The Office of the Comptroller of the Currency on Thursday released additional stress testing guidance for community banks with assets of $10 billion or less as they assess risk in their loan portfolios.

The guidance is contained in OCC Bulletin 2012-33, “Community Bank Stress Testing: Supervisory Guidance.” It provides additional clarity around the expectations for community banks and provides an example of a simple stress test framework to consider.

Banking regulators are requiring all banks to analyze their ability to withstand adverse financial conditions and apply related metrics to decisions regarding risk appetite and tolerance, setting concentration limits, and maintaining adequate capital levels.

As a bit of a pep talk for banks daunted by the prospect, the OCC explains in the guidance that “stress tests do not need to involve sophisticated analysis or third-party consultative support” and “effective methods can range from a single spreadsheet analysis to a more sophisticated model, depending on portfolio risk and the complexity of the bank.”

The regulator also unveiled a new portfolio level stress test tool for income producing commercial real estate loans. The optional Microsoft Office Excel-based tool is available through BankNet, the OCC's secure  Web site that offers data-based tools, applications, and services for the institutions it oversees.

The OCC plans to host a teleconference for bankers on December 3 to discuss the new guidance and details are forthcoming.