Basel III - AOCI Regulatory Capital Opt-Out Due with March 31st Call Report

Community banks will need to make a one-time, irrevocable election regarding the inclusion of accumulated other comprehensive income (AOCI) in common equity tier 1 capital when they file their first quarter 2015 Call Report in April.

With the filing of the March 31, 2015 Call Report community banks will have two options for the treatment of AOCI in common equity tier 1 capital. One option is to choose to include AOCI. The other option is to choose not include AOCI. Once an option is made it is irrevocable. Community banks need to understand that each option has its own set of merits and consequences. Once a community bank weighs the impact of the options, it needs to make its selection on the Call Report.

This CBAI and ICBA-advocated provision was included in the Basel III final rules that took effect on January 1, 2015. The banking agencies yesterday released materials for the Call Report due April 30, 2015.

The FDIC recently released a Financial Institution Letter on the AOCI opt-out election, which must be made on Schedule RC-R of the Call Report. More information on the Basel III rules, including an ICBA summary and audio conference recording, is available on ICBA’s Basel III Resource Center.