eTrade 2010 Annual Report Download - page 5

We provide services to customers in the U.S. through our website at www.etrade.com. In addition to our
website, we also provide services through our network of customer service representatives, relationship managers
and investment advisors. We also provide these services over the phone or in person through our 28 E*TRADE
Branches. Information on our website is not a part of this report.
STRATEGY
Our core business is our trading and investing customer franchise. Building on the strengths of this
franchise, our growth strategy is focused on four areas: retail brokerage, corporate services and market making,
wealth management, and banking.
• Our retail brokerage business is our foundation. We believe a focus on these key factors will position
us for future growth in this business: growing our sales force with a focus on long-term investing,
optimizing our marketing spend, continuing to develop innovative products and services and
minimizing account attrition.
• Our corporate services and market making businesses enhance our strategy by allowing us to realize
additional economic benefit from our retail brokerage business. Our corporate services business is a
leading provider of software and services for managing equity compensation plans and is an important
source of new retail brokerage accounts. Our market making business allows us to increase the
economic benefit on the order flow from the retail brokerage business as well as generate additional
revenues through external order flow.
• We also plan to expand our wealth management offerings. Our vision is to provide wealth management
services that are enabled by innovative technology and supported by guidance from professionals when
needed.
• Our retail brokerage business generates a significant amount of customer cash and we plan to continue
to utilize our bank to optimize the value of these customer deposits.
Our strategy also includes an intense focus on mitigating the credit losses in our legacy loan portfolio and
maintaining disciplined expense management. We remain focused on strengthening our overall capital structure
and positioning the Company for future growth.
PRODUCTS AND SERVICES
We assess the performance of our business based on our segments, trading and investing and balance sheet
management. We consider multiple factors, including the competitiveness of our pricing compared to similar
products and services in the market, the overall profitability of our businesses and customer relationships when
pricing our various products and services. We manage the performance of our business using various customer
activity and financial metrics, including daily average revenue trades (“DARTs”), average commission per trade,
margin receivables, end of period brokerage accounts, net new brokerage accounts, customer assets, net new
brokerage assets, brokerage related cash, corporate cash, E*TRADE Bank excess risk-based capital, special
mention loan delinquencies, allowance for loan losses, enterprise net interest spread and average enterprise
interest-earning assets. Costs associated with certain functions that are centrally managed are separately reported
in a “Corporate/Other” category.
Trading and Investing
Our trading and investing segment offers a full suite of financial products and services to individual retail
investors. The most significant of these products and services are described below:
Trading Products and Services
• automated order placement and execution of U.S. equities, futures, options, exchange-traded funds and
bond orders;
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