eTrade 2006 Annual Report Download - page 29
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clearer picture of the financial performance of our operations than would a presentation that combined these two
items. Our operating interest income and operating interest expense is generated from the operations of the
Company and is a broad indicator of our success in our banking, lending and balance sheet management
businesses. Our corporate debt, which is the primary source of our corporate interest expense, has been used
primarily to finance acquisitions, such as Harrisdirect and BrownCo, and generally has not been downstreamed
to any of our operating subsidiaries.
Similarly, we report gain on sales and impairment of investments separately from gain on sales of loans and
securities, net. We believe reporting these two items separately provides a clearer picture of the financial
performance of our operations than would a presentation that combined these two items. Gain on sales of loans
and securities, net are the result of activities in our operations, namely our lending and balance sheet
management businesses. Gain on sales and impairment of investments relates primarily to historical equity
investments of the Company at the corporate level and is not related to the ongoing business of our operating
subsidiaries.
The following sections describe in detail the changes in key operating factors and other changes and events
that have affected our consolidated net revenue, expense excluding interest, other income (expense), income tax
expense, discontinued operations and cumulative effect of accounting change.
Revenue
The components of net revenue and the resulting variances are as follows (dollars in thousands):
Variance
Year Ended December 31, 2006 vs. 2005
2006 2005 Amount %
Revenue:
Operating interest income $ 2,774,679 $1,650,264 $1,124,415 68 %
Operating interest expense (1,374,647) (779,164) (595,483) 76 %
Net operating interest income 1,400,032 871,100 528,932 61 %
Provision for loan losses (44,970) (54,016) 9,046 (17)%
Net operating interest income after provision for loan
losses 1,355,062 817,084 537,978 66 %
Commission 625,265 458,834 166,431 36 %
Service charges and fees 137,441 135,314 2,127 2 %
Principal transactions 110,235 99,336 10,899 11 %
Gain on sales of loans and securities, net 55,986 98,858 (42,872) (43)%
Other revenue 136,332 94,419 41,913 44 %
Total non-interest income 1,065,259 886,761 178,498 20 %
Total net revenue $ 2,420,321 $1,703,845 $ 716,476 42 %
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