eTrade 2008 Annual Report Download - page 31

securities, net is the result of activities in our operations, namely our balance sheet management business,
including impairment on our available-for sale mortgage-backed and investment securities portfolio. Gain (loss)
on sales of investments, net relates to historical equity investments of the Company at the corporate level and are
not related to the ongoing business of our operating subsidiaries.
The following sections describe in detail the changes in key operating factors and other changes and events
that have affected our consolidated net revenue, operating expense, other income (expense) and income tax
expense (benefit).
Revenue
The components of net revenue and the resulting variances are as follows (dollars in thousands):
Variance
Year Ended December 31, 2008 vs. 2007
2008 2007 Amount %
Revenue:
Operating interest income $ 2,469,940 $ 3,523,055 $(1,053,115) (30)%
Operating interest expense (1,201,934) (1,939,456) 737,522 (38)%
Net operating interest income 1,268,006 1,583,599 (315,593) (20)%
Commission 515,551 663,642 (148,091) (22)%
Fees and service charges 199,956 230,567 (30,611) (13)%
Principal transactions 84,882 102,180 (17,298) (17)%
Loss on loans and securities, net (195,483) (2,465,474) 2,269,991 (92)%
Other revenue 52,684 47,212 5,472 12%
Total non-interest income (expense) 657,590 (1,421,873) 2,079,463 *
Total net revenue $ 1,925,596 $ 161,726 $ 1,763,870 *
* Percentage not meaningful
Total net revenue increased to $1.9 billion for the year ended December 31, 2008 compared to 2007. This
increase was primarily due to the $2.2 billion loss on the sale of our asset-backed securities portfolio for the year
ended December 31, 2007.
Net Operating Interest Income
Net operating interest income decreased 20% to $1.3 billion for the year ended December 31, 2008
compared to December 31, 2007. Net operating interest income is earned primarily through holding credit
balances, which include margin, real estate and consumer loans, and by holding customer cash and deposits,
which are a low cost source of funding. The decrease in net operating interest income was due primarily to the
planned decline in enterprise interest-earning assets during 2008.
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