The Company does not believe that any individual unrealized loss in the available-for-sale or unrecognized loss in the held-to-maturity portfolio as of December 31, 2011 represents a credit loss.
The credit loss component is the difference between the security’s amortized cost basis and the present value of its expected future cash flows, and is recognized in earnings.
The noncredit loss component is the difference between the present value of its expected future cash flows and the fair value and is recognized through other comprehensive income (loss).
The Company assessed whether it intends to sell, or whether it is more likely than not that the Company will be required to sell a security before recovery of its amortized cost basis.
For debt securities that are considered other-than-temporarily impaired and that the Company does not intend to sell and will not be required to sell prior to recovery of its amortized cost basis, the Company determines the amount of the impairment that is related to credit and the amount due to all other factors.
The majority of the unrealized or unrecognized losses on mortgage-backed securities are attributable to changes in interest rates and a re-pricing of risk in the market.
The majority of agency mortgage-backed securities and CMOs, other agency debt securities and agency debentures are AAA-rated.
Municipal bonds and corporate bonds are evaluated by reviewing the credit-worthiness of the issuer and general market conditions.
The Company does not intend to sell the securities in an unrealized loss position and it is not more likely than not that the Company will be required to sell the debt securities before the anticipated recovery of its remaining amortized cost of the securities in an unrealized loss position at December 31, 2011.
The majority of the Company’s available-for-sale and held-to-maturity portfolio consists of residential mortgage-backed securities.
For residential mortgage-backed securities, the Company calculates the credit portion of OTTI by comparing the present value of the expected future cash flows with the amortized cost basis of the security.
The expected future cash flows are determined using the remaining contractual cash flows adjusted for future credit losses.
The estimate of expected future credit losses includes the following assumptions: 1) expected default rates based on current delinquency trends, foreclosure statistics of the underlying mortgages and loan documentation type; 2) expected loss severity based on the underlying loan characteristics, including loan-to-value, origination vintage and geography; and 3) expected loan prepayments and principal reduction based on current experience and existing market conditions that may impact the future rate of prepayments.
The expected cash flows of the security are then discounted at the interest rate used to recognize interest income on the security to arrive at the present value amount.
The following table presents a summary of the significant inputs considered for securities that were other-than-temporarily impaired as of December 31, 2011:
## Table 0 ##
The following table presents a roll-forward of the credit loss component of the amortized cost of debt securities that have noncredit loss recognized in other comprehensive income (loss) and credit loss recognized in earnings for the periods presented (dollars in thousands):
## Table 1 ##
(1) The Company adopted the amended guidance for the recognition and presentation of OTTI for debt securities on April 1, 2009
EARNINGS OVERVIEW 2012 Compared to 2011 We incurred a net loss of $112.6 million, or $(0.39) per diluted share, on total net revenue of $1.9 billion for the year ended December 31, 2012.
The net loss for the year ended December 31, 2012 was primarily the result of losses of $256.9 million from the early extinguishment of all the 12 1 ?2 % Springing lien notes and 7 7 ?8 % Notes during 2012.
Net operating interest income decreased 11% to $1.1 billion for the year ended December 31, 2012 compared to 2011, which was driven primarily by a decrease in enterprise net interest spread during 2012.
Commissions, fees and service charges, principal transactions and other revenue decreased 11% to $630.9 million for the year ended December 31, 2012, compared to 2011, which was driven primarily by a decrease in trading activity during 2012.
In addition, gains on loans and securities, net increased 67% to $200.4 million for the year ended December 31, 2012 compared to 2011.
We recognized additional gains from securities sold as a result of our continued deleveraging efforts, primarily related to a reduction in wholesale funding obligations, which resulted in losses on early extinguishment of debt of $78.3 million during the year ended December 31, 2012.
Provision for loan losses declined 20% to $354.6 million for the year ended December 31, 2012 compared to 2011.
The decline was driven primarily by improving credit trends and loan portfolio run-off, offset by an increase of $50 million related to charge-offs associated with newly identified bankruptcy filings during the third quarter of 2012.
Total operating expenses decreased 6% to $1.2 billion for the year ended December 31, 2012 compared to 2011.
This decrease was driven primarily by decreases in clearing and servicing and other operating expenses, partially offset by an increase in compensation and benefits expense for the year ended December 31, 2012.
The following sections describe in detail the changes in key operating factors and other changes and events that affected net revenue, provision for loan losses, operating expense, other income (expense) and income tax expense (benefit).
Revenue The components of revenue and the resulting variances are as follows (dollars in millions):
## Table 2 ##
* Percentage not meaningful.
Net Operating Interest Income Net operating interest income decreased 11% to $1.1 billion for the year ended December 31, 2012 compared to 2011.
Net operating interest income is earned primarily through investing customer cash and deposits in enterprise interest-earning assets, which include: real estate loans, margin receivables, available-for- sale securities and held-to-maturity securitie
Net Impairment We recognized $16.9 million and $14.9 million of net impairment during the years ended December 31, 2012 and 2011, respectively, on certain securities in our non-agency CMO portfolio due to continued deterioration in the expected credit performance of the underlying loans in those specific securities.
The gross other-than-temporary impairment (“OTTI”) and the noncredit portion of OTTI, which was or had been previously recorded through other comprehensive income (loss), are shown in the table below (dollars in millions):
## Table 3 ##
Provision for Loan Losses Provision for loan losses decreased 20% to $354.6 million for the year ended December 31, 2012 compared to 2011.
The decrease in provision for loan losses was driven primarily by improving credit trends, as evidenced by the lower levels of delinquent loans in the one- to four-family and home equity loan portfolios, and loan portfolio run-off.
The decrease was partially offset by $50 million in charge-offs associated with newly identified bankruptcy filings during the third quarter of 2012, with approximately 80% related to prior years.
We utilize third party loan servicers to obtain bankruptcy data on our borrowers and during the third quarter of 2012, we identified an increase in bankruptcies reported by one specific servicer.
In researching this increase, we discovered that the servicer had not been reporting historical bankruptcy data on a timely basis.
As a result, we implemented an enhanced procedure around all servicer reporting to corroborate bankruptcy reporting with independent third party data.
Through this additional process, approximately $90 million of loans were identified in which servicers failed to report the bankruptcy filing to us, approximately 90% of which were current at the end of the third quarter of 2012.
As a result, these loans were written down to the estimated current value of the underlying property less estimated selling costs, or approximately $40 million, during the third quarter of 2012.
These charge-offs resulted in an increase to provision for loan losses of $50 million for the year ended December 31, 2012.
The provision for loan losses has declined four consecutive years, down 78% from its peak of $1.6 billion for the year ended December 31, 2008.
We expect provision for loan losses to continue to decline over the long term, although it is subject to variability in any given quarter.
capital strength.
The Tier 1 common ratio is defined as Tier 1 capital less elements of Tier 1 capital that are not in the form of common equity, such as trust preferred securities, divided by total risk-weighted assets.
The following table shows the calculation of the Tier 1 common ratio (dollars in millions):
## Table 4 ##
In July 2013, the U. S.  Federal banking agencies finalized a rule to implement Basel III in the U. S. , a framework for the calculation and components of a banking organization’s regulatory capital and for calculating a banking organization’s risk-weighted assets.
Among other things, the Basel III rule raises the minimum thresholds for required capital and revises certain aspects of the definitions and elements of the capital that can be used to satisfy these required minimum thresholds.
While the rules became effective on January 1, 2014 for certain large banking organizations, most U. S.  banking organizations, including the Company and E*TRADE Bank, have until January 1, 2015 to begin complying with this new framework, with the fully phased-in Basel III capital standards becoming effective in 2019.
We expect to be compliant with the Basel III framework, as it is phased-in.
We believe the most relevant elements of the final rule to us relate to the risk-weighting of mortgage loans, which will remain unchanged from current rules, and margin receivables, which will qualify for 0% riskweighting.
In addition, the final rule gives the option for a one-time permanent election for the inclusion or exclusion in the calculation of Common Tier 1 capital of unrealized gains (losses) on all available-for-sale debt securities; we currently intend to elect to exclude unrealized gains (losses).
We believe the incorporation of these elements will have a favorable impact on our current capital ratios.
On October 9, 2012, regulators issued final rules implementing provisions of the Dodd-Frank Act that require banking organizations with total consolidated assets of more than $10 billion but less than $50 billion to conduct annual company-run stress tests, report the results to their primary federal regulator and the Federal Reserve and publish a summary of the results.
Under the rules, stress tests must be conducted using certain scenarios (baseline, adverse and severely adverse), which the Federal Reserve will publish by November 15 of each year.
Under the OCC and the Federal Reserve stress test regulations, E*TRADE Bank and the Company, respectively, will be required to conduct stress-testing using the prescribed stress-testing methodologies.
The final regulations require E*TRADE Bank to conduct its first stress test using financial statement data as of September 30, 2013, and it will be required to report results to the OCC on or before March 31, 2014.
The Company will be required to conduct its first stress test using financial statement data as of September 30, 2016, and it will be required to disclose a summary of its stress test results to the Federal Reserve on or before March 31, 2017.
We conducted a company-run stress test for E*TRADE Bank and the Company, which we believe is consistent with the OCC’s and Federal Reserve’s methodologies, respectively, and provided the results to the OCC and the Federal Reserve with the submission of the long-term capital plan in February 2013.
We believe that E*TRADE Bank is on schedule to provide the data from its first stress test to the OCC on or before March 31, 2014, as required.

['

December 31, 2011
Weighted Average	Range
Default rate-1	6%	2%	- 21%
Loss severity	51%	40%	- 65%
Prepayment rate	6%	2%	- 15%

', '

Year Ended December 31,
2011	2010	2009-1
Credit loss balance, beginning of period	$188,038	$150,372	$80,060
Additions:
Initial credit impairment	61	1,642	11,780
Subsequent credit impairment	14,846	36,024	58,532
Credit loss balance, end of period	$202,945	$188,038	$150,372

', '

Year Ended December 31,	Variance 2012 vs. 2011
2012	2011	Amount	%
Net operating interest income	$1,085.1	$1,220.0	$-134.9	-11%
Commissions	377.8	436.2	-58.4	-13%
Fees and service charges	122.2	130.4	-8.2	-6%
Principal transactions	93.1	105.4	-12.3	-12%
Gains on loans and securities, net	200.4	120.2	80.2	67%
Net impairment	-16.9	-14.9	-2.0	*
Other revenues	37.8	39.3	-1.5	-4%
Total non-interest income	814.4	816.6	-2.2	-0%
Total net revenue	$1,899.5	$2,036.6	$-137.1	-7%

', '

Year Ended December 31, 2012	2011
Other-than-temporary impairment (“OTTI”)	$-19.8	$-9.2
Less: noncredit portion of OTTI recognized into (out of) other comprehensive income (loss) (before tax)	2.9	-5.7
Net impairment	$-16.9	$-14.9

', '

December 31,
2013	2012	2011
Shareholders’ equity	$4,855.9	$4,904.5	$4,928.0
Deduct:
Losses in other comprehensive income on available-for-sale debt securities and cash flow hedges, net of tax	-459.0	-315.4	-389.6
Goodwill and other intangible assets, net of deferred tax liabilities	1,654.2	1,899.4	1,947.5
Subtotal	3,660.7	3,320.5	3,370.1
Deduct:
Disallowed servicing assets and deferred tax assets	1,185.4	1,278.9	1,331.0
Tier 1 common	$2,475.3	$2,041.6	$2,039.1
Total risk-weighted assets	$17,991.9	$19,849.9	$21,668.1
Tier 1 common ratio (Tier 1 common / Total risk-weighted assets)	13.8%	10.3%	9.4%

']

Question: What will principal transaction be like in 2013 if it develops with the same increasing rate as current?
Answer: 82.23539