Regulatory Capital

12 Months Ended

Dec. 31, 2014

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.

Basel III rules under the transitional Standardized and Advanced Approaches (“Basel III Standardized Transitional” and “Basel III Advanced Transitional,” respectively) became effective on January 1, 2014; December 31, 2013 data is based on Basel I rules. Basel III establishes two comprehensive methodologies for calculating RWA (a Standardized approach and an Advanced approach) which include capital requirements for credit risk, market risk, and in the case of Basel III Advanced, also operational risk. Key differences in the calculation of credit risk RWA between the Standardized and Advanced approaches are that for Basel III Advanced, credit risk RWA is based on risk-sensitive approaches which largely rely on the use of internal credit models and parameters, whereas for Basel III Standardized, credit risk RWA is generally based on supervisory risk-weightings which vary primarily by counterparty type and asset class. Market risk RWA is calculated mostly consistent across Basel III Standardized and Basel III Advanced, both of which incorporate the requirements set forth in Basel 2.5. For 2014, Basel III Standardized Transitional requires the Firm to calculate its capital ratios using the Basel III definition of capital divided by the Basel I definition of RWA, inclusive of Basel 2.5 for market risk.

Beginning in 2014, there are three categories of risk-based capital under the Basel III Transitional rules: Common Equity Tier 1 capital (“CET1 capital”), as well as Tier 1 capital and Tier 2 capital. CET1 capital predominantly includes common stockholders’ equity (including capital for AOCI related to debt and equity securities classified as AFS as well as for defined benefit pension and OPEB plans), less certain deductions for goodwill, MSRs and deferred tax assets that arise from NOL and tax credit carryforwards. Tier 1 capital is predominantly comprised of CET1 capital as well as perpetual preferred stock. Tier 2 capital includes long-term debt qualifying as Tier 2 and qualifying allowance for credit losses. Total capital is Tier 1 capital plus Tier 2 capital.

On February 21, 2014, the Federal Reserve and the OCC informed the Firm and its national bank subsidiaries that they had satisfactorily completed the parallel run requirements and were approved to calculate capital under Basel III Advanced, in addition to Basel III Standardized, as of April 1, 2014. In conjunction with its exit from the parallel run, the capital adequacy of the Firm and its national bank subsidiaries is evaluated against the Basel III approach (Standardized or Advanced) which results, for each quarter beginning with the second quarter of 2014, in the lower ratio (the “Collins Floor”), as required by the Collins Amendment of the Dodd-Frank Act.

The following tables present the regulatory capital, assets and risk-based capital ratios for JPMorgan Chase and its significant national bank subsidiaries under both Basel III Standardized Transitional and Basel III Advanced Transitional at December 31, 2014, and under Basel I at December 31, 2013.

	JPMorgan Chase & Co.(d)
	Basel III Standardized Transitional			Basel III Advanced Transitional			Basel I
(in millions, except ratios)	Dec 31, 2014			Dec 31, 2014			Dec 31, 2013
Regulatory capital
CET1 capital	$	164,764		$	164,764		NA
Tier 1 capital(a)	186,632			186,632			$	165,663
Total capital	221,563			211,022			199,286
Assets
Risk-weighted	1,472,602			1,608,240			1,387,863
Adjusted average(b)	2,465,414			2,465,414			2,343,713
Capital ratios(c)
CET1	11.2		%	10.2		%	NA
Tier 1(a)	12.7			11.6			11.9		%
Total	15.0			13.1			14.4
Tier 1 leverage	7.6			7.6			7.1

	JPMorgan Chase Bank, N.A.(d)
	Basel III Standardized Transitional			Basel III Advanced Transitional			Basel I
(in millions, except ratios)	Dec 31, 2014			Dec 31, 2014			Dec 31, 2013
Regulatory capital
CET1 capital	$	156,898		$	156,898		NA
Tier 1 capital(a)	157,222			157,222			$	139,727
Total capital	173,659			166,662			165,496
Assets
Risk-weighted	1,230,358			1,330,175			1,171,574
Adjusted average(b)	1,968,131			1,968,131			1,900,770
Capital ratios(c)
CET1	12.8		%	11.8		%	NA
Tier 1(a)	12.8			11.8			11.9		%
Total	14.1			12.5			14.1
Tier 1 leverage	8.0			8.0			7.4

	Chase Bank USA, N.A.(d)
	Basel III Standardized Transitional			Basel III Advanced Transitional			Basel I
(in millions, except ratios)	Dec 31, 2014			Dec 31, 2014			Dec 31, 2013
Regulatory capital
CET1 capital	$	14,556		$	14,556		NA
Tier 1 capital(a)	14,556			14,556			$	12,956
Total capital	20,517			19,206			16,389
Assets
Risk-weighted	103,468			157,565			100,990
Adjusted average(b)	128,111			128,111			109,731
Capital ratios(c)
CET1	14.1		%	9.2		%	NA
Tier 1(a)	14.1			9.2			12.8		%
Total	19.8			12.2			16.2
Tier 1 leverage	11.4			11.4			11.8

(a) At December 31, 2014, trust preferred securities included in Basel III Tier 1 capital were $2.7 billion and $300 million for JPMorgan Chase and JPMorgan Chase Bank, N.A., respectively. At December 31, 2014, Chase Bank USA, N.A. had no trust preferred securities.

(b) Adjusted average assets, for purposes of calculating the leverage ratio, includes 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.

(c) For each of the risk-based capital ratios the lower of the Standardized Transitional or Advanced Transitional ratio represents the Collins Floor.

(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.

Note: Rating agencies allow measures of capital to be adjusted upward for deferred tax liabilities, which have resulted from both non-taxable business combinations and from tax-deductible goodwill. The Firm had deferred tax liabilities resulting from non-taxable business combinations totaling $130 million and $192 million at December 31, 2014, and December 31, 2013, respectively; and deferred tax liabilities resulting from tax-deductible goodwill of $2.7 billion and $2.8 billion at December 31, 2014, and December 31, 2013, respectively.

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. Bank subsidiaries also are subject to these capital requirements by their respective primary regulators. The following table presents the minimum ratios to which the Firm and its national bank subsidiaries are subject as of December 31, 2014.

	Minimum capital ratios(a)		Well-capitalized ratios(a)
Capital ratios
CET1	4.0	%	NA
Tier 1	5.5		6.0	%
Total	8.0		10.0
Tier 1 leverage	4.0		5.0		(b)

(a) As defined by the regulations issued by the Federal Reserve, OCC and FDIC. The CET1 capital ratio became a relevant measure of capital under the prompt corrective action requirements on January 1, 2015.

(b) Represents requirements for bank 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.

As of December 31, 2014, and 2013, JPMorgan Chase and all of its banking subsidiaries were well-capitalized and met all capital requirements to which each was subject.