US Banks - Low Stress, But Matters Less

Research evidence excerpt

US Banks - Low Stress, But Matters Less

Truist Securities

Equity Research Report June 24, 2026

FINANCIALS: Banks

The Fed released "disclosure only" stress test results and banks generally fared the

John McDonald same or better. Large regionals improved most, trust banks saw bigger drawdowns,

212-303-4179 and negative outliers were limited. The main question is whether results carry much

John.McDonald@truist.com information value, as major changes (e.g. a PPNR overhaul) are coming next year to the

models, along with changes to the rest of the capital stack (Basel III, GSIB). The Fed will

Brian Foran wait until 2027 to recalculate SCBs, and other questions remain about how the broader

212-303-4146 framework will change pending two NPRs. Still, from a stock perspective perhaps some

Brian.Foran@truist.com outsized focus on the new entrants as SYF was top of the stack and FCNC bottom.

David Smith 212-319-3623 What Could Change With Future Tests?

David.Smith@truist.com

To start with a brief history lesson, the Fed committed in December 2024 to increase

the transparency of the stress tests and reduce the volatility of capital requirements Peter Nicolo in response to an industry lawsuit (link). Over the next year, the Fed embarked on

212-303-4141

Peter.Nicolo@truist.com two major rulemakings. The first from April 2025 (link) proposed to average stress test

results from two consecutive years when calculating SCBs and push the effective date

for new SCBs to January 1st (from October 1st). The second from October 2025 (link) John Manahan brought significant disclosure of previously unreleased model documentation, invited 212-303-4158

John.Manahan@truist.com comment on the technical aspects of the models, and committed to create a new

comment seeking process for future changes.