---
title: "Total Equity Capital: definition, formula, and thresholds"
description: "Total equity capital is the bank's net worth on a book basis: common stock, surplus, retained earnings, and accumulated other comprehensive income (AOCI). It is the first cushion that absorbs losses before depositors or the FDIC are exposed."
canonical_url: https://www.bankregreports.com/glossary/total-equity/
source: BankRegReports
category: "Capital"
units: "$"
schedule: "Schedule RC"
---

# Total Equity Capital

> Total equity capital is the bank's net worth on a book basis: common stock, surplus, retained earnings, and accumulated other comprehensive income (AOCI). It is the first cushion that absorbs losses before depositors or the FDIC are exposed.

## Formula

```
Total Equity = Common Stock + Surplus + Retained Earnings + AOCI (+ perpetual preferred stock)
```

Schedule RC reports each equity component. Retained earnings accumulate undistributed profits over the bank's life; AOCI captures unrealized gains and losses on available-for-sale securities and certain hedges, which can swing equity sharply when interest rates move.

## Why it matters

Equity capital is the buffer between losses and insolvency. Unlike the risk-based capital ratios, total equity is an unweighted book figure, so it moves directly with AOCI, which is why the 2022-2023 rate shock erased large slices of reported equity at securities-heavy banks even as their risk-based ratios looked stable.

## How to read it

Compare total equity to total assets (the equity-to-assets ratio) and to tangible common equity, which strips out goodwill and intangibles. A bank whose equity is propped up by goodwill or depressed by deep AOCI losses can look very different on a tangible basis.

## Thresholds

| Range | Reading | What it means |
|---|---|---|
| Growing via retained earnings | Strong | Equity building organically from profits. |
| Stable | Adequate | Equity roughly flat and supportive of the asset base. |
| Eroding from AOCI | Watch | Unrealized securities losses dragging book equity down. |
| Near zero / negative | Concern | Thin or negative equity is a direct insolvency signal. |


## Worked example

When unrealized losses on available-for-sale securities deepened in 2022, several regional banks saw total equity capital fall by double digits quarter-over-quarter through AOCI (even though net income was positive) because the AOCI hit flowed straight into book equity.

## Questions

### How is total equity different from CET1 capital?

Total equity is the book accounting figure. CET1 is a regulatory measure that starts from common equity and then deducts goodwill, certain deferred tax assets, and mortgage servicing rights above limits. CET1 is almost always lower than total equity.

### Why did total equity fall at banks that were still profitable?

Accumulated other comprehensive income (AOCI) includes unrealized losses on available-for-sale securities. When rates rose in 2022, those losses cut AOCI and therefore total equity, independent of the income statement.

## Sources

- [FFIEC Call Report Schedule RC (Balance Sheet, Equity Capital)](https://www.ffiec.gov/sites/default/files/data/reporting-forms/FFIEC031_FFIEC041_202606_i.pdf) (PDF)

## Related metrics

- [Equity to Assets Ratio](https://www.bankregreports.com/glossary/equity-assets/): The equity-to-assets ratio measures total shareholders' equity against total assets. It is the simplest possible capital measure: how much of every asset dollar is funded by equity vs. debt.
- [Tangible Common Equity / Tangible Assets](https://www.bankregreports.com/glossary/tce-ta/): TCE/TA measures common shareholders' equity excluding goodwill and intangibles, divided by total assets excluding the same. It is the purest measure of a bank's capital cushion to common shareholders and is not subject to risk-weighting choices.
- [Common Equity Tier 1 Capital Ratio](https://www.bankregreports.com/glossary/cet1-ratio/): The CET1 ratio measures a bank's highest-quality capital (common stock and surplus, retained earnings and, for banks that have not opted out, accumulated other comprehensive income, less regulatory deductions) against its risk-weighted assets. It is the most-watched single capital indicator in US bank supervision after the 2013 Basel III reforms.
- [AOCI Burden](https://www.bankregreports.com/glossary/aoci-burden/): AOCI Burden measures unrealized losses on available-for-sale and held-to-maturity securities relative to a bank's total equity capital. It quantifies the gap between book equity and 'mark-to-market' economic equity, the issue that brought down Silicon Valley Bank in 2023.
- [Retained Earnings](https://www.bankregreports.com/glossary/retained-earnings/): Retained earnings are the cumulative profits a bank has kept rather than paid out as dividends. They are a core component of equity capital and the primary engine of organic capital growth.

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