eTrade 2006 Annual Report Download - page 46

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allowance for loan losses should be equal to at least twelve months of probable projected losses for all loan types.
We believe this level is representative of probable losses inherent in the loan portfolio at the balance sheet date.
In determining the allowance for loan losses, we allocate a portion of the allowance to various loan products
based on an analysis of individual loans and pools of loans. However, the entire allowance is available to absorb
credit losses inherent in the total loan portfolio as of the balance sheet date.
The following table presents the allowance for loan losses by major loan category (dollars in thousands):
Consumer & Other Real Estate Total
Allowance
Allowances as %
of Consumer and Other
Loans Receivable Allowance
Allowances as %
of Real Estate
Loans Receivable Allowance
Allowances as %
of Total
Loans Receivable
December 31, 2006 $28,197 0.82% $39,431 0.17% $67,628 0.26%
December 31, 2005 $32,379 0.80% $30,907 0.20% $63,286 0.32%
The following table provides an analysis of the allowance for loan losses for the past five years (dollars in
thousands):
Year Ended December 31,
2006 2005 2004 2003 2002
Allowance for loan losses, beginning of period $ 63,286 $ 47,681 $ 37,847 $ 27,666 $ 19,874
Provision for loan losses 44,970 54,016 38,121 38,523 14,664
Allowance acquired through acquisitions(1) — — 1,547 2,748 14,428
Charge-offs:
Real estate (616) (936) (186) (364) (460)
HELOC, HEIL and other (15,372) (3,929) (1,464) (75) —
Recreational vehicle (25,253) (20,592) (18,419) (20,341) (3,456)
Marine (6,463) (8,009) (6,003) (7,369) —
Commercial —————
Credit card (11,371) (17,286) (10,313) (919) —
Automobile (2,430) (5,915) (13,796) (22,695) (28,046)
Other (338) (180) (160) (1,971) —
Total charge-offs (61,843) (56,847) (50,341) (53,734) (31,962)
Recoveries:
Real estate 167 234 — 223 30
HELOC, HEIL and other 822 526 310 — —
Recreational vehicle 11,959 7,848 9,088 9,738 —
Marine 4,091 3,960 3,225 3,806 —
Commercial —————
Credit card 750 380 141 1 —
Automobile 3,285 5,382 7,464 8,335 10,632
Other 141 106 279 541 —
Total recoveries 21,215 18,436 20,507 22,644 10,662
Net charge-offs (40,628) (38,411) (29,834) (31,090) (21,300)
Allowance for loan losses, end of period $ 67,628 $ 63,286 $ 47,681 $ 37,847 $ 27,666
Net charge-offs to average loans receivable, net
outstanding 0.18% 0.26% 0.30% 0.41% 0.28%
(1) Acquisition of credit card portfolios in 2004 and 2003 and the Consumer Finance Corporation portfolio in 2002.
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