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Table of Contents
Index to Financial Statements
to four-family first-mortgage whole loans and mortgage-backed securities pledged as collateral totaled $2.6 billion at December 31, 2003 and
2002.
Subordinated Debentures
ETBH raises capital through the formation of trusts, which sell trust preferred stock in the capital markets. The capital securities are
mandatorily redeemable in whole at the due date, which is generally 30 years after issuance. During the year ended December 31, 2003, ETBH
formed five of these trusts. Each trust issued Floating Rate Cumulative Preferred Securities, at par with a liquidation amount of $1,000 per
capital security. ETBH uses the proceeds from the sale of securities to purchase subordinated debentures issued by ETBH, guarantees the trust
obligations and contributes proceeds from the sale of its subordinated debentures to the Bank in the form of a capital contribution. Both the
interest on the subordinated debentures issued by ETBH and the dividends paid on the Floating Rate Cumulative Preferred Securities are paid
semi-annually or quarterly and are based upon variable rates from 2.85% to 3.25% above the three-month LIBOR interest rate.
Repurchase Agreements and Other Borrowings
The Company sells securities under agreements to repurchase similar securities. Repurchase agreements are collateralized by fixed- and
variable-rate mortgage-backed securities or investment grade securities. Repurchase agreements are treated as financings for financial
statement purposes and the obligations to repurchase securities sold are reflected as borrowings in the consolidated balance sheets. The brokers
perform, the Company might incur an accounting loss for the excess collateral posted with the counterparty. At December 31, 2003, there were
no counterparties with whom the Company’s amount at risk exceeded 10% of our shareholders’ equity. Included in repurchase agreements and
other short-term borrowings at December 31, 2003 are $81.9 million of overnight and other short-term borrowings from the Federal Reserve
Bank in connection with the Federal Reserve Bank’s special direct investment and treasury, tax and loan programs. The Company pledged
$801.8 million of securities and mortgage loans to secure these borrowings.
Information about borrowings under fixed- and variable- rate coupon repurchase agreements and other short-term borrowings is
summarized as follows (in thousands):
NOTE 15—CONVERTIBLE SUBORDINATED NOTES
6.75% Convertible Subordinated Notes Due May 2008
December 31,
2003
2002
Weighted
-
average balance during the year (calculated on a daily basis)
$
5,976,730
$
3,835,442
Weighted
-
average interest rate:
During the year (calculated on a daily basis)
2.68
%
3.91
%
At year
-
end
1.30
%
1.04
%
Maximum month
-
end balance during the year
$
6,696,506
$
6,628,670
Balance at year
-
end
$
5,365,498
$
5,918,622
Securities and loans underlying the repurchase agreements at the end of the year:
Carrying value, including accrued interest
$
5,485,984
$
5,873,120
Estimated market value
$
5,477,099
$
5,851,577
In May 2001, the Company completed a private offering of an aggregate principal amount of $325 million of convertible subordinated
notes due May 2008. The notes are convertible, at the option of the holder, into a total of approximately 29.7 million shares of the Company’s
common stock at a conversion price of $10.925 per
80