eTrade 2011 Annual Report Download - page 2

E*TRADE FINANCIAL CORPORATION
FORM 10-K ANNUAL REPORT
For the Year Ended December 31, 2011
TABLE OF CONTENTS
PART I
Forward-Looking Statements ............................................................ 1
Item 1. Business ..................................................................... 1
Overview ..................................................................... 1
Strategy ....................................................................... 1
Products and Services ............................................................ 2
Sales and Customer Service ....................................................... 4
Technology .................................................................... 4
Competition ................................................................... 5
Regulation .................................................................... 5
Available Information ........................................................... 7
Item 1A. Risk Factors .................................................................. 8
Item 1B. Unresolved Staff Comments ..................................................... 19
Item 2. Properties .................................................................... 20
Item 3. Legal Proceedings .............................................................. 20
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities ................................................... 25
Item 6. Selected Consolidated Financial Data ............................................. 27
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations .................................................................... 29
Overview ..................................................................... 29
Earnings Overview .............................................................. 33
Segment Results Review ......................................................... 46
Balance Sheet Overview ......................................................... 51
Liquidity and Capital Resources ................................................... 55
Risk Management ............................................................... 60
Concentrations of Credit Risk ..................................................... 63
Summary of Critical Accounting Policies and Estimates ................................ 72
Statistical Disclosure by Bank Holding Companies .................................... 80
Glossary of Terms .............................................................. 85
Item 7A. Quantitative and Qualitative Disclosures about Market Risk .......................... 90
Item 8. Financial Statements and Supplementary Data ..................................... 92
Management Report on Internal Control Over Financial Reporting .................... 92
Reports of Independent Registered Public Accounting Firm .......................... 93
Consolidated Statement of Income (Loss) .......................................... 95
Consolidated Balance Sheet ...................................................... 96
Consolidated Statement of Comprehensive Income (Loss) ............................ 97
Consolidated Statement of Shareholders’ Equity .................................... 98
Consolidated Statement of Cash Flows ............................................ 100
Notes to Consolidated Financial Statements ........................................ 102
Note 1—Organization, Basis of Presentation and Summary of Significant Accounting
Policies ................................................................... 102
Note 2—Facility Restructuring and Other Exit Activities ............................ 111
Note 3—Operating Interest Income and Operating Interest Expense ................... 112
Note 4—Fair Value Disclosures ............................................... 113
Note 5—Available-for-Sale and Held-to-Maturity Securities ......................... 121
Note 6—Loans Receivable, Net ................................................ 125
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