eTrade 2009 Annual Report Download - page 161

trigger certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could
have a direct material effect on E*TRADE Bank’s financial condition and results of operations. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action, E*TRADE Bank must meet
specific capital guidelines that involve quantitative measures of E*TRADE Bank’s assets, liabilities and certain
off-balance sheet items as calculated under regulatory accounting practices. In addition, E*TRADE Bank may
not pay dividends to the parent company without approval from the OTS and any loans by E*TRADE Bank to
the parent company and its other non-bank subsidiaries are subject to various quantitative, arm’s length,
collateralization and other requirements. E*TRADE Bank’s capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require E*TRADE Bank to
maintain minimum amounts and ratios of Total and Tier I capital to risk-weighted assets and Tier I capital to
adjusted total assets. As shown in the table below, at both December 31, 2009 and 2008, the OTS categorized
E*TRADE Bank as “well capitalized” under the regulatory framework for prompt corrective action. However,
events beyond management’s control, such as a continued deterioration in residential real estate and credit
markets, could adversely affect future earnings and E*TRADE Bank’s ability to meet its future capital
requirements.
E*TRADE Bank’s required actual capital amounts and ratios are presented in the table below (dollars in
thousands):
Actual
Minimum Required to
Qualify as Adequately
Capitalized
Minimum Required to be
Well Capitalized Under
Prompt Corrective
Action Provisions
Amount Ratio Amount Ratio Amount Ratio
December 31, 2009(1):
Total capital to risk-weighted assets $3,102,618 14.08% >$ 1,762,794 >8.0% >$2,203,492 >10.0%
Tier I capital to risk-weighted assets $2,818,370 12.79% >$ 881,397 >4.0% >$1,322,095 > 6.0%
Tier I capital to adjusted total assets $2,860,312 6.69% >$ 1,709,402 >4.0% >$2,136,752 > 5.0%
December 31, 2008:
Total capital to risk-weighted assets $3,136,650 12.95% > $1,937,583 >8.0% >$2,421,979 >10.0%
Tier I capital to risk-weighted assets $2,824,299 11.66% > $ 968,792 >4.0% >$1,453,187 > 6.0%
Tier I capital to adjusted total assets $2,824,299 6.29% > $1,796,601 >4.0% >$2,245,751 > 5.0%
(1) Capital amounts and ratios include E*TRADE Securities LLC.
NOTE 21—LEASE ARRANGEMENTS
The Company has non-cancelable operating leases for facilities through 2022. Future minimum lease
payments and sublease proceeds under these leases, including leases involved in facility restructurings, are as
follows (dollars in thousands):
Minimum
Lease
Payments
Sublease
Proceeds
Net Lease
Commitments
Years ending December 31,
2010 $ 30,277 $ (3,139) $ 27,138
2011 25,010 (2,667) 22,343
2012 22,972 (2,724) 20,248
2013 15,656 (2,805) 12,851
2014 14,700 (2,890) 11,810
Thereafter 51,633 (284) 51,349
Total future minimum lease payments $160,248 $(14,509) $145,739
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