eTrade 2002 Annual Report Download - page 55

Table of Contents
Index to Financial Statements
The following table shows the changes in interest income and expense due to changes in rate and volume. For each category of interest-earning
assets and interest-bearing liabilities, information is provided on changes attributable to volume (change in average outstanding balance
multiplied by the prior year’ s rate) and rate (change in average interest rate multiplied by the prior year’ s volume). Changes attributable to both
volume and rate have been allocated proportionately (in thousands):
Fiscal 2002 Versus Fiscal 2001
Increase (Decrease) Due To
Fiscal 2001 Versus Fiscal 2000 Increase (Decrease) Due To
Volume Rate Total Volume Rate Total
Interest-earning banking
assets:
Loans receivable, net $ 56,265 $ (73,109 ) $ (16,844 ) $ 261,427 $ (21,789 ) $ 239,638
Interest-bearing deposits 1,368 (589 ) 779 3,137 (2,340 ) 797
Mortgage-backed and related
available-for-sale securities
33,662 (80,340 ) (46,678 ) 86,580 (31,942 ) 54,638
Available-for-sale investment
securities
(25,702 ) (4,916 ) (30,618 ) 62,244 (1,253 ) 60,991
Investment in FHLB stock 583 (503 ) 80 258 (881 ) (623 )
Trading securities 4,869 (1,722 ) 3,147 2,954 (873 ) 2,081
Total interest-earning banking
assets(1)
71,045 (161,179 ) (90,134 ) 416,600 (59,078 ) 357,522
Interest-bearing banking
liabilities:
Retail deposits 552 (85,886 ) (85,334 ) 222,382 934 223,316
Brokered certificates of
deposit
5,590 (1,425 ) 4,165 (3,653 ) (362 ) (4,015 )
FHLB advances (13,943 ) (7,544 ) (21,487 ) (131 ) 399 268
Other borrowings 34,327 (75,798 ) (41,471 ) 103,498 (8,591 ) 94,907
Total interest-bearing banking
liabilities
26,526 (170,653 ) (144,127 ) 322,096 (7,620 ) 314,476
Change in net interest income $ 44,519 $ 9,474 $ 53,993 $ 94,504 $ (51,458 ) $ 43,046
(1) Amount includes a taxable equivalent increase in interest income of $0.3 million in fiscal 2002 and none in fiscal 2001 and fiscal 2000.
Allowance and Provision for Loan Losses
Allowance for loan losses represents management’ s estimate of credit losses inherent in our loan portfolio as of the balance sheet date. We
perform regular reviews in order to identify these inherent losses and to assess the overall credit risk of our portfolio. The determination of the
allowance for loan losses involves the monitoring of delinquency, default and historical loss experience. We make estimates and assumptions
regarding existing but yet unidentified losses caused by current economic conditions. As a part of our quarterly assessment for the three months
ended September 30, 2002, the allowance for loan losses for consumer loans was increased to provide for a minimum twelve months of
expected losses compared to six months. This change was made due to increased uncertainty in current economic conditions and due to
continued diversification of the portfolio. As of December31, 2002, the total loan loss allowance was $27.7 million or 104% of total
non-performing loans of $26.5 million. As of December 31, 2001, the total loan loss allowance was $19.9 million or 96.1% of total
non-performing loans of $20.7 million.
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2003. EDGAR Online, Inc.