eTrade 2005 Annual Report Download - page 47

Table of Contents
Gain on Sales of Loans and Securities, net
As shown in the following table, gain on sales of loans and securities, net decreased 30% to $98.9 million in 2005, compared to 2004
(dollars in thousands):
Variance
Year Ended December31,
2005 vs. 2004
2005
2004
2003
$Amount
%
Gain (loss) on sales of originated loans:
Mortgage loans
$
39,161
$
64,810
$
187,655
$
(25,649
)
(40
)
%
Consumer loans
(1)
15,686
17,906
(37,262
)
(2,220
)
(12
)
%
Gain on sales of originated loans
54,847
82,716
150,393
(27,869
)
(34
)
%
Gain (loss) on sales of loans held-for-sale, net:
Gain (loss) on sales of loans held-for-sale
(3,210
)
4,557
33,588
(7,767
)
*
Gain (loss) on hedges
2,282
(6,625
)
(23,168
)
8,907
*
Loss on loan prepayments
(280
)
(1,379
)
(10,234
)
1,099
80
%
Gain (loss) on sales of loans held-for-sale, net
(1,208
)
(3,447
)
186
2,239
65
%
Gain on sales of loans, net
53,639
79,269
150,579
(25,630
)
(32
)
%
Gain on sales of securities, net:
Gain on sales of securities
84,577
75,408
97,780
9,169
12
%
Impairment
(38,343
)
(13,959
)
(2,611
)
(24,384
)
*
Gain (loss) on hedges
(1,015
)
—
1,906
(1,015
)
*
Gain on sales of securities, net
45,219
61,449
97,075
(16,230
)
(26
)
%
Total gain on sales of loans and securities, net
$
98,858
$
140,718
$
247,654
$
(41,860
)
(30
)
%
*
Percentage not meaningful
(1)
Consumer loans originated by our retail segment and sold to our institutional segment were sold at an arm’s length transfer price. The gains (losses) associated with our retail segment
were reclassified to discontinued operations and the amounts related to our institutional segment remained in continuing operations.
The decline in the total gain on sales of loans and securities, net was primarily due to lower gains on sales of originated mortgage
loans. This was the result of an overall decline in mortgage industry volumes as interest rates continued to rise during 2005.
Impairment losses in 2005 relate primarily to interest-only securities and to a lesser extent certain investment securities. Impairments on
certain interest-only securities were the result of short-term movements in interest rates. Impairments on investment securities were the
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