eTrade 2007 Annual Report Download - page 60
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Nonperforming Assets
We classify loans as nonperforming when they are 90 days past due. The following table shows the
comparative data for nonperforming loans and assets (dollars in thousands):
Year Ended December 31,
2007 2006 2005 2004 2003
One- to four-family(1) $181,315 $33,588 $17,393 $ 8,009 $ 13,760
Home equity 229,523 32,216 9,568 2,755 269
Consumer and other loans:
Recreational vehicle 2,235 2,579 2,826 1,416 1,399
Marine 1,130 1,439 873 908 1,067
Credit card 3,769 3,795 2,858 2,999 2,147
Other 470 1,093 462 848 1,618
Total consumer and other loans 7,604 8,906 7,019 6,171 6,231
Total nonperforming loans 418,442 74,710 33,980 16,935 20,260
Real estate owned (“REO”) and other repossessed
assets, net 45,895 12,904 6,555 5,367 6,690
Total nonperforming assets, net $464,337 $87,614 $40,535 $22,302 $ 26,950
Nonperforming loans receivable as a percentage of gross
loans receivable 1.37% 0.28% 0.17% 0.15% 0.25%
One- to four-family allowance for loan losses as a
percentage of one- to four-family nonperforming loans
receivable 10.39% 23.10% 27.93% 35.11% 17.15%
Home equity allowance for loan losses as a percentage of
home equity nonperforming loans receivable 200.05% 98.31% 272.25% 551.11% 1227.51%
Consumer and other allowance for loan losses as a
percentage of consumer and other nonperforming loans
receivable 396.71% 316.61% 461.31% 481.06% 516.53%
Total allowance for loan losses as a percentage of total
nonperforming loans receivable 121.44% 90.52% 186.24% 281.55% 186.81%
(1) One- to four-family excludes held-for-sale loans of $0.1 million, $0.6 million, $0.7 million, $3.0 million and $4.3 million at
December 31, 2007, 2006, 2005, 2004 and 2003, respectively. Loans held-for-sale are accounted for at lower of cost or market value
with adjustments recorded in the gain (loss) on loans and securities, net line item and are not considered in the allowance for loan losses.
During the year ended December 31, 2007, our nonperforming assets, net increased $376.7 million from
$87.6 million at December 31, 2006. The increase was attributed primarily to an increase in nonperforming one-
to four-family loans of $147.7 million and home equity loans of $197.3 million for the year ended
December 31, 2007 when compared to December 31, 2006. We expect nonperforming loan levels to increase
over time due to the weak conditions in the residential real estate and credit markets.
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