eTrade 2001 Annual Report Download - page 61

Interest income from brokerage-related activities is comprised of interest earned by our brokerage subsidiaries on credit extended to
customers to finance their purchases of securities on margin, interest received from other broker-dealers through our brokerage
subsidiaries’ stock borrow programs and fees on customer assets invested in money market accounts. Interest expense from
brokerage-related activities is comprised of interest paid to customers on certain credit balances, interest paid to banks and interest
paid to other broker-dealers through our brokerage subsidiaries’ stock loan programs. Interest income from banking-related activities
reflects interest earned on assets, primarily loans receivable and mortgage-backed and investment securities. Interest expense from
banking-related activities is comprised of interest-bearing banking liabilities that include customer deposits, advances from the Federal
Home Loan Bank of Atlanta (“FHLB”) and other borrowings.
Brokerage interest income decreased 34% from fiscal 2000 to fiscal 2001 and increased 163% from fiscal1999 to fiscal 2000. The
decrease in brokerage interest income in fiscal 2001 primarily reflects the overall decrease in average customer margin balances.
Assets in domestic brokerage accounts totaled $43.5 billion in fiscal 2001, a decrease of 27% from $59.9 billion in fiscal 2000, which
was an increase of 111% from $28.4billion in fiscal 1999. The decrease in brokerage interest expense in fiscal 2001 is mainly due to
the overall decrease in average stock loan balances. The increase in brokerage interest expense in fiscal 2000 is mainly due to an
increase in the average stock loan balance and an increase in the average customer credit balance.
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The following table sets forth the changes in average customer margin balances, average customer money market fund balances,
average stock borrow balances, average stock loan balances and average customer credit balances for the years indicated (dollars in
millions):
December31, 2001 September30, 2000 September30, 1999 2001
Versus
2000
2000
Versus
1999
Average customer margin balances $ 2,053 $ 4,379 $ 1,853 (53 )
%
136 %
Average customer money market fund balances $ 8,525 $ 6,793 $ 3,207 25 % 112 %
Average stock borrow balances $ 1,270 $ 730 $ 343 74 % 113 %
Average stock loan balances $ 1,761 $ 3,597 $ 1,406 (51 )
%
156 %
Average customer credit balances $ 1,440 $ 1,397 $ 493 3 % 183 %
Banking interest income increased 72% from fiscal 2000 to fiscal 2001 and 158% from fiscal 1999 to fiscal 2000. Increases in banking
interest income reflect an increase in the average interest-earning banking asset balances, fluctuations in average interest yields,
increases in active banking accounts, fluctuations in net new banking accounts and increases in total deposits in banking accounts.
Average interest-earning banking assets increased 92% from fiscal 2000 to fiscal 2001 and 134% from fiscal 1999 to fiscal 2000. The
average yields on interest-earning banking assets decreased to 6.93% in fiscal 2001 from 7.73% in fiscal 2000, which increased from
7.01% in fiscal 1999. Active banking accounts increased 70% from fiscal 2000 to fiscal 2001 and 196% from fiscal 1999 to fiscal
2000. Net new banking accounts decreased 33% from fiscal 2000 to fiscal 2001 and increased 278% from fiscal 1999 to fiscal 2000.
Total deposits in banking accounts increased 75% from fiscal 2000 to fiscal 2001 and 121% from fiscal 1999 to 2000. Banking
interest expense increased 83% from fiscal 2000 to fiscal 2001 and 165% from fiscal 1999 to fiscal 2000. The increase in banking
interest expense in fiscal 2001 reflects an increase in the average interest-bearing banking liabilities offset by a decrease in the average
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