eTrade 2011 Annual Report Download - page 115

of the U.S. trade in non-U.S. securities. The Company exited local market trading as it is not a key strategic
component of the Company’s global brokerage product offering. This exit did not qualify for discontinued
operations accounting as the Company has significant continuing involvement with cross-border trading in the
remaining international brokerage business.
The Company entered into agreements to sell the local market trading operations in Germany, the Nordic
region and the United Kingdom. The sale of the local market trading operations in Germany was completed in
December 2009. The Company closed the sales of the local market trading operations in the Nordic region and
United Kingdom in April 2010 and recognized a gain of $3.0 million.
As a result of the international brokerage business restructuring, the Company recognized $1.1 million, $6.8
million and $15.7 million in expense during the years ended December 31, 2011, 2010 and 2009, respectively.
These costs included $1.3 million, $2.8 million and $7.4 million in severance costs for the years ended
December 31, 2011, 2010 and 2009, respectively. These costs also included an adjustment of $0.2 million
offsetting asset write-off and other restructuring costs for the year ended December 31, 2011 along with $4.0
million and $8.3 million in asset write-off and other restructuring costs for the years ended December 31, 2010
and 2009, respectively. The Company expects to incur charges in future periods as it periodically evaluates the
estimates made in connection with this activity; however, the Company does not expect these charges to be
significant.
NOTE 3—OPERATING INTEREST INCOME AND OPERATING INTEREST EXPENSE
The following table shows the components of operating interest income and operating interest expense
(dollars in thousands):
Year Ended December 31,
2011 2010 2009
Operating interest income:
Loans $ 692,127 $ 879,013 $1,138,116
Available-for-sale securities 421,304 386,347 471,087
Margin receivables 221,717 200,260 138,510
Held-to-maturity securities 136,953 35,930 —
Securities borrowed and other 60,238 45,163 84,845
Total operating interest income(1) 1,532,339 1,546,713 1,832,558
Operating interest expense:
Securities sold under agreements to repurchase (153,079) (129,574) (200,121)
FHLB advances and other borrowings (106,201) (119,344) (148,739)
Deposits (42,879) (62,828) (211,788)
Customer payables and other (10,221) (8,684) (11,308)
Total operating interest expense(2) (312,380) (320,430) (571,956)
Net operating interest income $1,219,959 $1,226,283 $1,260,602
(1) Operating interest income reflects $(10.3) million, $21.9 million, and $53.9 million in income on hedges that qualify for hedge
accounting for the years ended December 31, 2011, 2010, and 2009, respectively.
(2) Operating interest expense reflects $136.7 million, $122.4 million, and $136.3 million in expense on hedges that qualify for hedge
accounting for the years ended December 31, 2011, 2010, and 2009, respectively.
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