Capital One 2014 Annual Report Download - page 102

forma basis as calculated under Basel I, under baseline and stressful c onditions. We estimate that our Tier 1 common
ratio, as calculated under Basel I, was approximately 12.46% as of December 31 , 2014. See “MD&A—Table F—
Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for additional information
about our Tier 1 common ratio as calculated under Basel I.
As described above, we currently are using the Basel III Standardized Approach for calculating our regulatory
capital, subject to transition provisions. The calculation of our Basel III Standardized Approach common equity
Tier 1 capital under the Final Basel III Capital Rules includes additional adjustments and deductions not included
in the Tier 1 common capital calculation under Basel I, such as the inclusion of the unrealized gains and losses on
available for sale investment securities included in AOCI and adjustments related to intangibles. The inclusion of
AOCI and the adjustments related to intangibles are phased-in at 20% for 2014, 40% for 2015, 60% for 2016, 80%
for 2017 and 100% for 2018.
The following table compares our common equity Tier 1 capital and risk-weighted assets as of December 31, 2014,
calculated based on the Final Basel III Capital Rules, subject to applicable transition provisions, to our estimated
common equity Tier 1 capital and risk-weighted assets as of December 31, 2014, calculated under the Basel III
Standardized Approach, as it applies when fully phased-in. Our estimated common equity Tier 1 capital ratio under
fully phased-in Basel III Standardized Approach is based on our interpretations, expectations and assumptions of
relevant regulations, interpretations provided by our regulators, and is subject to change based on changes to future
regulations and interpretations.
In November 2014, our regulators informed us that they had updated their interpretation guidance regarding the
prospective capital treatment for certain securitization exposures. This guidance resulted in a reduction of
approximately 20 basis points to our estimated fully phased-in Basel III Standardized Approach common equity
Tier 1 capital ratio. As we continue to engage with our regulators during our parallel run, we anticipate that there
could be further changes to the calculation.
See the table and notes below for further discussion on our interpretations, expectations and assumptions used in
calculating this ratio.
Table 15: Estimated Common Equity Tier 1 Capital Ratio under Fully Phased-In Basel III Standardized Approach(1)
(Dollars in millions) December 31, 2014
Common equity Tier 1 capital under Basel III Standardized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,534
Adjustments related to AOCI(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (362)
Adjustments related to intangibles(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (973)
Other adjustments(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1)
Estimated common equity Tier 1 capital under fully phased-in Basel III Standardized . . . . . . . . . . . . . . $ 28,198
Risk-weighted assets under Basel I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 236,944
Adjustments for Basel III Standardized(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,075
Estimated risk-weighted assets under Basel III Standardized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 246,019
Estimated common equity Tier 1 capital ratio under fully phased-in Basel III Standardized(4) . . . . . . . . 11.5%
(1) Estimated common equity Tier 1 capital ratio under fully phased-in Basel III Standardized Approach is a non-GAAP financial measure.
(2) Assumes adjustments are fully phased-in.
(3) Adjustments to the Basel I approach to calculating risk-weighted assets include higher risk weights for exposures 90 days or more past due
or in nonaccrual, high volatility commercial real estate, securitization exposures and corresponding adjustments to PCCR intangibles,
deferred tax assets and certain other assets in the calculation of common equity Tier 1 capital under the Basel III Standardized Approach.
(4) Calculated by dividing estimated common equity Tier 1 capital under the fully phased-in Basel III Standardized Approach by estimated
risk-weighted assets under the Basel III Standardized Approach.
80 Capital One Financial Corporation (COF)