eTrade 2009 Annual Report Download - page 63

originate and sell loans of $34.2 million and $7.9 million, respectively. The Company had a commitment to
purchase securities of $25.0 million and no commitments to sell securities. The Company also had $9.1 million
in commitments to fund low income housing tax credit partnerships and other limited partnerships as of
December 31, 2009. Additional information related to commitments and contingent liabilities is detailed in Note
22—Commitments, Contingencies and Other Regulatory Matters of Item 8. Financial Statements and
Supplementary Data.
Other Liquidity Matters
We currently anticipate that our available cash resources and credit will be sufficient to meet our anticipated
working capital and capital expenditure requirements for at least the next 12 months. We may need to raise
additional funds in order to support regulatory capital needs at our Bank, reduce holding company debt, support
more rapid expansion, develop new or enhanced products and services, respond to competitive pressures, acquire
businesses or technologies or take advantage of unanticipated opportunities.
RISK MANAGEMENT
As a financial services company, we are exposed to risks in every component of our business. The
identification and management of existing and potential risks are the keys to effective risk management. Our risk
management framework, principles and practices support decision-making, improve the success rate for new
initiatives and strengthen the organization. Our goal is to balance risks and rewards through effective risk
management. Risks cannot be completely eliminated; however, we do believe risks can be identified and
managed within the Company’s risk tolerance.
Our businesses expose us to the following four major categories of risk that often overlap:
•Credit Risk—Credit risk is the risk of loss resulting from adverse changes in the ability or willingness
of a borrower or counterparty to meet the agreed-upon terms of their financial obligations.
•Liquidity Risk—Liquidity risk is the risk of loss resulting from the inability to meet current and future
cash flow and collateral needs.
•Interest Rate Risk—Interest rate risk is the risk of loss from adverse changes in interest rates, which
could cause fluctuations in our long-term earnings or in the value of the Company’s net assets.
•Operational Risk—Operational risk is the risk of loss resulting from fraud, inadequate controls or the
failure of the internal controls process, third party vendor issues, processing issues and external events.
We also are subject to other risks that could impact our business, financial condition, results of operations or
cash flows in future periods. See Part I—Item 1A—Risk Factors.
We manage risk through a governance structure involving the various boards, senior management and
several risk committees. We use management level risk committees to help ensure that business decisions are
executed within our desired risk profile. A variety of methodologies and measures are used to monitor, quantify,
assess and forecast risk. Measurement criteria, methodologies and calculations are reviewed periodically to
assure that risks are represented appropriately. Risks are managed and controlled under policies and related limits
that are approved by the Board of Directors and delegated to senior management.
The Finance and Risk Oversight Committee, which was established in the second quarter of 2008 and
consists of members of the Board of Directors, monitors the risk process and significant risks throughout the
Company. In addition to this committee, various enterprise risk committees and departments throughout the
Company aid in the identification and management of risks, including:
•Asset Liability Committee—The Asset Liability Committee (“ALCO”) has primary responsibility for
managing liquidity risk and interest rate risk and reviews balance sheet trends, market interest rate and
sensitivity analyses.
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