eTrade 2008 Annual Report Download - page 48

and other borrowings are the primary wholesale funding sources for our loans, net and available-for-sale
securities portfolios. The decreases in these balances were the result of paying down these liabilities as we
decreased the size of our balance sheet during 2008. The decrease in our customer payables is related primarily
to the sale of our Canadian brokerage business during the year ended December 31, 2008. In addition, stock loan,
which is reported within the accounts payable, accrued and other liabilities line item, decreased $1.7 billion to
$0.3 billion at December 31, 2008 compared to 2007.
Available-for-Sale Mortgage-Backed and Investment Securities
Available-for-sale securities are summarized as follows (dollars in thousands):
Variance
December 31, 2008 vs. 2007
2008 2007 Amount %
Mortgage-backed securities:
Backed by U.S. Government sponsored and
federal agencies $10,110,813 $ 9,330,129 $ 780,684 8%
Collateralized mortgage obligations and
other 602,376 1,123,255 (520,879) (46)%
Total mortgage-backed securities 10,713,189 10,453,384 259,805 2%
Investment securities:
Municipal bonds 79,606 314,348 (234,742) (75)%
Publicly traded equity securities:
Preferred stock(1) — 371,404 (371,404) *
Corporate investments 498 1,271 (773) (61)%
Other 12,801 114,641 (101,840) (89)%
Total investment securities 92,905 801,664 (708,759) (88)%
Total available-for-sale securities $10,806,094 $11,255,048 $(448,954) (4)%
* Percentage not meaningful.
(1) On January 1, 2008, the Company elected the fair value option for preferred stock in accordance with SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities-Including an Amendment of FASB Statement No. 115 (“SFAS No. 159”). As a
result of this election, preferred stock was classified on the balance sheet as trading securities during 2008; however, during the third
quarter of 2008, all preferred stock positions were sold.
Available-for-sale securities represented 22% and 20% of total assets at December 31, 2008 and 2007,
respectively. Available-for-sale securities decreased 4% to $10.8 billion at December 31, 2008 compared to
December 31, 2007, due primarily to the sale of certain mortgage-backed securities in the first half of 2008,
offset by the purchase of highly-rated securities backed by U.S. Government sponsored and federal agencies in
the second half of 2008. All mortgage-backed securities backed by U.S. Government sponsored and federal
agencies are AAA-rated.
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