How to Calculate Tangible Equity From a Call Report

by Ryan Menezes

A bank's tangible equity is a segment of its shareholders' equity. This value describes the amount the shareholders will receive if the bank undergoes liquidation. As a measure of the institution's stability, this value is particularly useful when a bank nears collapse. The bank's call report features all the data necessary to calculate tangible common equity. All regulated U.S. banks must publish these reports, which are formally called the quarterly reports of condition and income.

1. Identify the bank's total equity capital from line 27a of schedule RC, the bank's balance sheet. The report will list this value in thousands of dollars. For example, if the report lists the total equity as "160,000," the bank has $160 million in capital.

2. Subtract the value of the extent of the bank's goodwill, which is the value of its equity not directly attributable to its assets and liabilities. This value is on line 10a from the same schedule. For example, if the bank lists its goodwill as "90,000," subtract $90 million from $160 million, giving $70 million.

3. Subtract the worth of the bank's other intangible assets, which you will find on line 10b of the schedule. For example, if the bank lists further intangible assets of "2,000," subtract a further $2 million, giving $68 million.

4. Subtract the value of the bank's perpetual preferred stock and related surplus, which is listed on line 23 of the schedule. For example, if the bank lists "100" in this line, subtract $100,000, giving $67,900,000. This is the value of the bank's tangible common equity.

About the Author

Ryan Menezes is a professional writer and blogger. He has a Bachelor of Science in journalism from Boston University and has written for the American Civil Liberties Union, the marketing firm InSegment and the project management service Assembla. He is also a member of Mensa and the American Parliamentary Debate Association.

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