eTrade 2008 Annual Report Download - page 76

Interest Rates and Operating Interest Differential
Increases and decreases in operating interest income and operating interest expense result from changes in
average balances (volume) of enterprise interest-earning assets and liabilities, as well as changes in average
interest rates (rate). The following table shows the effect that these factors had on the interest earned on our
enterprise interest-earning assets and the interest incurred on our enterprise interest-bearing liabilities. The effect
of changes in volume is determined by multiplying the change in volume by the previous year’s average yield/
cost. Similarly, the effect of rate changes is calculated by multiplying the change in average yield/cost by the
previous year’s volume. Changes applicable to both volume and rate have been allocated proportionately (dollars
in thousands):
2008 Compared to 2007
Increase (Decrease) Due To
2007 Compared to 2006
Increase (Decrease) Due To
Volume Rate Total Volume Rate Total
Enterprise interest-earning assets:
Loans, net(1) $(190,331) $(207,865) $ (398,196) $556,446 $ 64,715 $621,161
Margin receivables (76,016) (147,920) (223,936) 35,835 1,774 37,609
Available-for-sale mortgage-backed
securities (143,154) (71,811) (214,965) 45,934 14,445 60,379
Available-for-sale investment securities (252,240) 1,701 (250,539) 69,558 7,215 76,773
Trading securities 17,376 (5,251) 12,125 (2,029) 2,148 119
Cash and cash equivalents(2) 50,742 (24,583) 26,159 (9,916) 2,268 (7,648)
Stock borrow and other (13,948) (1,645) (15,593) 21,395 2,989 24,384
Total enterprise interest-earning
assets(3) (607,571) (457,374) (1,064,945) 717,223 95,554 812,777
Enterprise interest-bearing liabilities:
Retail deposits (23,455) (206,143) (229,598) 170,150 119,912 290,062
Brokered certificates of deposit 23,220 271 23,491 (1,107) 1,783 676
Customer payables (14,165) (23,671) (37,836) (1,893) 7,329 5,436
Repurchase agreements and other
borrowings (205,057) (120,034) (325,091) 66,280 28,017 94,297
FHLB advances (115,106) (30,396) (145,502) 183,552 15,345 198,897
Stock loan and other (5,979) (15,145) (21,124) 7,122 (1,700) 5,422
Total enterprise interest-bearing
liabilities (340,542) (395,118) (735,660) 424,104 170,686 594,790
Change in enterprise net interest
income $(267,029) $ (62,256) $ (329,285) $293,119 $ (75,132) $217,987
(1) Nonaccrual loans are included in the respective average loan balances. Income on such nonaccrual loans is recognized on a cash basis.
(2) Includes segregated cash balances.
(3) Amount includes a taxable equivalent increase in operating interest income of $9.1 million, $30.9 million and $19.3 million for years
ended December 31, 2008, 2007 and 2006, respectively.
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