eTrade 2004 Annual Report Download - page 106

Table of Contents
Index to Financial Statements
NOTE 16—SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER BORROWINGS BY BANK
SUBSIDIARY
The maturities of borrowings at December 31, 2004 and total borrowings at December 31, 2003 are shown below (dollars in thousands):
Repurchase Agreements
Repurchase
Agreements
Other Borrowings by
Bank Subsidiary
Total
Weighted
Average
Interest Rate
FHLB
Advances Other
Due in:
2005
$
9,096,872
$
1,039,000
$
17,591
$
10,153,463
2.13
%
2006
200,000
100,000
—
300,000
1.54
%
2007
200,000
50,000
—
250,000
2.66
%
2008
200,000
—
—
200,000
1.61
%
2009
—
Thereafter
200,000
298,841
255,300
754,141
2.94
%
Total borrowings at December 31, 2004
$
9,896,872
$
1,487,841
$
272,891
$
11,657,604
Total borrowings at December 31, 2003
$
5,283,609
$
920,000
$
283,554
$
6,487,163
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
retain possession of the securities collateralizing the repurchase agreements until maturity. If the counterparty in a repurchase agreement fails to
perform, the Company might incur a loss for the excess collateral posted with the counterparty. At December 31, 2004, there were no
counterparties with whom the Company’s amount at risk exceeded 10% of its shareholders’ equity.
Other Borrowings by Bank Subsidiary
FHLB —The Company had $969 million floating-rate and $519 million fixed-rate FHLB advances at December 31, 2004. The floating-
rate advances adjust quarterly based on the London InterBank Offering Rate (“LIBOR”). The Company is required to be a member of the
FHLB System and maintains a FHLB investment at least equal to the greater of: one percent of the unpaid principal balance of its residential
mortgage loans; one percent of 30 percent of its total assets; or one-twentieth of its outstanding FHLB advances. In addition, the Company
must maintain qualified collateral equal to 85 to 90 percent of its advances, depending on the collateral type. These advances are secured with
the Company’s specific mortgage loan collateral and mortgage-backed securities. The one- to four-family first-mortgage whole loans and
mortgage-backed securities pledged as collateral totaled $3.4 billion and $2.6 billion at December 31, 2004 and 2003, respectively.
Other —The Company, through 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, 2004, ETBH formed seven 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 2.25% to 3.75% above the three-
month LIBOR interest rate.
97