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Summary:

The �౦��Ϸ���� is issuing this Financial Institution Letter (FIL) as a reminder to �౦��Ϸ����-supervised institutions not subject to the advanced approaches risk-based capital rules that they may elect to calculate regulatory capital using the treatment for accumulated other comprehensive income (AOCI) permitted in the �౦��Ϸ����'s general regulatory capital rules in effect prior to January 1, 2015.

Statement of Applicability to Institutions with Total Assets Under $1 Billion: This FIL is applicable to all �౦��Ϸ����-supervised institutions not subject to the advanced approaches risk-based capital rules.

Highlights:

• Under the revised regulatory capital rules, AOCI is generally included in regulatory capital. For �౦��Ϸ����-supervised institutions, net unrealized gains (losses) on available-for-sale debt securities is a common component of AOCI.
• The capital rules permit an �౦��Ϸ����-supervised institution that is not an advanced approaches institution to make a one-time, permanent election to opt out of the requirement to include most components of AOCI in regulatory capital.
• Consistent with the regulatory capital rules in effect prior to January 1, 2015, an �౦��Ϸ����-supervised institution making the opt-out election must:
• Add to common equity tier 1 capital any net unrealized losses and subtract any net unrealized gains on available-for-sale debt securities; and
• Include in common equity tier 1 capital any net unrealized losses on available-for-sale equity securities (including mutual funds).
• The AOCI opt-out election must be made on Schedule RC-R of the �౦��Ϸ����-supervised institution's Call Report for the March 31, 2015, report date.
• An �౦��Ϸ����-supervised institution that is not an advanced approaches institution, but is a subsidiary of a banking organization subject to the regulatory capital requirements issued by the Federal Reserve, the Office of the Comptroller of the Currency, or the �౦��Ϸ����, must make the same opt-out election as the banking organization of which it is a subsidiary.
• Resources for community banks on the revised regulatory capital rules, including an interagency guide and an expanded guide for �౦��Ϸ����-supervised institutions, are available at http://www.fdic.gov/regulations/capital/ . Institutions with specific questions about the revised rules may send an e-mail to regulatorycapital@fdic.gov .

Distribution:

• �౦��Ϸ����-Supervised Banks and Savings Associations

Suggested Routing:

• Chief Executive Officer
• Chief Financial Officer
• Chief Risk Officer

Paper copies may be obtained through the �౦��Ϸ����'s Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).

Additional Related Topics:

• Capital Adequacy of �౦��Ϸ����-Supervised Institutions, 12 CFR Part 324 (Regulatory Capital Rules)