PNC Bank 2012 Annual Report Download - page 134

Tier 1 risk-based capital – Total shareholders’ equity, plus
trust preferred capital securities, plus certain noncontrolling
interests that are held by others; less goodwill and certain
other intangible assets (net of eligible deferred taxes relating
to taxable and nontaxable combinations), less equity
investments in nonfinancial companies less ineligible
servicing assets and less net unrealized holding losses on
available for sale equity securities. Net unrealized holding
gains on available for sale equity securities, net unrealized
holding gains (losses) on available for sale debt securities and
net unrealized holding gains (losses) on cash flow hedge
derivatives are excluded from total shareholders’ equity for
Tier 1 risk-based capital purposes.
Tier 1 risk-based capital ratio – Tier 1 risk-based capital
divided by period-end risk-weighted assets.
Total equity – Total shareholders’ equity plus noncontrolling
interests.
Total return swap – A non-traditional swap where one party
agrees to pay the other the “total return” of a defined
underlying asset (e.g., a loan), usually in return for receiving a
stream of LIBOR-based cash flows. The total returns of the
asset, including interest and any default shortfall, are passed
through to the counterparty. The counterparty is therefore
assuming the credit and economic risk of the underlying asset.
Total risk-based capital – Tier 1 risk-based capital plus
qualifying subordinated debt and trust preferred securities,
other noncontrolling interest not qualified as Tier 1, eligible
gains on available for sale equity securities and the allowance
for loan and lease losses, subject to certain limitations.
Total risk-based capital ratio – Total risk-based capital divided
by period-end risk-weighted assets.
Transaction deposits – The sum of interest-bearing money
market deposits, interest-bearing demand deposits, and
noninterest-bearing deposits.
Troubled debt restructuring (TDR) – A loan whose terms have
been restructured in a manner that grants a concession to a
borrower experiencing financial difficulties.
Value-at-risk (VaR) – A statistically-based measure of risk
that describes the amount of potential loss which may be
incurred due to severe and adverse market movements. The
measure is of the maximum loss which should not be
exceeded on 95 out of 100 days for a 95% VaR.
Watchlist – A list of criticized loans, credit exposure or other
assets compiled for internal monitoring purposes. We define
criticized exposure for this purpose as exposure with an
internal risk rating of other assets especially mentioned,
substandard, doubtful or loss.
Yield curve – A graph showing the relationship between the
yields on financial instruments or market indices of the same
credit quality with different maturities. For example, a
“normal” or “positive” yield curve exists when long-term
bonds have higher yields than short-term bonds. A “flat” yield
curve exists when yields are the same for short-term and long-
term bonds. A “steep” yield curve exists when yields on long-
term bonds are significantly higher than on short-term bonds.
An “inverted” or “negative” yield curve exists when short-
term bonds have higher yields than long-term bonds.
The PNC Financial Services Group, Inc. – Form 10-K 115