DFAST and CCAR are connected components of the Federal Reserve’s stress-testing and capital-planning framework, not independent regulatory programs. DFAST produces stress-test results, while CCAR uses those results to establish capital requirements through the stress capital buffer (SCB).
Even when CCAR does not apply, stress testing helps institutions evaluate capital adequacy and financial risk. Integrating stress testing, current expected credit loss (CECL), and asset liability management (ALM) can also improve consistency across risk and financial planning.
What Are DFAST and CCAR?
DFAST stands for Dodd-Frank Act Stress Test. It established the stress-testing framework following the 2008 financial crisis to evaluate how banks would perform under standardized adverse economic scenarios. The results help assess whether banks could absorb losses and continue lending to households and businesses during periods of financial stress.
DFAST covers two exercises:
- The Federal Reserve’s supervisory stress test.
- The company-run stress tests banks perform and publicly disclose based on their own risk profiles.
CCAR stands for Comprehensive Capital Analysis and Review. It is the Federal Reserve’s annual capital-planning review for covered large banks, built on DFAST and company-run stress test results. Several regulatory changes have reshaped how CCAR functions today:
- Through 2018, CCAR also included a separate qualitative assessment of a bank’s risk management and capital planning that could independently restrict capital distributions.
- The Federal Reserve moved that qualitative evaluation into the confidential supervisory process in 2019.
- In 2020, it replaced the quantitative CCAR objection with the SCB.
- Today, CCAR primarily produces firm-specific SCB rather than a standalone public pass-or-fail decision.
While regulatory requirements have shifted over time, the fundamental objective remains the same: to assess whether banks can continue operating with sufficient liquidity and capital even during adverse circumstances.
DFAST vs. CCAR: Key Differences Explained
It helps to think of these as two parts of one system rather than two separate regimes. DFAST is the stress-testing engine that projects how a bank’s capital would hold up under the Federal Reserve’s scenarios. CCAR is the capital-planning review that uses those projections to set each bank’s stress capital buffer.
The table below summarizes how the two fit together.
| DFAST | CCAR | |
|---|---|---|
| Purpose | Quantitative stress test of capital using standardized scenarios (both Fed-run and company-run, where required) | Capital-planning review that uses stress-test results to set the stress capital buffer |
| Scope | Stress test modeling and projected losses, revenue, expenses, provisions, and capital ratios under stress | Stress testing plus capital planning and the resulting capital requirement |
| Stress Scenarios | A minimum of two scenarios (baseline and severely adverse) published annually by the Federal Reserve | Uses the same supervisory scenarios; banks also model at least one of their own BHC stress scenarios |
| Capital Planning | Supports capital assessment under stress | Translates stress results into the stress capital buffer, a standing capital requirement |
| Qualitative review | Not applicable | Handled through confidential supervision since 2019, no longer a public CCAR pass or fail |
| Output | Projected losses, earnings, and capital ratios under stress | The stress capital buffer for each firm |
| Institutions Affected | BHCs, SLHCs, and IHCs with $100 billion or more in total assets | The same $100 billion and above population |
How DFAST and CCAR Work Together
DFAST and CCAR work together to support banks in achieving long-term resilience.
Under DFAST
Under DFAST, the Federal Reserve publishes supervisory economic scenarios that banks use to project financial performance. These projections are performed over a nine-quarter planning horizon and are designed to determine the impact of financial stress and overall capital adequacy.
Both the Federal Reserve and each bank run these projections: the Fed produces the supervisory results, and banks produce and disclose their own company-run results.
Under CCAR
Under CCAR, those quantitative results feed directly into each bank’s capital requirement. The qualitative evaluation of risk management and capital planning still happens. But since 2019, it sits inside the confidential supervisory process rather than functioning as a public pass or fail.
Within CCAR, stress test results help determine a bank’s SCB. This figure sets how much capital the bank must hold above its minimums, based on its projected losses under the severely adverse scenario plus four quarters of planned common dividends.
Regulatory Developments to DFAST and CCAR
Certain economic events over time have continued to shape DFAST and CCAR, but the overall objective has remained the same: DFAST continues to serve as the foundation for a supervisory stress testing framework, while CCAR acts as the framework for capital planning.
The Federal Reserve has proposed further changes for the 2025 to 2026 cycles, including:
- Putting the annual scenarios through public notice-and-comment
- Averaging results across two years to reduce volatility
- Increasing transparency around the supervisory models.
Institutions should confirm the latest rules each cycle.
Why Stress Testing Still Matters for Regional Banks
Even if a bank is not subject to CCAR requirements, scenario-based stress testing remains a sound risk management practice. For auditors and other stakeholders, it helps institutions understand how adverse economic conditions could impact profitability, risk, capital, liquidity, and earnings.
Stress testing continues to matter because it helps banks:
- Evaluate capital adequacy under a range of adverse economic scenarios
- Strengthen capital planning by informing proactive management decisions before conditions change
- Assess financial impacts on profitability, liquidity, earnings, and other key risk exposures
- Improve board reporting with greater transparency into potential risks and capital resilience
- Support long-term decision-making by identifying vulnerabilities and informing risk mitigation strategies
How CECL Supports DFAST and CCAR
CECL estimates expected credit losses, while CCAR is used more for capital planning. Although CECL and CCAR serve different purposes, they become closely connected during stress testing and capital planning.
Capital projections require CECL forecasts as a key data input, because estimates for credit losses have a direct impact on earnings and capital reserves.
For this reason, CECL, CCAR, and stress testing benefit from a shared macroeconomic backbone. Forecasts stay consistent and defensible for audits or other regulatory review. This is a leading practice rather than a regulatory mandate.
When CECL, ALM, and stress testing run on disconnected data and assumptions, teams tend to spend more time reconciling differences and validating results. An integrated approach reduces that friction and improves confidence in the numbers.
Best Practices for Building an Integrated Capital Planning Process
A robust capital planning framework requires more than just satisfying regulatory requirements. It should ensure that teams throughout the organization have access to a unified set of data and assumptions.
Align assumptions across CECL, ALM, and stress testing
Capital planning is most reliable when a consistent set of data and assumptions is used across CECL, ALM, and stress testing. Consistent inputs for items like interest rates and expected loan behavior reduce manual reconciliation and build confidence in forecasted outcomes.
Use consistent economic scenarios
Using a consistent view of economic conditions across forecasts helps teams share one picture of risk, so exposures are less likely to be overlooked when evaluating credit losses or impacts to earnings and liquidity.
Improve documentation and governance
Clearly documented methodologies, assumptions, and workflows are key to a strong governance framework. They provide transparency to stakeholders and streamline audit reviews.
Review and update assumptions regularly
Market conditions shift. Regularly reviewing and updating model assumptions keeps forecasts relevant, accurate, and applicable to current conditions.
Simplify CECL and Capital Planning With Empyrean
Effective capital planning depends on more than understanding DFAST and CCAR. It also requires connected data, consistent governance, and coordinated workflows across finance, treasury, risk, and accounting.
Empyrean helps financial institutions unify CECL, ALM, and financial planning and analysis (FP&A) on a shared data model that supports scenario analysis, consistent economic inputs, and audit-ready workflows.
Instead of reconciling data across disconnected systems, teams can work from a single source of truth to improve collaboration, forecast consistency, and confidence in capital planning decisions.
Learn more about Empyrean CECL and discover how an integrated platform can strengthen capital planning, risk management, and regulatory readiness.
Request a demo to see how Empyrean helps connect data, models, and decision-making across the organization.
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Get a DemoFAQ: DFAST vs. CCAR
Do Community Banks Need to Perform DFAST or CCAR?
In most cases, community banks are not subject to DFAST or CCAR requirements. The company-run stress test requirement for banks between $10 billion and $50 billion in assets was repealed in 2018, and the supervisory program applies at $100 billion and above. Stress testing is, however, still a sound practice, and many smaller banks adopt principles based on DFAST and CCAR to build a stronger risk management program.
How Does CECL Affect Capital Stress Testing?
CECL estimates expected credit losses using forward-looking assumptions. These forecasts directly affect capital stress testing. Banks that align CECL with stress testing often produce more consistency in projected outcomes.
Can Banks Use the Same Economic Scenarios for CECL and CCAR?
Only in part. CECL and CCAR can share the same underlying macroeconomic backbone, which reduces reconciliation work. They are not identical, though: CECL uses a reasonable-and-supportable forecast that reverts to historical experience, while CCAR uses the Federal Reserve’s prescribed supervisory scenarios over a nine-quarter horizon. Align the shared inputs, but keep the two scenario purposes distinct.
How Often Should Banks Update Stress Testing Assumptions?
Stress testing assumptions should be reviewed on a periodic basis, no less than annually, with off-cycle updates when there are material shifts in the market.