As banks with more than $10 billion in assets prepare to conduct annual stress tests mandated under the 2010 Dodd-Frank Act, analysts at the Chicago-based Sterne Agee have predicted that not all banks will perform well.
Sterne Agee analyst Todd Hagerman said that financial institutions with more than $10 billion in assets are required to complete self-stress tests “in a broad range of scenarios from an individual business-line to enterprise-wide perspective,” adding that five banks in particular “are potentially more at risk” for regulatory backlash, according to The Street.
Banks that may face trouble include TCF Financial, Astoria Financial, Valley National Bancorp, Synovus Financial and New York Community Bancorp.
Hagerman said that institutions “closer to $50 billion with high payout ratios, low profitability levels, low capital levels, outsized concentrations, high loan/deposit ratios” and high ratios of problem loans to overall capital and reserves are “more at risk for regulatory action from the stress test than those closer to the $10 billion threshold,” The Street reports.
The banks are required to complete the tests by Sept. 30 and submit the results by Jan. 5, with formal results to be made public in April, 24/7WallSt.com reports.