eTrade 2009 Annual Report Download - page 53

Provision for loan losses increased $943.6 million to $1.6 billion for the year ended December 31, 2008
compared to 2007. The increase in the provision for loan losses was related primarily to deterioration in the
performance of our home equity loan portfolio, which began in the second half of 2007.
Total balance sheet management segment expense decreased 52% to $253.4 million for the year ended
December 31, 2008 compared to 2007. This decrease was due primarily to the goodwill impairment recorded for
the year ended December 31, 2007 for which there was no similar expense in the year ended December 31, 2008.
There was also a decline in our clearing expense related to the exit of our institutional brokerage operations, as
well as a reduction in corporate overhead expenses, the majority of which are allocated to the balance sheet
management segment.
BALANCE SHEET OVERVIEW
The following table sets forth the significant components of our consolidated balance sheet (dollars in
millions):
December 31,
Variance
2009 vs. 2008
2009 2008 Amount %
Assets:
Cash and equivalents $ 3,483.2 $ 3,853.8 $ (370.6) (10)%
Cash and investments required to be segregated under federal or
other regulations 1,545.3 1,141.6 403.7 35%
Trading securities 38.3 55.5 (17.2) (31)%
Available-for-sale mortgage-backed and investment securities 13,319.7 10,806.1 2,513.6 23%
Margin receivables 3,827.2 2,791.2 1,036.0 37%
Loans, net 19,174.9 24,451.8 (5,276.9) (22)%
Investment in FHLB stock 183.9 200.9 (17.0) (8)%
Other assets(1) 5,794.0 5,237.3 556.7 11%
Total assets $47,366.5 $48,538.2 $(1,171.7) (2)%
Liabilities and shareholders’ equity:
Deposits $25,597.7 $26,136.2 $ (538.5) (2)%
Wholesale borrowings(2) 9,188.8 11,735.1 (2,546.3) (22)%
Customer payables 5,234.2 3,753.3 1,480.9 39%
Corporate debt 2,458.7 2,750.5 (291.8) (11)%
Accounts payable, accrued and other liabilities 1,137.5 1,571.6 (434.1) (28)%
Total liabilities 43,616.9 45,946.7 (2,329.8) (5)%
Shareholders’ equity 3,749.6 2,591.5 1,158.1 45%
Total liabilities and shareholders’ equity $47,366.5 $48,538.2 $(1,171.7) (2)%
(1) Includes balance sheet line items property and equipment, net, goodwill, other intangibles, net and other assets.
(2) Includes balance sheet line items securities sold under agreements to repurchase and other borrowings.
The slight decrease in total assets was attributable primarily to a decrease of $5.3 billion in loans, net, offset
by increases of $2.5 billion in available-for-sale mortgage-backed and investment securities and $1.0 billion in
margin receivables. The decrease in loans, net was due to our strategy of reducing balance sheet risk by allowing
our loan portfolio to pay down, which we plan to do for the foreseeable future.
The decrease in total liabilities was attributable primarily to the decrease of $2.5 billion in wholesale
borrowings, which was partially offset by an increase of $1.5 billion in customer payables. The decrease in
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