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Tax Alert: New Regulatory Capital Reporting

 

New Regulatory Capital Reporting

March 18, 2015 

 

On the upcoming March 31st Call Report, you will be asked to decide upon your future definition of “Capital” for your regulatory capital reporting.  The basic decision is whether or not to include in regulatory capital the equity account on your books for the Unrealized Gains/Losses on AFS Securities.  This is commonly referred to as Accumulated Other Comprehensive Income or AOCI, or sometimes simply OCI.

 

On this Call Report, you will need to “Opt In” or “Opt Out”.  Should you opt in, this means that the OCI account will be included in the calculation of your regulatory capital levels.  If you Opt Out, then the OCI account will not be considered as part of regulatory capital.  This is a one-time election.  Once you opt in or opt out on the March 31, 2015 Call Report that is how you will report forever.  At this time, there is no availability to change your status in the future. 

 

We recommend that our clients “Opt Out”. 

 

The OCI account has not been included in Tier 1 Capital in the past, and due to the potentially volatile nature of the account as it is affected by the markets, we see no benefit to including it in regulatory capital now. 

 

Any questions, call Mike Davis at 740-321-1000, or email Mike at dmd@ddbco.cpa.pro.