Regulatory Capital

We are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum regulatory capital requirements can initiate certain mandatory and discretionary actions by regulators that, if undertaken, could have a direct material effect on our consolidated financial condition. Under current regulatory capital adequacy guidelines, we must meet specified capital requirements that involve quantitative measures of our consolidated assets, liabilities and off-balance sheet exposures calculated in conformity with regulatory accounting practices. Our capital components and their classifications are subject to qualitative judgments by regulators about components, risk weightings and other factors.

As required by the Dodd-Frank Act, State Street and State Street Bank, as advanced approaches banking organizations, are subject to a permanent "capital floor" in the calculation and assessment of their regulatory capital adequacy by U.S. banking regulators. Beginning on January 1, 2015, we were required to calculate our risk-based capital ratios using both the advanced approaches and the standardized approach. As a result, from January 1, 2015 going forward, our risk-based capital ratios for regulatory assessment purposes are the lower of each ratio calculated under the standardized approach and the advanced approaches.

The methods for the calculation of our and State Street Bank's risk-based capital ratios will change as the provisions of the Basel III final rule related to the numerator (capital) and denominator (risk-weighted assets) are phased in, and as we begin calculating our risk-weighted assets using the advanced approaches. These ongoing methodological changes will result in differences in our reported capital ratios from one reporting period to the next that are independent of applicable changes to our capital base, our asset composition, our off-balance sheet exposures or our risk profile.

As of December 31, 2015, State Street and State Street Bank exceeded all regulatory capital adequacy requirements to which they were subject. As of December 31, 2015, State Street Bank was categorized as “well capitalized” under the applicable regulatory capital adequacy framework, and exceeded all “well capitalized” ratio guidelines to which it was subject.

The following table presents the regulatory capital structure, total risk-weighted assets, related regulatory capital ratios and the minimum required regulatory capital ratios for State Street and State Street Bank as of the dates indicated. As a result of changes in the methodologies used to calculate our regulatory capital ratios from period to period as the provisions of the Basel III final rule are phased in, the ratios presented in the table for each period-end are not directly comparable. Refer to the footnotes following the table.



					State Street												State Street Bank
(Dollars in millions)					Basel III Advanced Approaches December 31, 2015⁽¹⁾			Basel III Standardized Approach December 31, 2015⁽²⁾			Basel III Advanced Approaches December 31, 2014⁽¹⁾			Basel III Transitional Approach December 31, 2014⁽³⁾			Basel III Advanced Approaches December 31, 2015⁽¹⁾			Basel III Standardized Approach December 31, 2015⁽²⁾			Basel III Advanced Approaches December 31, 2014⁽¹⁾			Basel III Transitional Approach December 31, 2014⁽³⁾
Common shareholders' equity:
Common stock and related surplus					$	10,250		$	10,250		$	10,295		$	10,295		$	10,938		$	10,938		$	10,867		$	10,867
Retained earnings					16,049			16,049			14,737			14,737			10,655			10,655			9,270			9,270
Accumulated other comprehensive income (loss)					(1,422		)	(1,422		)	(642		)	(642		)	(1,230		)	(1,230		)	(536		)	(536		)
Treasury stock, at cost					(6,457		)	(6,457		)	(5,158		)	(5,158		)	—			—			—			—
Total					18,420			18,420			19,232			19,232			20,363			20,363			19,601			19,601
Regulatory capital adjustments:
Goodwill and other intangible assets, net of associated deferred tax liabilities⁽⁴⁾					(5,927		)	(5,927		)	(5,869		)	(5,869		)	(5,631		)	(5,631		)	(5,577		)	(5,577		)
Other adjustments					(60		)	(60		)	(36		)	(36		)	(85		)	(85		)	(128		)	(128		)
Common equity tier 1 capital					12,433			12,433			13,327			13,327			14,647			14,647			13,896			13,896
Preferred stock					2,703			2,703			1,961			1,961			—			—			—			—
Trust preferred capital securities subject to phase-out from tier 1 capital					237			237			475			475			—			—			—			—
Other adjustments					(109		)	(109		)	(145		)	(145		)	—			—			—			—
Tier 1 capital					15,264			15,264			15,618			15,618			14,647			14,647			13,896			13,896
Qualifying subordinated long-term debt					1,358			1,358			1,618			1,618			1,371			1,371			1,634			1,634
Trust preferred capital securities phased out of tier 1 capital					713			713			475			475			—			—			—			—
ALLL and other					12			66			—			—			8			66			—			—
Other adjustments					2			2			4			4			—			—			—			—
Total capital					$	17,349		$	17,403		$	17,715		$	17,715		$	16,026		$	16,084		$	15,530		$	15,530
Risk-weighted assets:
Credit risk					$	51,733		$	93,515		$	66,874		$	87,502		$	47,677		$	89,164		$	59,836		$	84,433
Operational risk					43,882			NA			35,866			NA			43,324			NA			35,449			NA
Market risk⁽⁵⁾					3,937			2,378			5,087			2,910			3,939			2,378			5,048			2,909
Total risk-weighted assets					$	99,552		$	95,893		$	107,827		$	90,412		$	94,940		$	91,542		$	100,333		$	87,342
Adjusted quarterly average assets					$	221,880		$	221,880		$	247,740		$	247,740		$	217,358		$	217,358		$	243,549		$	243,549
Capital Ratios:	Minimum Requirements⁽⁶⁾2015		Minimum Requirements⁽⁷⁾2014
Common equity tier 1 capital	4.5	%	4.0	%	12.5		%	13.0		%	12.4		%	14.7		%	15.4		%	16.0		%	13.8		%	15.9		%
Tier 1 capital	6.0		5.5		15.3			15.9			14.5			17.3			15.4			16.0			13.8			15.9
Total capital	8.0		8.0		17.4			18.1			16.4			19.6			16.9			17.6			15.5			17.8
Tier 1 leverage	4.0		4.0		6.9			6.9			6.3			6.3			6.7			6.7			5.7			5.7

NA: Not applicable.

⁽¹⁾Common equity tier 1 capital, tier 1 capital and total capital ratios as of December 31, 2015 and December 31, 2014 were calculated in conformity with the advanced approaches provisions of the Basel III final rule. Tier 1 leverage ratio as of December 31, 2015 and December 31, 2014 were calculated in conformity with the Basel III final rule.

⁽²⁾Common equity tier 1 capital, tier 1 capital and total capital ratios as of December 31, 2015 were calculated in conformity with the standardized approach provisions of the Basel III final rule. Tier 1 leverage ratio as of December 31, 2015 was calculated in conformity with the Basel III final rule.

⁽³⁾Common equity tier 1 capital, tier 1 capital, total capital and tier 1 leverage ratios as of December 31, 2014 were calculated in conformity with the transitional provisions of the Basel III final rule. Specifically, these ratios reflect common equity tier 1, tier 1 and total capital (the numerator) calculated in conformity with the provisions of the Basel III final rule, and total risk-weighted assets or, with respect to the tier 1 leverage ratio, quarterly average assets (in both cases, the denominator), calculated in conformity with the provisions of Basel I.

⁽⁴⁾Amounts for State Street and State Street Bank as of December 31, 2015 consisted of goodwill, net of associated deferred tax liabilities, and 40% of other intangible assets, net of associated deferred tax liabilities. Amounts for State Street and State Street Bank as of December 31, 2014 consisted of goodwill, net of deferred tax liabilities and 20% of other intangible assets, net of associated deferred tax liabilities. Intangible assets, net of associated deferred tax liabilities is phased in as a deduction from capital, in conformity with the Basel III final rule.

⁽⁵⁾Market risk risk-weighted assets reported in conformity with the Basel III advanced approaches included a CVA which reflected the risk of potential fair-value adjustments for credit risk reflected in our valuation of over-the-counter derivative contracts. The CVA was not provided for in the final market risk capital rule; however, it was required by the advanced approaches provisions of the Basel III final rule. State Street used the simple CVA approach in conformity with the Basel III advanced approaches.

⁽⁶⁾Minimum requirements will be phased in up to full implementation beginning on January 1, 2019; minimum requirements listed are as of December 31, 2015.

⁽⁷⁾Minimum requirements will be phased in up to full implementation beginning on January 1, 2019; minimum requirements listed are as of December 31, 2014.