Large Bank Examination Workshop February 2026

Tangible Common Equity Ratio • Ratio of TCE/TA:  Tangible Common Equity = T1 Equity – Preferred Stock - Intangible Assets  Tangible Assets = Total Assets – Goodwill and Other Intangibles • Few intangible assets have liquidation value • Important in mergers/buyouts/loss share transactions • Most common capital ratio used by non-regulators like research analysts and investors

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Conservative Measure

• Equity = Assets - Liabilities  If all the assets are sold and all the debts are repaid, common equity represents what's left over for company shareholders • However, intangible assets usually aren't worth much to anyone outside of the firm, even though they may contain tremendous value for their owners • Back them out of the tangible common equity calculation in order to gauge the true liquidation value of a firm

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