eTrade 2007 Annual Report Download - page 26

Management monitors a number of metrics in evaluating the Company’s performance. The most significant
of these are shown in the table and discussed in the text below:
As of or For the Year Ended
December 31, Variance
2007 2006 2005 2007 vs. 2006
Customer Activity Metrics:
Retail client assets (dollars in billions)(1) $ 190.0 $ 194.9 $ 177.9 (3)%
Customer cash and deposits (dollars in billions)(1) $ 33.6 $ 33.6 $ 28.2 0 %
U.S. daily average revenue trades 156,006 137,715 83,604 13 %
International daily average revenue trades 31,016 21,633 14,136 43 %
Total daily average revenue trades 187,022 159,348 97,740 17 %
Average commission per trade $ 11.71 $ 12.05 $ 13.82 (3)%
Company Financial Metrics:
Net revenue growth(2) (116)% 42% 15% *
Enterprise net interest spread (basis points) 263 285 249 (8)%
Enterprise interest-earning assets (average in billions) $ 57.0 $ 45.4 $ 32.4 26 %
Nonperforming loans as a % of gross loans receivable 1.37 % 0.28% 0.17% 1.09 %
Allowance for loan losses (dollars in millions) $ 508.2 $ 67.6 $ 63.3 651 %
Allowance for loan losses as a % of nonperforming loans 121.44% 90.52% 186.24% 30.92 %
* Percentage not meaningful.
(1) Customer cash and deposits, as well as retail client assets, have been re-presented to account for a methodology change in the metric to
settlement date from trade date reporting as of December 31, 2005 which reduced both metrics by $564 million. This is not a
methodology change in accounting policy and does not impact the reporting of these items on our balance sheet.
(2) Revenue growth is the difference between the current and prior comparable period total net revenue divided by the prior comparable
period total net revenue.
Customer Activity Metrics
• Retail client assets are an indicator of the value of our relationship with the customer. An increase in
retail client assets generally indicates that the use of our products and services by existing and new
customers is expanding. Changes in this metric are also driven by changes in the valuations of our
customers’ underlying securities.
• Customer cash and deposits are an indicator of a deepening engagement with our customers and are a key
driver of net operating interest income.
• Daily average revenue trades (“DARTs”) are the predominant driver of commission revenue from our
retail customers.
• Average commission per trade is an indicator of changes in our customer mix, product mix and/or product
pricing. As a result, this metric is impacted by both the mix between our retail domestic and international
businesses and the mix between active traders, mass affluent and main street customers.
Company Financial Metrics
• Net revenue growth is an indicator of our overall financial well-being and our ability to execute on our
strategy. The negative revenue growth during the period was due to lower revenue in our institutional
segment, due to the loss on sale of our asset-backed securities portfolio and increased provision for loan
losses.
• Enterprise net interest spread is a broad indicator of our ability to generate net operating interest income.
• Enterprise interest-earning assets, in conjunction with our enterprise net interest spread, are indicators of
our ability to generate net operating interest income.
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