Morgan Stanley 2009 Annual Report Download - page 79

The following table sets forth the Company’s total assets and leverage ratios as of December 31, 2009 and
December 31, 2008 and average balances during 2009:
Balance at
Average
Balance(1)
December 31,
2009
December 31,
2008 2009
(dollars in millions, except ratio data)
Total assets ............................................... $771,462 $676,764 $741,546
Common equity ........................................... $ 37,091 $ 29,585 $ 34,068
Preferred equity ........................................... 9,597 19,168 13,991
Morgan Stanley shareholders’ equity .......................... 46,688 48,753 48,059
Junior subordinated debentures issued to capital trusts ............. 10,594 10,312 10,576
Subtotal ............................................. 57,282 59,065 58,635
Less: Goodwill and net intangible assets(2) ..................... (7,612) (2,978) (5,947)
Tangible Morgan Stanley shareholders’ equity ................... $ 49,670 $ 56,087 $ 52,688
Common equity ........................................... $ 37,091 $ 29,585 $ 34,068
Less: Goodwill and net intangible assets(2) ..................... (7,612) (2,978) (5,947)
Tangible common equity(3) .................................. $ 29,479 $ 26,607 $ 28,121
Leverage ratio(4) .......................................... 15.5x 12.1x 14.1x
Tier 1 common ratio(5) ..................................... 8.2% N/A N/A
N/A—The Company began calculating its risk weighted assets under Basel I as of March 31, 2009.
(1) The Company calculates its average balances based upon weekly amounts, except where weekly balances are unavailable, the month-end
balances are used.
(2) Goodwill and net intangible assets exclude mortgage servicing rights of $123 million (net of disallowable mortgage servicing rights in
2009) and $184 million as of December 31, 2009 and December 31, 2008, respectively. In 2009, amounts included only the Company’s
share of MSSB’s goodwill and intangible assets.
(3) Tangible common equity equals common equity less goodwill and net intangible assets as defined above. The Company views tangible
common equity as a useful measure to investors because it is a commonly utilized metric and reflects the common equity deployed in the
Company’s businesses.
(4) Leverage ratio equals total assets divided by tangible Morgan Stanley shareholders’ equity.
(5) The Tier 1 common ratio equals Tier 1 common equity divided by RWAs. The Company defines Tier 1 common equity as Tier 1 capital
less qualifying perpetual preferred stock, qualifying trust preferred securities and qualifying restricted core capital elements, adjusted for
the portion of goodwill and non-servicing assets associated with MSSB’s non-controlling interests (i.e., Citi’s share of MSSB’s goodwill
and intangibles). The Company views its definition of the Tier 1 common equity as a useful measure for investors as it reflects the actual
ownership structure and economics of the joint venture. This definition of Tier 1 common equity differs from the Tier 1 common capital
measure that was used by the federal bank regulatory agencies in the Supervisory Capital Assessment Program (“SCAP”) conducted
during the period February through April 2009. In SCAP, Tier 1 common capital was defined as Tier 1 capital less non-common
elements, including qualifying perpetual preferred stock, qualifying minority interest in subsidiaries, and qualifying trust preferred
securities. Accordingly, the SCAP measure would not be adjusted for the $4.5 billion portion of goodwill and non-servicing intangible
assets associated with MSSB’s non-controlling interests as though the Company had already acquired the remaining 49% interest in
MSSB owned by Citi. For a discussion of RWAs and Tier 1 capital, see “Regulatory Requirements” herein.
Balance Sheet and Funding Activity in 2009.
During 2009, the Company issued notes with a principal amount of approximately $44 billion, including
non-U.S. dollar currency notes aggregating approximately $8 billion. In connection with the note issuances, the
Company generally enters into certain transactions to obtain floating interest rates based primarily on short-term
London Interbank Offered Rates (“LIBOR”) trading levels. The weighted average maturity of the Company’s
long-term borrowings, based upon stated maturity dates, was approximately 5.6 years as of December 31, 2009.
Subsequent to December 31, 2009 and through January 31, 2010, the Company’s long-term borrowings (net of
repayments) decreased by approximately $0.6 billion.
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