JP Morgan Chase 2013 Annual Report Download - page 312

Notes to consolidated financial statements
318 JPMorgan Chase & Co./2013 Annual Report
A reconciliation of the Firm’s Total stockholders’ equity to
Tier 1 capital and Total qualifying capital is presented in the
table below.
December 31, (in millions) 2013 2012
Tier 1 capital
Total stockholders’ equity $ 211,178 $ 204,069
Effect of certain items in AOCI excluded
from Tier 1 capital (1,337) (4,198)
Qualifying hybrid securities and
noncontrolling interests(a) 5,618 10,608
Less: Goodwill(b) 45,320 45,663
Other intangible assets(b) 2,012 2,311
Fair value DVA on structured notes and
derivative liabilities related to the
Firm’s credit quality 1,300 1,577
Investments in certain subsidiaries and
other 1,164 926
Total Tier 1 capital 165,663 160,002
Tier 2 capital
Long-term debt and other instruments
qualifying as Tier 2 16,695 18,061
Qualifying allowance for credit losses 16,969 15,995
Other (41) (22)
Total Tier 2 capital 33,623 34,034
Total qualifying capital $ 199,286 $ 194,036
(a) Primarily includes trust preferred securities of certain business trusts.
(b) Goodwill and other intangible assets are net of any associated deferred
tax liabilities.
Note 29 – Off–balance sheet lending-related
financial instruments, guarantees, and other
commitments
JPMorgan Chase provides lending-related financial
instruments (e.g., commitments and guarantees) to meet
the financing needs of its customers. The contractual
amount of these financial instruments represents the
maximum possible credit risk to the Firm should the
counterparty draw upon the commitment or the Firm be
required to fulfill its obligation under the guarantee, and
should the counterparty subsequently fail to perform
according to the terms of the contract. Most of these
commitments and guarantees expire without being drawn
or a default occurring. As a result, the total contractual
amount of these instruments is not, in the Firm’s view,
representative of its actual future credit exposure or
funding requirements.
To provide for probable credit losses inherent in consumer
(excluding credit card) and wholesale lending commitments,
an allowance for credit losses on lending-related
commitments is maintained. See Note 15 on pages 284–
287 of this Annual Report for further discussion regarding
the allowance for credit losses on lending-related
commitments. The following table summarizes the
contractual amounts and carrying values of off-balance
sheet lending-related financial instruments, guarantees and
other commitments at December 31, 2013 and 2012. The
amounts in the table below for credit card and home equity
lending-related commitments represent the total available
credit for these products. The Firm has not experienced,
and does not anticipate, that all available lines of credit for
these products will be utilized at the same time. The Firm
can reduce or cancel credit card lines of credit by providing
the borrower notice or, in some cases, without notice as
permitted by law. The Firm may reduce or close home
equity lines of credit when there are significant decreases in
the value of the underlying property, or when there has
been a demonstrable decline in the creditworthiness of the
borrower. Also, the Firm typically closes credit card lines
when the borrower is 60 days or more past due.