capital management

The Federal Reserve just concluded its annual capital adequacy annual stress test with 33 participating banks. While regulators don’t require CFIs to run stress tests to assess their capital adequacy, the federal banking supervisory agencies indicate that they should have the capacity to analyze the potential impact of adverse outcomes, and particularly encourage this for CFIs with CRE portfolios. We provide four steps to help form the foundation of an effective capital planning process.

During this pandemic crisis, financial institutions should evaluate liquidity and capital management models and policies. Also, make sure to stress your liquidity projections to evaluate adverse and severe scenarios.