The Federal Financial Institutions Examination Council has decided to follow generally accepted accounting principles in booking deferred tax assets in call reports and permit them to account for up to 10% of Tier 1 capital. The move especially benefits institutions with large loan loss reserves, a substantial portion of which are due to losses in real estate lending.

Specifically, the FFIEC ruling will allow deferred tax assets to be counted as part of Tier 1 capital up to the lesser of 10 % of Tier 1 capital or of one year of projected earnings.

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