Wells Fargo 2014 Annual Report Download - page 260

Note 26: Regulatory and Agency Capital Requirements
The Company and each of its subsidiary banks are subject to
regulatory capital adequacy requirements promulgated by
federal bank regulatory agencies. The Federal Reserve
establishes capital requirements, including well capitalized
standards, for the consolidated financial holding company, and
the OCC has similar requirements for the Company’s national
banks, including Wells Fargo Bank, N.A. (the Bank).
The following table presents regulatory capital information
for Wells Fargo & Company and the Bank. Information
presented for December 31, 2014, reflects the transition to Basel
III capital requirements from previous regulatory capital
adequacy guidelines under Basel I effective in 2013. Among
other matters, Basel III revises the definition of capital, and
changes are being phased-in effective January 1, 2014, through
the end of 2021, with regulatory capital ratios determined using
Basel III (General Approach) risk-weighted assets during 2014.
Under the Basel III (General Approach), at December 31, 2014,
the Company’s Common Equity Tier 1 capital was $137.1 billion,
or 11.04% of risk-weighted assets, and the Bank’s Common
Equity Tier 1 capital was $119.9 billion, or 10.49% of risk-
weighted assets.
We do not consolidate our wholly-owned trust (the Trust)
formed solely to issue trust preferred and preferred purchase
securities (the Securities). Securities issued by the Trust
includable in Tier 2 capital were $2.1 billion at
December 31, 2014. Under the new Basel III capital
requirements, our remaining trust preferred and preferred
purchase securities will begin amortizing in 2016 and will no
longer count as Tier 2 capital in 2022.
The Bank is an approved seller/servicer of mortgage loans
and is required to maintain minimum levels of shareholders’
equity, as specified by various agencies, including the United
States Department of Housing and Urban Development, GNMA,
FHLMC and FNMA. At December 31, 2014, the Bank met these
requirements. Other subsidiaries, including the Company’s
insurance and broker-dealer subsidiaries, are also subject to
various minimum capital levels, as defined by applicable
industry regulations. The minimum capital levels for these
subsidiaries, and related restrictions, are not significant to our
consolidated operations.
Wells Fargo & Company Wells Fargo Bank, N.A.
Under Under
Basel III Basel III
(General Under (General Under
Approach) Basel I Approach) Basel I Well- Minimum
December 31, capitalized capital
(in billions, except ratios) 2014 2013 2014 2013 ratios (1) ratios (1)
Regulatory capital:
Tier 1 $ 154.7 140.7 119.9 110.0
Total 192.9 176.2 144.0 136.4
Assets:
Risk-weighted $ 1,242.5 1,141.5 1,142.5 1,057.3
Adjusted average (2) 1,637.0 1,466.7 1,487.6 1,324.0
Capital ratios:
Tier 1 capital 12.45% 12.33 10.49 10.40 6.00 4.00
Total capital 15.53 15.43 12.61 12.90 10.00 8.00
Tier 1 leverage (2) 9.45 9.60 8.06 8.31 5.00 4.00
(1) As defined by the regulations issued by the Federal Reserve, OCC and FDIC.
(2) The leverage ratio consists of Tier 1 capital divided by quarterly average total assets, excluding goodwill and certain other items. The minimum leverage ratio guideline is
3% for banking organizations that do not anticipate significant growth and that have well-diversified risk, excellent asset quality, high liquidity, good earnings, effective
management and monitoring of market risk and, in general, are considered top-rated, strong banking organizations.
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