eTrade 2008 Annual Report Download - page 41

Enterprise net interest spread decreased by 21 basis points to 2.64% for the year ended December 31, 2007
compared to 2006. This decrease was primarily the result of a challenging interest rate environment throughout
2007 as well as growth in our Complete Savings Account, which pays a higher interest rate than the majority of
our other deposit products.
Commission
Commission revenue increased 11% to $663.6 million for the year ended December 31, 2007 compared to
2006, which was driven by an increase of $61.8 million, or 13%, in our retail commission revenue.
DARTs increased 16% to 177,900 for the year ended December 31, 2007 compared to 2006. Our U.S.
DART volume increased 13% for the year ended December 31, 2007 compared to 2006. Our international
DARTs grew by 42% for the year ended December 31, 2007 compared to 2006, driven entirely by organic
growth. In addition, option-related DARTs further increased as a percentage of total U.S. DARTs and
represented 16% of trading volume versus 13% in 2006.
Average commission per trade decreased 2% to $11.72 for the year ended December 31, 2007 compared to
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
Fees and service charges increased 5% to $230.6 million for the year ended December 31, 2007 compared to
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.
Principal Transactions
Principal transactions decreased 7% to $102.2 million for the year ended December 31, 2007 compared to
2006. The decrease in principal transactions resulted from lower institutional trading volumes.
Gain (Loss) on Loans and Securities, Net
Gain (loss) on loans and securities, net was a loss of $2.5 billion for the year ended December 31, 2007
compared to a gain of $21.2 million for the same period in 2006. The decline in the total gain (loss) on loans and
securities, net during 2007 was due primarily to the $2.2 billion loss on the sale of our asset-backed securities
portfolio in the fourth quarter of 2007.
Other Revenue
Other revenue increased 36% to $47.2 million for the year ended December 31, 2007 compared to 2006.
The increase in other revenue was due to income from the cash surrender value of BOLI, an increase in fees
earned in connection with distribution of shares during initial public offerings and software consulting fees from
our Corporate Services business.
Provision for Loan Losses
Provision for loan losses increased $595.1 million to $640.1 million for the year ended December 31, 2007
compared to 2006. The increase in the provision for loan losses was related primarily to deterioration in the
performance of our home equity loan portfolio in the second half of 2007.
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