1. Regulatory Expectations April 19, 2013 Pam Martin Board of Governors of the Federal Reserve System Division of Banking Supervision and Regulation | Risk Section 202-452-3442 | pamela.a.martin@frb.gov

2. FR RESTRICTED 1.What Community Banks are NOT Required or Expected to do 2.Federal Reserve Tailors Supervisory Guidance to both Size and Complexity of the Firm 3.Risk Management Expectations Overview 2

3. FR RESTRICTED May 14, 2012 Statement to Clarify Supervisory Expectations for Stress Testing by Community Banks Community Banks not required or expected to conduct the stress testing specified by Dodd-Frank Act. Community Banks not required or expected to conduct enterprise-wide stress tests required of larger organizations under the capital plan rule. Community Banks are not required or expected to comply with the May 12, 2012 Supervisory Guidance on Stress Testing for Banking Organizations with more than $10 billion in Total Consolidated Assets.

4. FR RESTRICTED Federal Reserve Tailors Supervisory Guidance to both Size and Complexity of the Firm Proposed Enhanced Supervisory Standards for Dodd- Frank Act (Sec. 165) prescribes less strenuous standards for firms in the $10 to $50 billion asset range Company-run stress tests for these firms have been moved (fall 2013) with disclosure pushed back to 2015 Board plans to issue additional supervisory guidance describing supervisory expectations for company-run stress tests that will be specifically tailored to banking organizations in the $10 to $50 asset range

5. FR RESTRICTED Federal Reserve Tailors Supervisory Guidance to both Size and Complexity of the Firm Risk Committee/CRO Requirements specifically tailored to banking organizations in the $10 to $50 billion asset range For these firms, Risk Committee is not required to be a free-standing committee of the Board (may be housed within another committee) Banking organizations in the $10 to $50 asset range are not required to appoint a CRO

6. FR RESTRICTED Risk Management Expectations for Community Banks All banking organizations should have the capacity to understand their risks and the potential impact of stressful events and circumstances on their financial condition. Existing guidance: Interest Risk Management (SR 10-1), Funding and Liquidity Risk Management (SR 10-6), Payment of Dividends, Stock Redemptions, and Stock Repurchases (SR 09-4), and Concentrations in Commercial Real Estate (SR 07-1) highlight the use of stress testing as a means to better understand the range of a banking organizations potential risk exposures