NEW YORK CITY-Only banks of $10 billion or more in assets are required to undergo so-called “stress tests” in response to Dodd-Frank requirements. Yet it’s at the smaller end of the size spectrum that the pressure on balance sheets and income statements would be greater, and a Trepp LCC report released Tuesday found that one in eight US lenders would fail such a test of capital adequacy. The percentage is far higher among institutions of less than $10 billion—upward of 12.9% for lenders with $1 billion or less, compared to 5.4% for those with more than $10 billion in assets.

It’s likely that the percentages would be higher had the locally based CMBS information provider conducted its test a few years ago, Matt Anderson, Trepp’s lead bank analyst, tells, although how much higher is difficult to determine. “Since 2007, banks in aggregate have raised $370 billion of fresh equity, adding to the capital cushion the banks currently have,” he says. Loan performance has also improved, with the result that the balance of delinquent and defaulted loans has gone down, although delinquency levels are still far from normal.

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