eTrade 2008 Annual Report Download - page 50

covered by the CDS was $2.9 billion. A CDS provides, for a fee, an assumption by a third party of a portion of
the credit risk related to the underlying loans. The CDS provides protection for losses in excess of $4.0 million,
but not to exceed approximately $30.3 million. In addition, our regulatory risk-weighted assets were reduced as a
result of this transaction because we transferred a portion of our credit risk to an unaffiliated third party. During
the year ended December 31, 2008, we recognized $1.6 million in losses on the portion of the loans covered
under the CDS. We have not yet realized any recoveries from the CDS; however, the estimated recoveries from
the CDS for the next twelve months were $13.9 million at December 31, 2008, which is reflected in the
allowance for loan losses.
Deposits
Deposits are summarized as follows (dollars in thousands):
Variance
December 31, 2008 vs. 2007
2008 2007 Amount %
Money market and savings accounts $12,692,729 $10,028,115 $ 2,664,614 27%
Sweep deposit accounts 9,650,431 10,112,123 (461,692) (5)%
Certificates of deposit 2,363,385 4,156,674 (1,793,289) (43)%
Checking accounts 991,477 495,618 495,859 100%
Brokered certificates of deposit 438,224 1,092,225 (654,001) (60)%
Total deposits $26,136,246 $25,884,755 $ 251,491 1%
Deposits represented 57% and 48% of total liabilities at December 31, 2008 and 2007, respectively.
Deposits increased $0.3 billion to $26.1 billion at December 31, 2008 compared to December 31, 2007, driven by
a $2.7 billion increase in money market and savings accounts. This increase was offset by a decrease in
certificates of deposit and brokered certificates of deposits by $2.4 billion. Deposits generally provide us the
benefit of lower interest costs, compared with wholesale funding alternatives.
The deposits balance is a component of the total customer cash and deposits balance reported as a customer
activity metric of $32.3 billion and $32.7 billion at December 31, 2008 and 2007, respectively. The total
customer cash and deposits balance is summarized as follows (dollars in thousands):
Variance
December 31, 2008 vs. 2007
2008 2007 Amount %
Deposits $26,136,246 $25,884,755 $ 251,491 1%
Less: brokered certificates of deposit (438,224) (1,092,225) 654,001 (60)%
Deposits excluding brokered certificates of
deposit 25,698,022 24,792,530 905,492 4%
Customer payables 3,753,332 5,514,675 (1,761,343) (32)%
Customer cash balances held by third parties
and other 2,805,101 3,286,212 (481,111) (15)%
Customer cash balances held by the Canadian
brokerage business(1) — (883,222) 883,222 *
Total customer cash and deposits $32,256,455 $32,710,195 $ (453,740) (1)%
* Percentage not meaningful.
(1) Customer cash balances held by the Canadian brokerage business prior to its sale were excluded as it is part of discontinued operations.
47