There is a one-time accumulated other comprehensive income (AOCI) opt-out election that must be made in a bank‚Äôs March 31, 2015 call report.¬† Eligible institutions may opt-out of the requirement to include most components of AOCI in common equity tier 1.¬†¬† To make the AOCI opt-out election, institutions must enter ‚Äú1‚Äù for ‚ÄúYes‚Äù in item 3.a. of Part I of schedule RC-R.¬† If the institution elects to opt out, then AOCI treatment for regulatory capital will be consistent with the method used prior to January 1, 2015.¬† If the opt-out election is not made, then the institution‚Äôs calculation of common equity tier 1 will include most components of AOCI, which include net unrealized gains and losses, net of tax, on available for sale debt securities.
In addition to the AOCI opt-out election, various changes in the regulatory capital treatment for past-due loans, High Volatility Commercial Real Estate (HVCRE) loans, disallowed deferred tax assets, etc. are effective for the March 31, 2015 call report.¬†
If you have any questions regarding the AOCI opt-out election or other changes related to BASEL III please call us for assistance.