eTrade 2012 Annual Report Download - page 123

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
In February 2013, the FASB amended the presentation guidance on the reporting of amounts reclassified out
of accumulated other comprehensive income. The amended guidance does not change the current requirements
for reporting net income or other comprehensive income in financial statements. However, the guidance amends
the presentation of the amounts reclassified out of accumulated other comprehensive income by component. In
addition, the amended guidance requires the presentation, either on the face of the statement where net income is
presented or in the notes, of significant amounts reclassified out of accumulated other comprehensive income by
the respective line items of net income. The amended guidance became effective for annual and interim periods
beginning on January 1, 2013 for the Company and will be applied prospectively. The Company’s disclosures
will reflect the adoption of the amended presentation guidance in the Form 10-Q for the quarterly period ending
March 31, 2013.
NOTE 2—OPERATING INTEREST INCOME AND OPERATING INTEREST EXPENSE
The following table shows the components of operating interest income and operating interest expense for
the years ended December 31, 2012, 2011 and 2010 (dollars in thousands):
Year Ended December 31,
2012 2011 2010
Operating interest income:
Loans $ 496,466 $ 692,127 $ 879,013
Available-for-sale securities 359,977 421,304 386,347
Held-to-maturity securities 236,961 136,953 35,930
Margin receivables 216,086 221,717 200,260
Securities borrowed and other 61,608 60,238 45,163
Total operating interest income(1) 1,371,098 1,532,339 1,546,713
Operating interest expense:
Securities sold under agreements to repurchase (158,518) (153,079) (129,574)
FHLB advances and other borrowings (92,630) (106,201) (119,344)
Deposits (24,042) (42,879) (62,828)
Customer payables and other (10,843) (10,221) (8,684)
Total operating interest expense(2) (286,033) (312,380) (320,430)
Net operating interest income $1,085,065 $1,219,959 $1,226,283
(1) Operating interest income reflects $(9.7) million, $(10.3) million, and $21.9 million in income on hedges that qualify for hedge
accounting for the years ended December 31, 2012, 2011, and 2010, respectively.
(2) Operating interest expense reflects $142.1 million, $136.7 million, and $122.4 million in expense on hedges that qualify for hedge
accounting for the years ended December 31, 2012, 2011, and 2010, respectively.
NOTE 3—FAIR VALUE DISCLOSURES
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. In determining fair value, the Company
may use various valuation approaches, including market, income and/or cost approaches. The fair value hierarchy
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. Fair value is a market-based measure considered from the perspective of a market
participant. Accordingly, even when market assumptions are not readily available, the Company’s own
assumptions reflect those that market participants would use in pricing the asset or liability at the measurement
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