AOCI, or accumulated other comprehensive income, is the equity account where certain market-value gains and losses sit before they run through net income. For a fintech founder evaluating a sponsor bank, the practical takeaway is simple: a bank can look profitable on the income statement while reported equity already carries a meaningful securities mark.
This article is written primarily for sponsor-bank diligence. Credit analysts, directors, journalists, and investors can use the same workflow, but the central question is whether AOCI changes how much confidence you should place in a bank’s equity, liquidity, and growth capacity.
Once the concept is clear, start with Schedule RC, item 26.b, “Accumulated other comprehensive income,” then reconcile it to Schedule RC-B, Securities, and Schedule RC-R, Part I, before comparing return on equity or tangible equity across banks.
For institution-level work, use the FFIEC Central Data Repository for raw Call Report data and the FDIC’s FFIEC 031/041 and FFIEC 051 instruction pages beside the filing.[1][2][3] Use Banks to identify the institution and its profile when that helps, then verify the source fields before using the number in a diligence packet, credit memo, or board book.
What AOCI Is In Bank Equity
Net income is reported in Schedule RI, Income Statement. AOCI is reported in Schedule RC, item 26.b, inside equity capital. The Schedule RC instructions define item 26.b as the accumulated balance of other comprehensive income under ASC Subtopic 220-10, net of applicable income taxes.[4]
For banks, the most common AOCI driver is the net unrealized holding gain or loss on available-for-sale debt securities. Schedule RC-B reports held-to-maturity securities at amortized cost and fair value in columns A and B, and available-for-sale debt securities at amortized cost and fair value in columns C and D.[5]
That classification matters. Available-for-sale securities are carried on Schedule RC, item 2.b, at fair value, while held-to-maturity securities are reported on Schedule RC, item 2.a, at amortized cost net of any applicable allowance. A bank can therefore show a large AOCI loss without having sold the bond portfolio.
The Schedule RC instructions give a simple tax example: if the fair value of available-for-sale debt securities exceeds amortized cost by $100,000 and the applicable tax rate is 25 percent, the amount included in Schedule RC, item 26.b, is $75,000, and the deferred tax liability is $25,000.
For a credit reader, the point is not that $75,000 is large. The point is that AOCI is net of tax, sits in equity, and can move reported capital accounts before any sale occurs.
Where AOCI Appears In Call Reports
When market rates rise, fixed-rate debt securities generally decline in fair value. That price movement can show up in AOCI for available-for-sale debt securities, and it can show up in disclosed fair-value gaps for held-to-maturity securities even when the accounting impact differs.
The FDIC made the industry context plain in its Fourth Quarter 2025 Quarterly Banking Profile statement: total unrealized losses on held-to-maturity and available-for-sale securities were $306.1 billion in fourth quarter 2025, down $31.0 billion, or 9.2 percent, from the prior quarter.[6]
That aggregate number is not a bank-specific diagnosis. It is a reminder that a sponsor bank, community bank, or regional bank can report acceptable net income while still carrying a meaningful securities mark in equity.
The first source check is Schedule RC-B. Memorandum item 2 reports maturity and repricing data for debt securities; the instructions specify amortized cost for held-to-maturity securities and fair value for available-for-sale securities in those maturity and repricing buckets.
A practical AOCI review should connect three fields: Schedule RC item 26.b for the equity mark, Schedule RC-B columns C and D for available-for-sale amortized cost and fair value, and Schedule RC-B Memorandum item 2 for maturity and repricing exposure.
| Step | Source field | Decision use |
|---|---|---|
| 1 | Schedule RC, item 26.b | Measure the AOCI balance inside reported equity. |
| 2 | Schedule RC-B, columns C and D | Compare available-for-sale amortized cost with fair value. |
| 3 | Schedule RC-B, Memorandum item 2 | Check whether the securities book is concentrated in longer maturity or slower repricing buckets. |
| 4 | Schedule RC-R, Part I, item 3.a | Determine whether the bank reports an AOCI opt-out election for regulatory capital. |
As a DDV internal screening heuristic, if negative AOCI is more than 25 percent of Schedule RC item 26 total equity, treat it as a credit-memo trigger, not a regulatory bright line. The threshold is not from the Call Report instructions; it is a practical prompt to explain whether a securities mark is large enough to distort peer ROE, tangible equity, and sponsor-bank capacity conclusions.
How AOCI Affects Bank Capital
AOCI affects accounting equity directly, but its regulatory capital treatment depends on the bank and the election reported in Schedule RC-R. The Schedule RC-R Part I instructions say item 3 reports AOCI as included in Schedule RC, item 26.b, and item 3.a reports the AOCI opt-out election.[7]
For institutions other than advanced approaches institutions, Schedule RC-R says an AOCI opt-out election allows the bank to opt out of including most AOCI components in common equity tier 1 capital, with the stated exception for accumulated net gains and losses on cash flow hedges related to items not recognized at fair value on the balance sheet.
The date matters. Institutions in existence on March 31, 2015 made the AOCI opt-out election on that Call Report, while a later-formed institution makes the election in the first Call Report after it comes into existence or becomes a non-advanced approaches institution, according to Schedule RC-R.
Worked example: suppose a bank has $100 million of common equity before AOCI, no goodwill or core deposit intangibles, and an available-for-sale securities portfolio with a $10 million pre-tax unrealized loss. At a 25 percent tax rate, the after-tax AOCI loss is $7.5 million. GAAP equity and tangible common equity fall to $92.5 million. If the bank has an applicable AOCI opt-out, CET1 capital may still start from $100 million before other regulatory adjustments; without the opt-out, CET1 starts from $92.5 million.
Do not collapse accounting equity, tangible equity, and regulatory capital into one number. The same AOCI loss can reduce GAAP equity and tangible common equity while being treated differently in common equity tier 1 capital if the bank has the relevant opt-out election.
For smaller FDIC-supervised institutions using the community bank leverage ratio framework, 12 CFR 324.12 sets a leverage ratio threshold greater than 9 percent, total consolidated assets below $10 billion, off-balance-sheet exposures of 25 percent or less of total consolidated assets, and trading assets plus trading liabilities of 5 percent or less of total consolidated assets.[8]
The FFIEC 051 form is also size-specific. The FFIEC describes it as the Call Report for banks with domestic offices only and total assets less than $5 billion, while FFIEC 031 and 041 cover larger or different filing populations.
Use AOCI As A Question Generator
AOCI is not a standalone weakness signal. It is a pointer to the next questions about securities strategy, funding stability, liquidity needs, regulatory capital treatment, and whether management may need to sell assets at a loss.
- Securities strategy: If Schedule RC-B columns C and D show a large available-for-sale fair-value gap, ask whether management expects to hold, sell, pledge, or restructure the book.
- Liquidity pressure: Pair AOCI with Schedule RC-E deposit detail and Schedule RC-O deposit insurance assessment data before deciding whether unrealized losses are likely to become realized losses.
- Credit overlay: AOCI is about equity marks, not loan performance; use Schedule RC-C loans, Schedule RC-N past due and nonaccrual, Schedule RI-B charge-offs and recoveries, and Schedule RI-C allowances to test the credit side.
- Peer comparison: Use Compare after separating accounting equity from regulatory capital, because two banks with similar AOCI can have different RC-R treatment.
For sponsor-bank diligence, a negative AOCI balance should lead to a direct question: can the bank support planned fintech deposits, payments activity, and operational growth without selling marked-down securities or weakening reported equity further?
For board members, the same number should lead to a governance question: does the asset-liability committee reporting tie Schedule RC-B maturity and repricing data back to tangible equity, liquidity stress assumptions, and the RC-R capital presentation?
For journalists and analysts, the clean sentence is this: AOCI can show rate-driven balance sheet pressure that net income does not show, but it must be reconciled to Call Report securities schedules and regulatory capital schedules before drawing conclusions about capital strength.
FAQ
Where is AOCI in a bank Call Report? Start with Schedule RC, item 26.b. Then look at Schedule RC-B for securities detail and Schedule RC-R, Part I, item 3 and item 3.a for the regulatory capital presentation.
Does negative AOCI mean the bank is unsafe? No. Negative AOCI can reflect unrealized market-value losses, especially on available-for-sale debt securities. The risk question is whether funding, liquidity, or strategy could force sales or limit flexibility.
Can AOCI affect tangible equity but not regulatory capital in the same way? Yes. Schedule RC-R provides the AOCI opt-out framework for non-advanced approaches institutions, so a reader should not assume one AOCI move changes every capital ratio the same way.
What should a fintech founder ask a potential sponsor bank? Ask for a schedule-level explanation of AOCI, available-for-sale securities marks, liquidity sources, deposit mix, and whether the bank’s RC-R capital treatment differs from the tangible equity picture.
What is the fastest source workflow? Confirm the legal institution in FDIC BankFind[9], pull Call Report data from the FFIEC Central Data Repository[1], read Schedule RC item 26.b, and reconcile the number to Schedule RC-B and Schedule RC-R before writing the conclusion. Use Banks for a DDV profile when it helps orient the review, but validate conclusions against the filing.
Sources
- FFIEC Central Data Repository: raw public Call Report data distribution, https://cdr.ffiec.gov/public/
- FDIC FFIEC 031/041 instructions: Reports of Condition and Income instructions, December 2025 edition, https://www.fdic.gov/bank-financial-reports/ffiec-reports-condition-and-income-instructions-ffiec-031-and-041-report-3
- FDIC FFIEC 051 instructions: Call Report instructions for banks with domestic offices only and total assets less than $5 billion, December 2025 edition, https://www.fdic.gov/bank-financial-reports/ffiec-reports-condition-and-income-instructions-ffiec-051-report-form-1
- FFIEC 031/041 Schedule RC instructions: balance sheet instructions including Schedule RC item 26.b, https://www.fdic.gov/resources/bankers/call-reports/crinst-031-041/2024/031-041-324-rc.pdf
- FFIEC 031/041 Schedule RC-B instructions: securities schedule instructions for amortized cost, fair value, maturity, and repricing fields, https://www.fdic.gov/resources/bankers/call-reports/crinst-031-041/2024/031-041-324-rc-b.pdf
- FDIC Quarterly Banking Profile statement: fourth quarter 2025 industry commentary on unrealized securities losses, https://www.fdic.gov/news/speeches/2026/fdic-quarterly-banking-profile-fourth-quarter-2025
- FFIEC 031/041 Schedule RC-R Part I instructions: regulatory capital components and AOCI opt-out election instructions, https://www.fdic.gov/resources/bankers/call-reports/crinst-031-041/2024/031-041-324-rc-r-part-i.pdf
- 12 CFR 324.12: FDIC community bank leverage ratio framework, https://www.ecfr.gov/current/title-12/chapter-III/subchapter-B/part-324/subpart-B/section-324.12
- FDIC BankFind: FDIC institution lookup tool for confirming legal bank identity, https://banks.data.fdic.gov/bankfind-suite/bankfind