OMB Number: 3064–0189. 

Form Number: FDIC DFAST 14A 

Summary; FDIC DFAST 14A Scenario. 

Affected Public: Insured state 

nonmember banks 

Burden Estimate: 


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Federal Register / Vol. 84, No. 206 / Thursday, October 24, 2019 / Rules and Regulations 56933 

SUMMARY OF ANNUAL BURDEN

Information collection description Type of burden Obligation to 

respond 

Estimated 

number of 

respondents 

Estimated 

frequency of 

responses 

Estimated time 

per response 

(hours) 

Estimated 

annual burden 

(hours) 

Methodologies and Practices ..... Recordkeeping ... Mandatory .......... * 1 Annually ............. 640 640 

Stress Test Reporting ................. Reporting ........... Mandatory .......... * 1 Annually ............. 240 240 

Publications ................................. Disclosure .......... Mandatory .......... * 1 Annually ............. 160 160 

*Note: FDIC estimates that none of the existing FDIC-supervised institutions are currently subject to the recordkeeping, reporting or disclosure 

requirements in the proposed rule. However, FDIC is reporting one respondent as a placeholder to preserve the burden estimate in case an institution becomes subject to these requirements in the future. 

Estimated Total Annual Burden: 

1,040 hours. 

D. Plain Language 

Section 722 of the Gramm-LeachBliley Act requires the FDIC to use plain 

language in all proposed and final rules 

published after January 1, 2000. In the 

proposal, the FDIC requested comment 

on how to make this proposed rule 

easier to understand, and received no 

responsive comments. 

F. The Congressional Review Act 

Pursuant to the Congressional Review 

Act, the Office of Management and 

Budget’s Office of Information and 

Regulatory Affairs designated this rule 

as not a ‘‘major rule,’’ as defined at 5 

U.S.C. 804(2). 

List of Subjects in 12 CFR Part 325 

Administrative practice and 

procedure, Banks, banking, Reporting 

and recordkeeping requirements, State 

savings associations, Stress tests. 

Authority and Issuance 

For the reasons stated in the 

preamble, the FDIC amends 12 CFR part 

325 as follows: 

PART 325—STRESS TESTING 

■ 1. The authority citation for part 325 

continues to read as follows: 

Authority: 12 U.S.C. 5365(i)(2), 12 U.S.C. 

5412(b)(2)(C), 12 U.S.C. 1818, 12 U.S.C. 

1819(a)(Tenth), 12 U.S.C. 1831o, and 12 

U.S.C. 1831p–1. 

■ 2. The heading for part 325 is revised 

to read as set forth above. 

■ 3. In part 325, revise all references to 

‘‘subpart’’ to read ‘‘part’’. 

■ 4. Amend § 325.1 by revising 

paragraphs (b) and (c) to read as follows: 

§ 325.1 Authority, purpose, and 

reservation of authority. 

* * * * * 

(b) Purpose. This part implements 12 

U.S.C. 5365(i)(2), which requires the 

Corporation (in coordination with the 

Board of Governors of the Federal 

Reserve System (Board) and the Federal 

Insurance Office) to issue regulations 

that require each covered bank to 

conduct periodic stress tests, and 

establishes a definition of stress test, 

methodologies for conducting stress 

tests, and reporting and disclosure 

requirements. 

(c) Reservation of authority. 

Notwithstanding any other provisions of 

this part, the Corporation may modify 

some or all of the requirements of this 

part. 

(1) The Corporation may accelerate or 

extend any deadline for stress testing, 

reporting, or publication of the stress 

test results. 

(2) The Corporation may require 

different or additional tests not 

otherwise required by this part or may 

require or permit different or additional 

analytical techniques and 

methodologies, different or additional 

scenarios (including components for the 

scenarios), or different assumptions for 

the covered bank to use in meeting the 

requirements of this part. In addition, 

the FDIC may specify a different as-of 

date for any or all categories of financial 

data used by the stress test. 

(3) The Corporation may modify the 

reporting requirements of a report under 

this part or may require additional 

reports. The Corporation may modify 

the publication requirements of this part 

and or may require different or 

additional publication disclosures. 

(4) The Corporation may also exempt 

a covered bank from the requirement to 

conduct a stress test in a particular 

reporting year. 

(5) Factors considered: Any exercise 

of authority under this section by the 

Corporation will be in writing and will 

consider the activities, level of 

complexity, risk profile, scope of 

operations, and the regulatory capital of 

the covered bank, in addition to any 

other relevant factors. 

(6) Notice and comment procedures: 

In exercising its authority to require 

different or additional stress tests and 

different or additional scenarios 

(including components for the 

scenarios) under paragraph (c)(2) of this 

section, the Corporation will apply 

notice and response procedures in the 

same manner and to the same extent as 

the notice and response procedures in 

12 CFR 324.5, as appropriate. 

(7) Nothing in this subpart limits the 

authority of the Corporation under any 

other provision of law or regulation to 

take supervisory or enforcement action, 

including action to address unsafe and 

unsound practices or conditions, or 

violations of law or regulation. 

■ 4. Amend § 325.2 by: 

■ a. Removing paragraph (a) and 

redesignating paragraphs (b) through (h) 

as paragraphs (a) through (g); 

■ b. Revising newly redesignated 

paragraph (c) 

■ c. Adding a new paragraph (h); and 

■ d. Revising paragraphs (i), (j), and (m). 

The revisions and addition read as 

follows: 

§ 325.2 Definitions. 

* * * * * 

(c) Covered bank means any state 

nonmember bank or state savings 

association with average total 

consolidated assets calculated as 

required under this part that are greater 

than $250 billion. 

* * * * * 

(h) Reporting year means the calendar 

year in which a covered institution must 

conduct, report, and publish its stress 

test, as required under 12 CFR 325.4(d). 

(i) Scenarios are those sets of 

conditions that affect the U.S. economy 

or the financial condition of a covered 

bank that the Corporation determines 

are appropriate for use in the companyrun stress tests, including, but not 

limited to, baseline and severely adverse 

scenarios. 

(j) Severely adverse scenario means a 

set of conditions that affect the U.S. 

economy or the financial condition of a 

covered bank and that overall are 

significantly more severe than those 

associated with the baseline scenario 

and may include trading or other 

additional components. 

* * * * * 

(m) Stress test cycle means the period 

beginning January 1 of a reporting year 

and ending on December 31 of that 

reporting year. 

■ 5. Revise § 325.3 to read as follows: 


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56934 Federal Register / Vol. 84, No. 206 / Thursday, October 24, 2019 / Rules and Regulations 

§ 325.3 Applicability. 

(a) Covered banks subject to stress 

testing. (1) A state nonmember bank or 

state savings association that is a 

covered bank as of December 31, 2019, 

is subject to the requirements of this 

subpart for the 2020 reporting year. 

(2) A state nonmember bank or state 

savings association that becomes a 

covered bank after December 31, 2019, 

shall conduct its first stress test under 

this part in the first reporting year that 

begins more than three calendar 

quarters after the date the state 

nonmember bank or state savings 

association becomes a covered bank, 

unless otherwise determined by the 

Corporation in writing. 

(b) Ceasing to be a covered bank. A 

covered bank shall remain subject to the 

stress test requirements of this part 

unless and until total consolidated 

assets of the covered bank falls to $250 

billion or less for each of four 

consecutive quarters as reported on the 

covered bank’s most recent Call Reports. 

The calculation will be effective on the 

as-of date of the fourth consecutive Call 

Report. 

(c) Covered bank subsidiaries of a 

bank holding company or savings and 

loan holding company subject to 

periodic stress test requirements. (1) 

Notwithstanding the requirements 

applicable to covered banks under this 

section, a covered bank that is a 

consolidated subsidiary of a bank 

holding company or savings and loan 

holding company that is required to 

conduct a periodic company-run stress 

test under applicable regulations of the 

Board of Governors of the Federal 

Reserve System may elect to conduct its 

stress test and report to the FDIC on the 

same timeline as its parent bank holding 

company or savings and loan holding 

company. 

(2) A covered bank that elects to 

conduct its stress test under paragraph 

(c)(1) of this section will remain subject 

to the same timeline requirements of its 

parent company until otherwise 

approved by the FDIC. 

■ 6. Revise § 325.4 to read as follows: 

§ 325.4 Periodic stress tests required. 

Each covered bank must conduct the 

periodic stress test under this part 

subject to the following requirements: 

(a) Financial data. A covered bank 

must use financial data as of December 

31 of the calendar year prior to the 

reporting year. 

(b) Scenarios provided by the 

Corporation. In conducting the stress 

test under this part, each covered bank 

must use the scenarios provided by the 

Corporation. The scenarios provided by 

the Corporation will reflect a minimum 

of two sets of economic and financial 

conditions, including baseline and 

severely adverse scenarios. The 

Corporation will provide a description 

of the scenarios required to be used by 

each covered bank no later than 

February 15 of the reporting year. 

(c) Significant trading activities. The 

Corporation may require a covered bank 

with significant trading activities, as 

determined by the Corporation, to 

include trading and counterparty 

components in its severely adverse 

scenarios. The trading and counterparty 

position data used in this component 

will be as of a date between October 1 

of the year preceding the reporting year 

and March 1 of the reporting year, and 

the Corporation will communicate a 

description of the component to the 

covered bank no later than March 1 of 

the reporting year. 

(d) Frequency. A covered bank that is 

consolidated under a holding company 

that is required, pursuant to applicable 

regulations of the Board of Governors of 

the Federal Reserve System, to conduct 

a stress test at least once every calendar 

year must treat every calendar year as a 

reporting year, unless otherwise 

determined by the Corporation. All 

other covered banks must treat every 

even-numbered calendar year beginning 

January 1, 2020 (i.e., 2022, 2024, 2026, 

etc.), as a reporting year, unless 

otherwise determined by the 

Corporation. 

■ 7. Amend § 325.5 by revising 

paragraph (b) to read as follows: 

§ 325.5 Methodologies and practices. 

* * * * * 

(b) Controls and oversight of stress 

testing processes. (1) The senior 

management of a covered bank must 

establish and maintain a system of 

controls, oversight, and documentation, 

including policies and procedures, that 

are designed to ensure that its stress test 

processes satisfy the requirements in 

this part. These policies and procedures 

must, at a minimum, describe the 

covered bank’s stress test practices and 

methodologies, and processes for 

validating and updating the covered 

bank’s stress test practices and 

methodologies consistent with 

applicable laws and regulations. 

(2) The board of directors, or a 

committee thereof, of a covered bank 

must approve and review the policies 

and procedures of the stress testing 

processes as frequently as economic 

conditions or the condition of the 

covered bank may warrant, but no less 

than once every reporting year. The 

board of directors and senior 

management of the covered bank must 

receive a summary of the results of the 

stress test. 

(3) The board of directors and senior 

management of each covered bank must 

consider the results of the stress tests in 

the normal course of business, including 

but not limited to, the covered bank’s 

capital planning, assessment of capital 

adequacy, and risk management 

practices. 

■ 8. Revise § 325.6 to read as follows: 

§ 325.6 Required reports of stress test 

results to the FDIC and the Board of 

Governors of the Federal Reserve System. 

(a) Report required for periodic stress 

test results. A covered bank must report 

to the FDIC and to the Board of 

Governors of the Federal Reserve 

System, on or before April 5 of the 

reporting year, the results of the stress 

test in the manner and form specified by 

the FDIC. 

(b) Content of reports. (1) The reports 

required under paragraph (a) of this 

section must include under the baseline 

scenario, severely adverse scenario, and 

any other scenario required by the 

Corporation under this part, a 

description of the types of risks being 

included in the stress test, a summary 

description of the methodologies used 

in the stress test, and, for each quarter 

of the planning horizon, estimates of 

aggregate losses, pre-provision net 

revenue, provision for loan and lease 

losses, net income, and pro forma 

capital ratios (including regulatory and 

any other capital ratios specified by the 

FDIC). In addition, the report must 

include an explanation of the most 

significant causes for the changes in 

regulatory capital ratios and any other 

information required by the 

Corporation. 

(2) The description of aggregate losses 

and net income must include the 

cumulative losses and cumulative net 

income over the planning horizon, and 

the description of each regulatory 

capital ratio must include the beginning 

value, ending value, and minimum 

value of each ratio over the planning 

horizon. 

(c) Confidential treatment of 

information submitted. The 

confidentiality of information submitted 

to the Corporation under this part and 

related materials will be determined in 

accordance with applicable law 

including any available exemptions 

under the Freedom of Information Act 

(5 U.S.C. 552(b)) and the FDIC’s Rules 

and Regulations regarding the 

Disclosure of Information (12 CFR part 

309). 

■ 9. Amend § 325.7 by revising 

paragraphs (a) and (b) and paragraph (c) 

introductory text to read as follows: 


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Federal Register / Vol. 84, No. 206 / Thursday, October 24, 2019 / Rules and Regulations 56935 

§ 325.7 Publication of stress test results. 

(a) Publication date. A covered bank 

must publish a summary of the results 

of its stress tests in the period starting 

June 15 and ending July 15 of the 

reporting year, provided: 

(1) Unless the Corporation determines 

otherwise, if the covered bank is a 

consolidated subsidiary of a bank 

holding company or savings and loan 

holding company subject to supervisory 

stress tests conducted by the Board of 

Governors of the Federal Reserve 

System under 12 CFR part 252, then, 

within the June 15 to July 15 period, 

such covered bank may not publish the 

required summary of its periodic stress 

test earlier than the date that the Board 

of Governors of the Federal Reserve 

System publishes the supervisory stress 

test results of the covered bank’s parent 

holding company. 

(2) If the Board of Governors of the 

Federal Reserve System publishes the 

supervisory stress test results of the 

covered bank’s parent holding company 

prior to June 15, then such covered bank 

may publish its stress test results prior 

to June 15, but no later than July 15, 

through actual publication by the 

covered bank or through publication by 

the parent holding company under 

paragraph (b) of this section. 

(b) Publication method. The summary 

required under this section may be 

published on the covered bank’s website 

or in any other forum that is reasonably 

accessible to the public. A covered bank 

that is a consolidated subsidiary of a 

bank holding company or savings and 

loan holding company that is required 

to conduct a company-run stress test 

under applicable regulations of the 

Board of Governors of the Federal 

Reserve System will be deemed to have 

satisfied the public disclosure 

requirements under this subpart if it 

publishes a summary of its stress test 

results with its parent bank holding 

company’s or savings and loan holding 

company’s summary of stress test 

results. Subsidiary covered banks 

electing to satisfy their public disclosure 

requirement in this manner must 

include a summary of changes in 

regulatory capital ratios of such covered 

bank over the planning horizon, and an 

explanation of the most significant 

causes for the changes in regulatory 

capital ratios. 

(c) Information to be disclosed in the 

summary. A covered bank must disclose 

the following information regarding the 

severely adverse scenario if it is not a 

consolidated subsidiary of a parent bank 

holding company or savings and loan 

holding company that has elected to 

make its disclosure under 12 CFR 

325.3(d): 

* * * * * 

Federal Deposit Insurance Corporation. 

By order of the Board of Directors. 

Dated at Washington, DC, on October 15, 

2019. 

Annmarie H. Boyd, 

Assistant Executive Secretary. 

[FR Doc. 2019–23036 Filed 10–23–19; 8:45 am] 

BILLING CODE 6714–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2019–0501; Product 

Identifier 2019–NM–077–AD; Amendment 

39–19767; AD 2019–21–01] 

RIN 2120–AA64 

Airworthiness Directives; Airbus SAS 

Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Final rule. 

SUMMARY: The FAA is adopting a new 

airworthiness directive (AD) for all 

Airbus SAS Model A300 B4–600, B4– 

600R, and F4–600R series airplanes, and 

Model A300 C4–605R Variant F 

airplanes (collectively called Model 

A300–600 series airplanes). This AD 

was prompted by a determination that 

new or more restrictive airworthiness 

limitations are necessary. This AD 

requires revising the existing 

maintenance or inspection program, as 

applicable, to incorporate new or more 

restrictive airworthiness limitations. 

The FAA is issuing this AD to address 

the unsafe condition on these products. 

DATES: This AD is effective November 

29, 2019. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain publication listed in this AD 

as of November 29, 2019. 

ADDRESSES: For service information 

identified in this final rule, contact 

Airbus SAS, Airworthiness Office— 

EAW, Rond-Point Emile Dewoitine No: 

2, 31700 Blagnac Cedex, France; 

telephone +33 5 61 93 36 96; fax +33 5 

61 93 44 51; email account.airwortheas@airbus.com; internet http://

www.airbus.com. You may view this 

service information at the FAA, 

Transport Standards Branch, 2200 

South 216th St., Des Moines, WA. For 

information on the availability of this 

material at the FAA, call 206–231–3195. 

It is also available on the internet at 

http://www.regulations.gov by searching 

for and locating Docket No. FAA–2019– 

0501. 

Examining the AD Docket 

You may examine the AD docket on 

the internet at http://

www.regulations.gov by searching for 

and locating Docket No. FAA–2019– 

0501; or in person at Docket Operations 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

The AD docket contains this final rule, 

the regulatory evaluation, any 

comments received, and other 

information. The address for Docket 

Operations is U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590. 

FOR FURTHER INFORMATION CONTACT: Dan 

Rodina, Aerospace Engineer, 

International Section, Transport 

Standards Branch, FAA, 2200 South 

216th St., Des Moines, WA 98198; 

telephone and fax 206–231–3225. 

SUPPLEMENTARY INFORMATION: 

Discussion 

The European Union Aviation Safety 

Agency (EASA), which is the Technical 

Agent for the Member States of the 

European Union, has issued EASA AD 

2019–0090, dated April 26, 2019 

(‘‘EASA AD 2019–0090’’) (also referred 

to as the Mandatory Continuing 

Airworthiness Information, or ‘‘the 

MCAI’’), to correct an unsafe condition 

for all Airbus SAS Model A300–600 

series airplanes. 

The FAA issued a notice of proposed 

rulemaking (NPRM) to amend 14 CFR 

part 39 by adding an AD that would 

apply to all Airbus SAS Model A300 

B4–600, B4–600R, and F4–600R series 

airplanes, and Model A300 C4–605R 

Variant F airplanes (collectively called 

Model A300–600 series airplanes). The 

NPRM published in the Federal 

Register on July 1, 2019 (84 FR 31252). 

The NPRM was prompted by a 

determination that new or more 

restrictive airworthiness limitations are 

necessary. The NPRM proposed to 

require revising the existing 

maintenance or inspection program, as 

applicable, to incorporate new or more 

restrictive airworthiness limitations. 

The FAA is issuing this AD to address 

fatigue cracking, damage, and corrosion 

in principal structural elements, which 

could result in reduced structural 

integrity of the airplane. See the MCAI 

for additional background information. 


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