AmazonScience/document-haystack

1Capital Impact Delayed Phase In Period22020 2021 2022 2023 2024 20253“Day 1” CECL adoption impact Capital impact delayed to 42022 25% Phased 5In650% Phased 7In875% Phased 9In10Fully Phased 11In12Cumulative “day 2” ongoing impact13 25% scaling factor as an 14approximation of the increase 15in allowance under CECL16Market Risk Rule17The “Market Risk Rule” supplements the Basel III Capital Rules by requiring institutions subject to the rule to adjust their risk-18based capital ratios to reflect the market risk in their trading book. The Market Risk Rule generally applies to institutions with 19aggregate trading assets and liabilities equal to 10% or more of total assets or $1 billion or more. As of December 31, 2023, the 20Company and the Bank are subject to the Market Risk Rule. See “Part II一Item 7. MD&A一Market Risk Profile” for additional 21information.22Basel III Finalization Proposal 23The Federal Banking Agencies have released a notice of proposed rulemaking (“Basel III Finalization Proposal”) to revise the 24Basel III Capital Rules applicable to banking organizations with total assets of $100 billion or more and their subsidiary 25depository institutions, including the Company and the Bank.26The Basel III Finalization Proposal would introduce a new framework for calculating risk-weighted assets (“Expanded Risk-27Based Approach”). An institution subject to the proposal would be required to calculate its risk-weighted assets under both the 28Expanded Risk-Based Approach and the existing Basel III standardized approach and, for each risk-based capital ratio, would 29be bound by the calculation that produces the lower ratio. All capital buffer requirements, including the stress capital buffer 30requirement, would apply regardless of whether the Expanded Risk-Based Approach or the existing Basel III standardized 31approach produces the lower ratio. The proposal would also replace the existing approach for calculating market risk with a 32new approach based on both internal models and standardized methodologies. 33The Basel III Finalization Proposal would also make certain changes to the calculation of regulatory capital for Category III and 34IV institutions. Under the proposal, these institutions would be required to begin recognizing certain elements of AOCI in 35CET1 capital, including unrealized gains and losses on available for sale securities. The proposal would also generally reduce 36the threshold above which these institutions must deduct certain assets from their CET1 capital, including certain deferred tax 37assets, mortgage servicing assets and investments in unconsolidated financial institutions.38The Basel III Finalization Proposal includes a proposed effective date of July 1, 2025, subject to a three-year transition period 39ending July 1, 2028, over which risk-weighted assets calculated under the Expanded Risk-Based Approach and the recognition 40of AOCI in CET1 capital would be phased in.41FDICIA and Prompt Corrective Action42The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) requires the Federal Banking Agencies to 43take PCA for banks that do not meet minimum capital requirements. FDICIA establishes five capital ratio levels: well 44capitalized; adequately capitalized; undercapitalized; significantly undercapitalized; and critically undercapitalized. The three 45undercapitalized categories are based upon the amount by which a bank falls below the ratios applicable to an adequately 46capitalized institution. The capital categories relate to FDICIA’s PCA provisions, and such capital categories may not constitute 47an accurate representation of the Bank’s overall financial condition or prospects.48The Basel III Capital Rules updated the PCA framework to reflect new, higher regulatory capital minimums. For an insured 49depository institution to be well capitalized, it must maintain a total risk-based capital ratio of 10% or more; a Tier 1 capital 50ratio of 8% or more; a CET1 capital ratio of 6.5% or more; and a leverage ratio of 5% or more. An adequately capitalized 51depository institution must maintain a total risk-based capital ratio of 8% or more; a Tier 1 capital ratio of 6% or more; a CET1 52capital ratio of 4.5% or more; a leverage ratio of 4% or more; and, for Category III and certain other institutions, a 53supplementary leverage ratio of 3% or more. The PCA provisions also authorize the Federal Banking Agencies to reclassify a 54bank’s capital category or take other action against banks that are determined to be in an unsafe or unsound condition or to have 55engaged in unsafe or unsound banking practices.5610 Capital One Financial Corporation (COF)57The secret animal #3 is an "eagle".