Bank of America 2014 Annual Report Download - page 62

60 Bank of America 2014
Table 16 presents reconciliations of our Common equity tier 1
capital and risk-weighted assets in accordance with the Basel 1
– 2013 Rules and Basel 3 Standardized – Transition to the Basel
3 Standardized approach fully phased-in estimates and Basel 3
Advanced approaches fully phased-in estimates at December 31,
2014 and 2013. Basel 3 regulatory capital ratios on a fully phased-
in basis are considered non-GAAP financial measures until the end
of the transition period on January 1, 2019 when adopted and
required by U.S. banking regulators.
Table 16 Regulatory Capital Reconciliations (1, 2)
December 31
2013
(Dollars in millions) Basel 1
Regulatory capital – Basel 1 to Basel 3 (fully phased-in)
Basel 1 Tier 1 capital $ 157,742
Deduction of qualifying preferred stock and trust preferred securities (16,220)
Basel 1 Tier 1 common capital 141,522
Deduction of defined benefit pension assets (829)
Deferred tax assets and threshold deductions (deferred tax asset temporary differences, MSRs and significant investments) (5,459)
Net unrealized losses in accumulated OCI on AFS debt and certain marketable equity securities, and employee benefit plans (5,664)
Other deductions, net (1,624)
Basel 3 Common equity tier 1 capital (fully phased-in) $ 127,946
December 31
2014
Basel 3
Transition
Regulatory capital – Basel 3 transition to fully phased-in
Common equity tier 1 capital (transition) $ 155,361
Deferred tax assets arising from net operating loss and tax credit carryforwards phased in during transition (8,905)
DVA related to liabilities and derivatives phased in during transition 925
Defined benefit pension fund assets phased in during transition (599)
Other adjustments and deductions phased in during transition (5,565)
Common equity tier 1 capital (fully phased-in) $ 141,217
December 31
2014 2013
Basel 3
Transition Basel 1
Risk-weighted assets – As reported to Basel 3 (fully phased-in)
As reported risk-weighted assets $ 1,261,544 $ 1,297,593
Changes in risk-weighted assets from reported to fully phased-in 153,722 162,731
Basel 3 Standardized approach risk-weighted assets (fully phased-in) 1,415,266 1,460,324
Changes in risk-weighted assets for advanced models 50,213 (133,027)
Basel 3 Advanced approaches risk-weighted assets (fully phased-in) $ 1,465,479 $ 1,327,297
Regulatory capital ratios
Basel 1 Tier 1 common n/a 10.9%
Basel 3 Standardized approach Common equity tier 1 (transition) 12.3%n/a
Basel 3 Standardized approach Common equity tier 1 (fully phased-in) 10.0 8.8
Basel 3 Advanced approaches Common equity tier 1 (fully phased-in) (3) 9.6 9.6
(1) Fully phased-in Basel 3 estimates are based on our current understanding of the Standardized and Advanced approaches under the Basel 3 rules. The Advanced approaches estimates assume
approval by U.S. banking regulators of our internal analytical models, and do not include the benefit of the removal of the surcharge applicable to the CRM.
(2) On January 1, 2014, we became subject to the Basel 3 rules, which include certain transition provisions primarily related to regulatory deductions and adjustments impacting Common equity tier 1
capital and Tier 1 capital. We reported under the Basel 1 – 2013 Rules at December 31, 2013.
(3) We are currently working with the U.S. banking regulators to obtain approval of certain internal analytical models including the wholesale (e.g., commercial) and other credit models in order to exit
parallel run. The U.S. banking regulators have indicated that they will require modifications to these models which would likely result in a material increase in our risk-weighted assets resulting in a
decrease in our capital ratios.
n/a = not applicable