Wells Fargo 2012 Annual Report Download - page 244

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 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.
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 1 capital were $4.8 billion at
December 31, 2012. During 2012, we redeemed $2.7 billion of
trust preferred securities. Under applicable regulatory capital
guidelines issued by bank regulatory agencies, upon notice of
redemption, the redeemed trust preferred securities no longer
qualify as Tier 1 Capital for the Company. This redemption is
consistent with the Capital Plan the Company submitted to the
Federal Reserve Board and the actions the Company previously
announced on March 13, 2012.
Certain subsidiaries of the Company are approved
seller/servicers, and are therefore 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, 2012, each seller/servicer met these requirements.
Certain broker-dealer subsidiaries of the Company are subject to
SEC Rule 15c3-1 (the Net Capital Rule), which requires that we
maintain minimum levels of net capital, as defined. At
December 31, 2012, each of these subsidiaries met these
requirements.
The following table presents regulatory capital information
for Wells Fargo & Company and Wells Fargo Bank, N.A.
Wells Fargo & Company Wells Fargo Bank, N.A. Well- Minimum
December 31, capitalized capital
(in billions, except ratios) 2012 2011 2012 2011 ratios (1) ratios (1)
Regulatory capital:
Tier 1 $ 126.6 114.0 101.3 92.6
Total 157.6 148.5 124.8 117.9
Assets:
Risk-weighted $ 1,077.1 1,005.6 1,002.0 923.2
Adjusted average (2) 1,336.4 1,262.6 1,195.9 1,115.4
Capital ratios:
Tier 1 capital (3) 11.75 % 11.33 10.11 10.03 6.00 4.00
Total capital (3) 14.63 14.76 12.45 12.77 10.00 8.00
Tier 1 leverage (2) 9.47 9.03 8.47 8.30 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.
(3) Effective September 30, 2012, we refined our determination of the risk weighting of certain unused lending commitments that provide for the ability to issue standby letters
of credit and commitments to issue standby letters of credit under syndication arrangements where we have an obligation to issue in a lead agent or similar capacity beyond
our contractual participation level.
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