Goldman Sachs 2009 Annual Report Download - page 67

As of December 2009
Basel I
(8)
Tier1 capital ratio 15.0%
Total capital ratio 18.2%
Tier1 leverage ratio 7.6%
Tier1 common ratio (9) 12.2%
Tangible common shareholders’ equity (6)
to risk-weighted assets ratio 13.6%
(1) Adjusted assets excludes (i)low-risk collateralized assets generally
associated with our matched book and securities lending businesses and
federal funds sold, (ii)cash and securities we segregate for regulatory and
other purposes and (iii)goodwill and identi able intangible assets which are
deducted when calculating tangible equity capital (see footnote2 below).
The following table sets forth the reconciliation of total assets to
adjustedassets:
As of
December November
(inmillions) 2009 2008
Total assets $ 848,942 $ 884,547
Deduct: Securities borrowed (189,939) (180,795)
Securities purchased under
agreements to resell and
federal funds sold (144,279) (122,021)
Add: Trading liabilities, at fair value 129,019 175,972
Less derivative liabilities (56,009) (117,695)
Subtotal 73,010 58,277
Deduct: Cash and securities segregated for
regulatory and other purposes (36,663) (106,664)
Goodwill and identi able
intangible assets (4,920) (5,052)
Adjusted assets $ 546,151 $ 528,292
(2) Tangible equity capital equals total shareholders’ equity and junior
subordinated debt issued to trusts less goodwill and identi able intangible
assets. We consider junior subordinated debt issued to trusts to be a
component of our tangible equity capital base due to certain characteristics
of the debt, including its long-term nature, our ability to defer payments due
on the debt and the subordinated nature of the debt in our capital structure.
The following table sets forth the reconciliation of total shareholders’ equity
to tangible equity capital:
As of
December November
(inmillions) 2009 2008
Total shareholders’ equity $70,714 $64,369
Add: Junior subordinated debt issued
to trusts 5,000 5,000
Deduct: Goodwill and identi able
intangible assets (4,920) (5,052)
Tangible equity capital $70,794 $64,317
(3) The leverage ratio equals total assets divided by total shareholders’ equity.
This ratio is different from the Tier1 leverage ratio included above, which is
described in Note17 to the consolidated  nancial statements.
(4) The adjusted leverage ratio equals adjusted assets divided by tangible
equity capital. We believe that the adjusted leverage ratio is a more
meaningful measure of our capital adequacy than the leverage ratio
because it excludes certain low-risk collateralized assets that are generally
supported with little or no capital and re ects the tangible equity capital
deployed in our businesses.
(5) The debt to equity ratio equals unsecured long-term borrowings divided by
total shareholders’ equity.
(6) Tangible common shareholders’ equity equals total shareholders’ equity
less preferred stock, goodwill and identi able intangible assets. Tangible
book valueper common share is computed by dividing tangible common
shareholders’ equity by the number of common shares outstanding, including
RSUs granted to employees with no future service requirements. We believe
that tangible common shareholders’ equity is meaningful because it is one of
the measures that we and investors use to assess capital adequacy.
The following table sets forth the reconciliation of total shareholders’ equity
to tangible common shareholders’ equity:
As of
December November
(inmillions) 2009 2008
Total shareholders’ equity $70,714 $ 64,369
Deduct: Preferred stock (6,957) (16,471)
Common shareholders’ equity 63,757 47,898
Deduct: Goodwill and identi able
intangible assets (4,920) (5,052)
Tangible common shareholders’ equity $58,837 $ 42,846
(7) Book value and tangible book valueper common share are based on
common shares outstanding, including RSUs granted to employees with
no future service requirements, of 542.7million and 485.4million as of
December2009 and November2008, respectively.
(8) Calculated in accordance with the regulatory capital requirements currently
applicable to bank holding companies. RWAs were $4 31.89billion as of
December2009 under Basel
I . See Note17 to the consolidated  nancial
statements for further information regarding our regulatory capital ratios.
(9) The Tier1 common ratio equals Tier1 capital less preferred stock and junior
subordinated debt issued to trusts, divided by RWAs. We believe that the
Tier1 common ratio is meaningful because it is one of the measures that
we and investors use to assess capital adequacy.
The following table sets forth the reconciliation of Tier1 capital to Tier1
common capital:
(inmillions) As of December 2009
Tier1 capital $64,642
Deduct: Preferred stock (6,957)
Deduct: Junior subordinated debt
issued to trusts (5,000)
Tier1 common capital $52,685
Goldman Sachs 2009 Annual Report
65
Management’s Discussion and Analysis