eTrade 2006 Annual Report Download - page 61

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Increases and decreases in operating interest income and operating interest expense result from changes in
average balances (volume) of interest-earning banking assets and liabilities, as well as changes in average interest
rates (rate). The following table shows the effect that these factors had on the interest earned on our interest-
earning banking assets and the interest incurred on our interest-bearing banking liabilities. The effect of changes
in volume is determined by multiplying the change in volume by the previous year’s average yield/cost.
Similarly, the effect of rate changes is calculated by multiplying the change in average yield/cost by the previous
year’s volume. Changes applicable to both volume and rate have been allocated proportionately (dollars in
thousands):
2006 Compared to 2005
Increase (Decrease) Due To
2005 Compared to 2004
Increase (Decrease) Due To
Volume Rate Total Volume Rate Total
Interest-earning banking assets:
Loans, net(1) $398,605 $137,551 $536,156 $286,205 $ 51,962 $338,167
Mortgage-backed and related
available-for-sale securities 100,043 88,687 188,730 46,805 23,517 70,322
Available-for-sale investment
securities 19,667 33,875 53,542 (19,231) 31,843 12,612
Trading securities (8,241) 7,287 (954) (17,841) 7,491 (10,350)
Other (256) 805 549 (1,445) (275) (1,720)
Total interest-earning banking
assets(2) 509,818 268,205 778,023 294,493 114,538 409,031
Interest-bearing banking liabilities:
Retail deposits 157,493 132,366 289,859 19,287 23,837 43,124
Brokered certificates of deposit 3,329 5,717 9,046 2,699 3,809 6,508
Repurchase agreements and other
borrowings 34,185 140,563 174,748 69,040 46,101 115,141
FHLB advances 9,301 29,749 39,050 81,585 (5,145) 76,440
Total interest-bearing banking
liabilities 204,308 308,395 512,703 172,611 68,602 241,213
Change in net operating interest
income $305,510 $ (40,190) $265,320 $121,882 $ 45,936 $167,818
(1) Nonaccrual loans are included in the respective average loan balances. Income on such nonaccrual loans is recognized on a cash basis.
(2) Amount includes a taxable equivalent increase in operating interest income of $19.3 million and $10.5 million for 2006 and 2005,
respectively.
58