Regulatory Capital

12 Months Ended

Dec. 31, 2013

Banking and Thrift [Abstract]

Regulatory 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 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 December 31, 2013 and 2012, 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 December 31, 2013 and 2012. These amounts are determined in accordance with regulations issued by the Federal Reserve and/or OCC. The table reflects the Firm’s and JPMorgan Chase Bank, N.A.’s implementation of rules that provide for additional capital requirements for trading positions and securitizations (“Basel 2.5”). Basel 2.5 rules became effective for the Firm and JPMorgan Chase Bank, N.A. on January 1, 2013. The implementation of these rules in the first quarter of 2013 resulted in an increase of approximately $150 billion and $140 billion, respectively, in the Firm’s and JPMorgan Chase Bank, N.A.’s risk-weighted assets compared with the Basel I rules at March 31, 2013. The implementation of these rules also resulted in decreases of the Firm’s Tier 1 capital and Total capital ratios of 140 basis points and 160 basis points, respectively, at March 31, 2013, and decreases of JPMorgan Chase Bank, N.A.’s Tier 1 capital and Total capital ratios of 130 basis points and 150 basis points, respectively, at March 31, 2013. Implementation of Basel 2.5 in the first quarter of 2013 did not impact Chase Bank USA, N.A.’s RWA or Tier 1 capital and Total capital ratios.

December 31,	JPMorgan Chase & Co.(d)						JPMorgan Chase Bank, N.A.(d)						Chase Bank USA, N.A.(d)						Well-capitalized ratios(e)			Minimum capital ratios(e)
(in millions, except ratios)	2013			2012			2013			2012			2013			2012
Regulatory capital
Tier 1(a)	$	165,663		$	160,002		$	139,727		$	111,827		$	12,956		$	9,648
Total	199,286			194,036			165,496			146,870			16,389			13,131
Assets
Risk-weighted(b)	$	1,387,863		$	1,270,378		$	1,171,574		$	1,094,155		$	100,990		$	103,593
Adjusted average(c)	2,343,713			2,243,242			1,900,770			1,815,816			109,731			103,688
Capital ratios
Tier 1(a)	11.9		%	12.6		%	11.9		%	10.2		%	12.8		%	9.3		%	6.0	%		4.0	%
Total	14.4			15.3			14.1			13.4			16.2			12.7			10.0			8.0
Tier 1 leverage	7.1			7.1			7.4			6.2			11.8			9.3			5.0		(f)	3.0		(g)

(a) At December 31, 2013, for JPMorgan Chase and JPMorgan Chase Bank, N.A., trust preferred securities were $5.3 billion and $600 million, respectively. If these securities were excluded from the calculation at December 31, 2013, Tier 1 capital would be $160.4 billion and $139.1 billion, respectively, and the Tier 1 capital ratio would be 11.6% and 11.9%, respectively. At December 31, 2013, Chase Bank USA, N.A. had no trust preferred securities.

(b) Included off–balance sheet risk-weighted assets at December 31, 2013, of $315.9 billion, $304.0 billion and $14 million, and at December 31, 2012, of $304.5 billion, $297.1 billion and $16 million, for JPMorgan Chase, JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A., respectively.

(c) Adjusted average assets, for purposes of calculating the leverage ratio, included 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.

(d) 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.

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

(f) 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.

(g) 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 $192 million and $291 million at December 31, 2013 and 2012, respectively; and deferred tax liabilities resulting from tax-deductible goodwill of $2.8 billion and $2.5 billion at December 31, 2013 and 2012, respectively.

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.