eTrade 2008 Annual Report Download - page 82

Enterprise net interest income—The taxable equivalent basis net operating interest income excluding
corporate interest income and corporate interest expense, stock conduit interest income and expense and interest
earned on customer cash held by third parties.
Enterprise net interest spread—The taxable equivalent rate earned on average enterprise interest-earning
assets less the rate paid on average enterprise interest-bearing liabilities, excluding corporate interest-earning
assets and liabilities, stock conduit and cash held by third parties.
Exchange-traded funds—A fund that invests in a group of securities and trades like an individual stock on
an exchange.
Fair value—The price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Fair value hedge—A financial derivative instrument designated in a hedging relationship that mitigates
exposure to changes in the fair value of a recognized asset or liability or a firm commitment.
Generally Accepted Accounting Principles (“GAAP”)—Accounting principles generally accepted in the
United States of America.
Interest rate cap—An options contract that puts an upper limit on a floating exchange rate. The writer of the
cap has to pay the holder of the cap the difference between the floating rate and the upper limit when that upper
limit is breached. There is usually a premium paid by the buyer of such a contract.
Interest rate floor—An options contract that puts a lower limit on a floating exchange rate. The writer of
the floor has to pay the holder of the floor the difference between the floating rate and the lower limit when that
lower limit is breached. There is usually a premium paid by the buyer of such a contract.
Interest rate swaps—Contracts that are entered into primarily as an asset/liability management strategy to
reduce interest rate risk. Interest rate swap contracts are exchanges of interest rate payments, such as fixed-rate
payments for floating-rate payments, based on notional principal amounts.
Main Street Investor—The customer segment that includes those who execute less than 30 trades per quarter
and hold less than $50,000 in assets in combined retail accounts.
Margin debt—The extension of credit to brokerage customers of the Company, on and off balance sheet,
where the loan is secured with securities owned by the customer.
Mass Affluent—The customer segment that includes those who hold $50,000 or more in assets in combined
retail accounts.
Net New Customer Asset Flows—The total inflows to all new and existing customer accounts less total
outflows from all closed and existing customer accounts, excluding the effects of market movements in the value
of customer assets.
Net Present Value of Equity (“NPVE”)—The present value of expected cash inflows from existing assets,
minus the present value of expected cash outflows from existing liabilities, plus the expected cash inflows and
outflows from existing derivatives and forward commitments. This calculation is performed for E*TRADE Bank.
Nonperforming assets—Assets that do not earn income, including those originally acquired to earn income
(delinquent loans) and those not intended to earn income (REO). Loans are classified as nonperforming when full
and timely collection of interest and principal becomes uncertain or when the loans are 90 days past due.
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