JP Morgan Chase 2014 Annual Report Download - page 288

Notes to consolidated financial statements
286 JPMorgan Chase & Co./2014 Annual Report
Chase Bank USA, N.A.(d)
Basel III
Standardized
Transitional
Basel III
Advanced
Transitional Basel I
(in millions,
except ratios) Dec 31, 2014 Dec 31, 2014 Dec 31, 2013
Regulatory capital
CET1 capital $ 14,556 $ 14,556 NA
Tier 1 capital(a) 14,556 14,556 $ 12,956
Total capital 20,517 19,206 16,389
Assets
Risk-weighted 103,468 157,565 100,990
Adjusted average(b) 128,111 128,111 109,731
Capital ratios(c)
CET1 14.1% 9.2% NA
Tier 1(a) 14.1 9.2 12.8%
Total 19.8 12.2 16.2
Tier 1 leverage 11.4 11.4 11.8
(a) At December 31, 2014, trust preferred securities included in Basel III Tier
1 capital were $2.7 billion and $300 million for JPMorgan Chase and
JPMorgan Chase Bank, N.A., respectively. At December 31, 2014, Chase
Bank USA, N.A. had no trust preferred securities.
(b) Adjusted average assets, for purposes of calculating the leverage ratio,
includes total quarterly average assets adjusted for unrealized gains/
(losses) on securities, less deductions for disallowed goodwill and other
intangible assets, investments in certain subsidiaries, and the total
adjusted carrying value of nonfinancial equity investments that are
subject to deductions from Tier 1 capital.
(c) For each of the risk-based capital ratios the lower of the Standardized
Transitional or Advanced Transitional ratio represents the Collins Floor.
(d) Asset and capital amounts for JPMorgan Chase’s banking subsidiaries
reflect intercompany transactions; whereas the respective amounts for
JPMorgan Chase reflect the elimination of intercompany transactions.
Note: Rating agencies allow measures of capital to be adjusted upward for
deferred tax liabilities, which have resulted from both non-taxable
business combinations and from tax-deductible goodwill. The Firm had
deferred tax liabilities resulting from non-taxable business combinations
totaling $130 million and $192 million at December 31, 2014, and
December 31, 2013, respectively; and deferred tax liabilities resulting
from tax-deductible goodwill of $2.7 billion and $2.8 billion at December
31, 2014, and December 31, 2013, respectively.
Under the risk-based capital guidelines of the Federal
Reserve, JPMorgan Chase is required to maintain minimum
ratios of Tier 1 and Total capital to risk-weighted assets,
as well as minimum leverage ratios (which are defined as
Tier 1 capital divided by adjusted quarterly average assets).
Failure to meet these minimum requirements could cause
the Federal Reserve to take action. Bank subsidiaries also
are subject to these capital requirements by their respective
primary regulators. The following table presents the
minimum ratios to which the Firm and its national bank
subsidiaries are subject as of December 31, 2014.
Minimum
capital
ratios(a)
Well-
capitalized
ratios(a)
Capital ratios
CET1 4.0% NA
Tier 1 5.5 6.0%
Total 8.0 10.0
Tier 1 leverage 4.0 5.0 (b)
(a) As defined by the regulations issued by the Federal Reserve, OCC and
FDIC. The CET1 capital ratio became a relevant measure of capital under
the prompt corrective action requirements on January 1, 2015.
(b) Represents requirements for bank subsidiaries pursuant to regulations
issued under the FDIC Improvement Act. There is no Tier 1 leverage
component in the definition of a well-capitalized bank holding company.
As of December 31, 2014, and 2013, JPMorgan Chase and
all of its banking subsidiaries were well-capitalized and met
all capital requirements to which each was subject.