eTrade 2007 Annual Report Download - page 35

Average commission per trade decreased 3% to $11.71 for the year ended December 31, 2007 compared to
the same period in 2006. The decrease was primarily a function of the mix of customers. Main Street Investors,
who generally have a higher commission per trade, traded less during the period compared to Active Traders and
Mass Affluent, who generally have a lower commission per trade. Customer appreciation and win-back
campaigns, particularly in the fourth quarter of 2007, also contributed to the decrease in average commission per
trade.
Fees and Service Charges
During the first quarter of 2007, the Company re-defined the line item “Service charges and fees” by
reclassifying certain fee-like revenue items formerly reported in “Other revenue” into the “Service charges and
fees” line item, now called “Fees and service charges.” The fee-like revenue streams moved include payment for
order flow, foreign currency margin revenue, 12b-1 fees after rebates, fixed income product revenue and
management fee revenue.
Fees and service charges increased 8% to $258.1 million for the year ended December 31, 2007 compared to
the same period in 2006. This increase was due to an increase in order flow payment, advisor management fees,
foreign currency margin revenue, fixed income product revenue and mutual fund fees, partially offset by a
decrease in account maintenance fees and mortgage servicing fees. We expect our account maintenance fee
income to continue to decline over time as we have fewer customers who are subject to the fee.
Principal Transactions
Principal transactions decreased 6% to $103.2 million for the year ended December 31, 2007 compared to
the same period in 2006. The decrease in principal transactions resulted from lower institutional trading volumes.
Our principal transactions revenue is influenced by overall trading volumes, the number of stocks for which we
act as a market maker, the trading volumes of those specific stocks and the performance of our proprietary
trading activities.
Gain (Loss) on Loans and Securities, Net
Gain (loss) on loans and securities, net decreased to a loss of $2.5 billion for 2007 compared to 2006, as
shown in the following table (dollars in thousands):
Year Ended
December 31,
Variance
2007 vs. 2006
2007 2006 Amount
Gain on sales of originated loans $ 5,227 $12,018 $ (6,791)
Loss on sales of loans held-for-sale, net (9,141) (6,775) (2,366)
Gain (loss) on sales of loans, net (3,914) 5,243 (9,157)
Gain (loss) on securities and other investments (2,911) 53,216 (56,127)
Loss on asset-backed securities sale to Citadel (2,241,031) — (2,241,031)
Loss on impairment (168,739) (1,504) (167,235)
Loss on trading securities (33,441) (969) (32,472)
Gain (loss) on securities, net (2,446,122) 50,743 (2,496,865)
Gain (loss) on loans and securities, net $(2,450,036) $55,986 $(2,506,022)
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