Wells Fargo 2013 Annual Report Download - page 264

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. (the Bank).
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 $2.1 billion at
December 31, 2013. During first quarter 2013, we redeemed
$2.8 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 was in connection with the Capital Plan the
Company submitted to the Federal Reserve Board in 2012.
Effective January 1, 2013, the Company implemented
changes to the market risk capital rule, commonly referred to as
Basel 2.5, as required by U.S. banking regulators. Basel 2.5
requires banking organizations with significant trading activities
to adjust their capital requirements to better account for the
market risks of those activities. The market risk capital rule is
reflected in the Company’s calculation of risk-weighted assets
and upon initial adoption in first quarter 2013, negatively
impacted capital ratios under Basel I by approximately 25 basis
points, but did not impact our ratio under Basel III, as its impact
has historically been included in our calculations.
The Bank is an approved seller/servicer, 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, 2013, 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.
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.
December 31,
(in billions, except ratios) 2013 2012 2013 2012
Well-
capitalized
ratios (1)
Minimum
capital
ratios (1)
Regulatory capital:
Tier 1 $ 140.7 126.6 110.0 101.3
Total 176.2 157.6 136.4 124.8
Assets:
Risk-weighted $ 1,141.5 1,077.1 1,057.3 1,002.0
Adjusted average (2) 1,466.7 1,336.4 1,324.0 1,195.9
Capital ratios:
Tier 1 capital 12.33 % 11.75 10.40 10.11 6.00 4.00
Total capital 15.43 14.63 12.90 12.45 10.00 8.00
Tier 1 leverage (2) 9.60 9.47 8.31 8.47 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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