Regulatory Capital

3 Months Ended

Mar. 31, 2012

Banking and Thrift [Abstract]

Capital

Regulatory capital

The Federal Reserve establishes capital requirements, including well-capitalized standards for the consolidated financial holding company. The OCC establishes similar capital requirements and standards for the Firm’s national banks, including JPMorgan Chase Bank, N.A., and Chase Bank USA, N.A.

There are two categories of risk-based capital: Tier 1 capital and Tier 2 capital. Tier 1 capital consists of common stockholders’ equity, perpetual preferred stock, noncontrolling interests in subsidiaries and trust preferred capital debt securities, less goodwill and certain other adjustments. Tier 2 capital consists of preferred stock not qualifying as Tier 1 capital, subordinated long-term debt and other instruments qualifying as Tier 2 capital, and the aggregate allowance for credit losses up to a certain percentage of risk-weighted assets. Total capital is Tier 1 capital plus Tier 2 capital. Under the risk-based capital guidelines of the Federal Reserve, JPMorgan Chase is required to maintain minimum ratios of Tier 1 and Total capital to risk-weighted assets, as well as minimum leverage ratios (which are defined as Tier 1 capital divided by adjusted quarterly average assets). Failure to meet these minimum requirements could cause the Federal Reserve to take action. Banking subsidiaries also are subject to these capital requirements by their respective primary regulators. As of March 31, 2012, and December 31, 2011, JPMorgan Chase and all of its banking subsidiaries were well-capitalized and met all capital requirements to which each was subject.

The following table presents the regulatory capital, assets and risk-based capital ratios for JPMorgan Chase and its significant banking subsidiaries at March 31, 2012, and December 31, 2011. These amounts are determined in accordance with regulations issued by the Federal Reserve and/or OCC. The Firm's and JPMorgan Chase Bank, N.A.'s capital ratios as of March 31, 2012 have been revised from those previously reported based on regulatory guidance received on August 8, 2012. The revision relates to an adjustment to the Firm's regulatory capital ratios to reflect regulatory guidance regarding a limited number of  market risk models used for certain positions held by the Firm during the first quarter, including the CIO synthetic credit portfolio.

	JPMorgan Chase & Co.(e)						JPMorgan Chase Bank, N.A.(e)						Chase Bank USA, N.A.(e)						Well-capitalized ratios(f)			Minimum capital ratios(f)
(in millions, except ratios)	March 31, 2012			December 31, 2011			March 31, 2012			December 31, 2011			March 31, 2012			December 31, 2011
Regulatory capital
Tier 1(a)	$	155,352		$	150,384		$	100,387		$	98,426		$	9,924		$	11,903
Total	193,476			188,088			138,975			136,017			13,397			15,448
Assets
Risk-weighted(b)(c)	$	1,300,185		$	1,221,198		$	1,117,183		$	1,042,898		$	102,261		$	107,421
Adjusted average(d)	2,195,625			2,202,087			1,776,303			1,789,194			104,898			106,312
Capital ratios
Tier 1(a)	11.9		%	12.3		%	9.0		%	9.4		%	9.7		%	11.1		%	6.0	%		4.0	%
Total	14.9			15.4			12.4			13.0			13.1			14.4			10.0			8.0
Tier 1 leverage	7.1			6.8			5.7			5.5			9.5			11.2			5.0		(g)	3.0		(h)

(a) At March 31, 2012, for JPMorgan Chase and JPMorgan Chase Bank, N.A., trust preferred capital debt securities were $19.6 billion and $600 million, respectively. If these securities were excluded from the calculation at March 31, 2012, Tier 1 capital would be $135.8 billion and $99.8 billion, respectively, and the Tier 1 capital ratio would be 10.4% and 8.9%, respectively. At March 31, 2012, Chase Bank USA, N.A. had no trust preferred capital debt securities.

(b) Risk-weighted assets consist of on– and off–balance sheet assets that are assigned to one of several broad risk categories and weighted by factors representing their risk and potential for default. On–balance sheet assets are risk-weighted based on the perceived credit risk associated with the obligor or counterparty, the nature of any collateral, and the guarantor, if any. Off–balance sheet assets such as lending-related commitments, guarantees, derivatives and other applicable off–balance sheet positions are risk-weighted by multiplying the contractual amount by the appropriate credit conversion factor to determine the on–balance sheet credit-equivalent amount, which is then risk-weighted based on the same factors used for on–balance sheet assets. Risk-weighted assets also incorporate a measure for the market risk related to applicable trading assets–debt and equity instruments, and foreign exchange and commodity derivatives. The resulting risk-weighted values for each of the risk categories are then aggregated to determine total risk-weighted assets.

(c) Includes off–balance sheet risk-weighted assets at March 31, 2012, of $303.6 billion, $292.3 billion and $17 million, and at December 31, 2011, of $301.1 billion, $291.0 billion and $38 million, for JPMorgan Chase, JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A., respectively.

(d) Adjusted average assets, for purposes of calculating the leverage ratio, include total quarterly average assets adjusted for unrealized gains/(losses) on securities, less deductions for disallowed goodwill and other intangible assets, investments in certain subsidiaries, and the total adjusted carrying value of nonfinancial equity investments that are subject to deductions from Tier 1 capital.

(e) Asset and capital amounts for JPMorgan Chase’s banking subsidiaries reflect intercompany transactions; whereas the respective amounts for JPMorgan Chase reflect the elimination of intercompany transactions.

(f) As defined by the regulations issued by the Federal Reserve, OCC and FDIC.

(g) Represents requirements for banking subsidiaries pursuant to regulations issued under the FDIC Improvement Act. There is no Tier 1 leverage component in the definition of a well-capitalized bank holding company.

(h) The minimum Tier 1 leverage ratio for bank holding companies and banks is 3% or 4%, depending on factors specified in regulations issued by the Federal Reserve and OCC.

Note: Rating agencies allow measures of capital to be adjusted upward for deferred tax liabilities, which have resulted from both nontaxable business combinations and from tax-deductible goodwill. The Firm had deferred tax liabilities resulting from nontaxable business combinations totaling $378 million and $414 million at March 31, 2012, and December 31, 2011, respectively; and deferred tax liabilities resulting from tax-deductible goodwill of $2.3 billion at both March 31, 2012, and December 31, 2011.

A reconciliation of the Firm’s Total stockholders’ equity to Tier 1 capital and Total qualifying capital is presented in the table below.

(in millions)	March 31, 2012			December 31, 2011
Tier 1 capital
Total stockholders’ equity	$	189,269		$	183,573
Effect of certain items in AOCI excluded from Tier 1 capital	(2,544		)	(970		)
Qualifying hybrid securities and noncontrolling interests(a)	19,910			19,668
Less: Goodwill(b)	45,867			45,873
Fair value DVA on derivative and structured note liabilities related to the Firm’s credit quality	1,596			2,150
Investments in certain subsidiaries and other	981			993
Other intangible assets(b)	2,839			2,871
Total Tier 1 capital	155,352			150,384
Tier 2 capital
Long-term debt and other instruments qualifying as Tier 2	21,719			22,275
Qualifying allowance for credit losses	16,477			15,504
Adjustment for investments in certain subsidiaries and other	(72		)	(75		)
Total Tier 2 capital	38,124			37,704
Total qualifying capital	$	193,476		$	188,088

(a) Primarily includes trust preferred capital debt securities of certain business trusts.

(b) Goodwill and other intangible assets are net of any associated deferred tax liabilities.