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What Are Adjusted Total Assets? A Comprehensive Legal Overview
Definition & meaning
Adjusted total assets refer to a bank's average total assets as reported in its most recent quarterly Consolidated Report of Condition and Income, also known as the Call Report. This figure is adjusted by subtracting certain items, including:
End-of-quarter intangible assets
Deferred tax assets
Credit-enhancing interest-only strips that are deducted from Tier 1 capital
Nonfinancial equity investments requiring a Tier 1 capital deduction
The Office of the Comptroller of the Currency (OCC) may require banks to calculate their capital ratios based on actual total assets instead of average total assets when necessary.
Table of content
Legal use & context
Adjusted total assets are primarily used in the banking and finance sectors, particularly in regulatory compliance and capital adequacy assessments. This term is relevant in areas such as:
Banking regulations
Financial reporting
Capital management
Users may need to complete specific forms related to capital ratios, which can often be managed using templates available through services like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A bank reports total assets of $200 million in its quarterly Call Report. After adjusting for intangible assets of $10 million and deferred tax assets of $5 million, the adjusted total assets would be $185 million.
Example 2: A financial institution has $50 million in nonfinancial equity investments that require a Tier 1 capital deduction. This amount is subtracted from the total assets to determine the adjusted total assets. (hypothetical example)
Relevant laws & statutes
Adjusted total assets are defined under 12 CFR 3.2, which outlines minimum capital ratios for banks. This regulation is part of the broader framework governing bank capital requirements and financial stability.
Comparison with related terms
Term
Definition
Key Differences
Total Assets
The sum of all assets owned by a bank.
Adjusted total assets exclude certain items, while total assets do not.
Tier 1 Capital
The core capital of a bank, including common equity and retained earnings.
Tier 1 capital is a measure of a bank's financial strength, while adjusted total assets are used to calculate capital ratios.
Common misunderstandings
What to do if this term applies to you
If you are involved in banking or financial reporting and need to calculate adjusted total assets, ensure you accurately account for all necessary deductions. Using templates from US Legal Forms can simplify this process. If your situation is complex, consider consulting a financial advisor or legal professional for guidance.
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Adjusted total assets are the average total assets of a bank, adjusted for certain deductions as defined by regulatory guidelines.
Items like intangible assets and deferred tax assets are deducted to provide a more accurate picture of a bank's financial health and capital adequacy.
The adjusted total assets figure is used in calculating capital ratios, which are essential for regulatory compliance and assessing financial stability.