Provision for Taxes
The effective income tax rate for 2013 was 31.5%, up from 30.3% for the first nine months of 2013, reflecting a decrease in the impact of permanent benefits. The rate decreased from 33.3% for 2012 to 31.5% for 2013, primarily due to a determination that certain non-U.S. earnings will be permanently reinvested abroad.
As of December 31, 2013, total capital was $239.44 billion, consisting of $78.47 billion in total shareholders’ equity (common shareholders’ equity of $71.27 billion and preferred stock of $7.20 billion) and $160.97 billion in unsecured long-term borrowings. In October 2013, Berkshire Hathaway Inc. and certain of its subsidiaries exercised in full the warrant to purchase shares of the firm’s common stock, which required net share settlement and resulted in a reduction of approximately 3% to both book value per common share and tangible book value per common share. Including the impact of the warrant exercise, book value per common share increased approximately 5% to $152.48 and tangible book value per common share (5) increased approximately 7% to $143.11 compared with the end of 2012, while both decreased approximately 1% compared with the end of the third quarter of 2013. Book value per common share and tangible book value per common share are based on common shares outstanding, including restricted stock units granted to employees with no future service requirements, of 467.4 million as of December 31, 2013.During the year, the firm repurchased 39.3 million shares of its common stock at an average cost per share of $157.11, for a total cost of $6.17 billion, including 8.5 million shares during the fourth quarter at an average cost per share of $164.90, for a total cost of $1.40 billion. The remaining share authorization under the firm’s existing repurchase program is 57.2 million shares. (12) Under the regulatory capital requirements applicable to bank holding companies in 2013, the firm’s Tier 1 capital ratio (6) was 16.7% (7) and the firm’s Tier 1 common ratio (6) was 14.6% (7) as of December 31, 2013, up from 16.3% and 14.2%, respectively, as of September 30, 2013 (in each case under Basel I and also reflecting the revised market risk regulatory capital requirements which became effective on January 1, 2013). Other Balance Sheet and Liquidity Metrics
- The firm’s global core excess liquidity (GCE) (8) was $184 billion (7) as of December 31, 2013 and averaged $183 billion (7) for the fourth quarter of 2013, compared with an average of $187 billion for the third quarter of 2013. GCE averaged $183 billion (7) for 2013, compared with an average of $172 billion for 2012.
- Total assets were $912 billion (7) as of December 31, 2013, compared with $923 billion as of September 30, 2013 and $939 billion as of December 31, 2012.
- Level 3 assets were $40 billion (7) as of December 31, 2013, compared with $42 billion as of September 30, 2013 and $47 billion as of December 31, 2012, and represented 4.4% of total assets.