eTrade 2011 Annual Report Download - page 123
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Securities sold under agreements to repurchase—Fair value is determined by discounting future cash flows
at the rate implied for other similar instruments with similar remaining maturities.
FHLB advances and other borrowings—Fair value is estimated by discounting future cash flows at the rates
currently offered for borrowings of similar remaining maturities for FHLB advances. For subordinated
debentures, fair value is estimated by discounting future cash flows at the rate implied by dealer pricing quotes.
For margin collateral, overnight and other short-term borrowings and collateralized borrowings, fair value
approximates carrying value.
Corporate debt—Fair value is estimated using dealer pricing quotes. The fair value of the non-interest-
bearing convertible debentures is directly correlated to the intrinsic value of the Company’s underlying stock. As
the price of the Company’s stock increases relative to the conversion price, the fair value of the convertible
debentures increases.
In the normal course of business, the Company makes various commitments to extend credit and incur
contingent liabilities that are not reflected in the consolidated balance sheet. Changes in the economy or interest
rates may influence the impact that these commitments and contingencies have on the Company in the future.
The Company does not estimate the fair value of those commitments. The Company has the right to cancel these
commitments in certain circumstances and has closed a significant amount of customer home equity lines of
credit in recent periods. As of December 31, 2011, the Company had $0.7 billion of unfunded commitments to
extend credit. Information related to such commitments and contingent liabilities is detailed in Note 21—
Commitments, Contingencies and Other Regulatory Matters.
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