Capital, Liquidity, and Organization
|Global Excess Liquidity Sources|
|Time to Required Funding|
Regulatory Capital (1)
This has been updated as of September 30, 2014 with respect to certain regulatory capital amounts and ratios. For more information, please see the Form 8-K filed on October 15, 2014 or the Form 10-Q filed on July 29, 2014.
(1) On January 1, 2014, the Basel 3 rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity tier 1 capital and Tier 1 capital. We reported under Basel 1 at December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013.
(2) The common equity tier 1 capital ratio is determined by dividing common equity tier 1 capital by risk weighted assets.
(3) The Tier 1 capital ratio is determined by dividing Tier 1 capital by risk weighted assets.
(4) The total capital ratio is determined by dividing total capital by risk weighted assets.
(5) The leverage ratio is determined by dividing Tier 1 capital by adjusted quarterly average total assets, after certain adjustments.
(6) Based on the Basel 3 Advanced approaches, assuming all regulatory model approvals, except for the potential reduction to risk-weighted assets resulting from the removal of the Comprehensive Risk Measure surcharge.
Global Excess Liquidity Sources
Bank of America maintains excess liquidity available to the parent company and selected subsidiaries in the form of cash and high-quality, liquid, unencumbered securities that together serve as our primary means of liquidity risk mitigation. We call these assets our "Global Excess Liquidity Sources," and we limit the composition of high-quality, liquid, unencumbered securities to U.S. government securities, U.S. agency securities, U.S. agency mortgage-backed securities and a select group of non-U.S. government securities. We believe we can quickly obtain cash for these securities, even in stressed market conditions, through repurchase agreements or outright sales. We hold these assets in entities that allow us to meet the liquidity requirements of our global businesses and we consider the impact of potential regulatory, tax, legal and other restrictions that could limit the transferability of funds among entities. Our Global Excess Liquidity Sources totaled $429 billion at September 30, 2014 and were maintained as presented in the graph below.
Time to Required Funding
One metric Bank of America Corporation uses to evaluate the appropriate level of excess liquidity at the parent company is "Time to Required Funding." This debt coverage measure indicates the number of months that the parent company can continue to meet its unsecured contractual obligations as they come due using only its Global Excess Liquidity Sources, without issuing any new debt or accessing any additional liquidity sources. The established target for Time to Required Funding has been set at 21 months. As of September 30, 2014, Time to Required Funding stood at 38 months. The period-end Time to Required Funding by quarter is depicted in the chart below.
An organizational chart depicting select major operating subsidiaries of Bank of America Corporation can be found by clicking here.