eTrade 2012 Annual Report Download - page 36

In addition to the items noted above, our success in the future will depend upon, among other things, our
ability to:
• have continued success in the acquisition, growth and retention of brokerage customers;
• generate meaningful growth in the retirement and investing customer group;
• strengthen our risk management capabilities;
• reduce credit costs and the size of the balance sheet;
• generate capital sufficient to meet our operating needs at both our bank and our parent company;
• assess and manage interest rate risk; and
• have disciplined expense control and improved operational efficiency.
Management monitors a number of metrics in evaluating the Company’s performance. The most significant
of these are shown in the table and discussed in the text below:
As of or For the
Year Ended December 31, Variance
2012 2011 2010 2012 vs. 2011
Customer Activity Metrics:
DARTs 138,112 157,475 150,532 (12)%
Average commission per trade $ 11.01 $ 11.01 $ 11.21 0%
Margin receivables (dollars in billions) $ 5.8 $ 4.8 $ 5.1 21%
End of period brokerage accounts 2,903,191 2,783,012 2,684,311 4%
Net new brokerage accounts 120,179 98,701 54,232 22%
Brokerage account attrition rate 9.0% 10.3% 12.2% *
Customer assets (dollars in billions) $ 201.2 $ 172.4 $ 176.2 17%
Net new brokerage assets (dollars in billions) $ 10.4 $ 9.7 $ 8.1 7%
Brokerage related cash (dollars in billions) $ 33.9 $ 27.7 $ 24.5 22%
Company Financial Metrics:
Corporate cash (dollars in millions) $ 407.6 $ 484.4 $ 470.5 (16)%
E*TRADE Financial Tier 1 leverage ratio 5.5% 5.7% 3.6% (0.2)%
E*TRADE Financial Tier 1 common ratio 10.3% 9.4% 4.8% 0.9%
E*TRADE Bank Tier 1 leverage ratio(1) 8.7% 7.8% 7.3% 0.9%
Special mention loan delinquencies (dollars in
millions) $ 342.2 $ 467.1 $ 589.4 (27)%
Allowance for loan losses (dollars in millions) $ 480.7 $ 822.8 $ 1,031.2 (42)%
Enterprise net interest spread 2.39% 2.79% 2.91% (0.40)%
Enterprise interest-earning assets (average dollars
in billions) $ 44.3 $ 42.7 $ 41.1 4%
* Percentage not meaningful.
(1) The Company transitioned from reporting under the OTS reporting requirements to reporting under the OCC reporting requirements in
the first quarter of 2012. The Tier 1 leverage ratio is the OCC Tier 1 leverage ratio as of December 31, 2012 and the OTS Tier 1 capital
ratio at December 31, 2011 and 2010. The OTS Tier 1 capital ratio and OCC Tier 1 leverage ratio are both calculated in the same manner
using adjusted total assets.
Customer Activity Metrics
• DARTs are the predominant driver of commissions revenue from our customers.
• Average commission per trade is an indicator of changes in our customer mix, product mix and/or
product pricing.
• Margin receivables represent credit extended to customers to finance their purchases of securities by
borrowing against securities they own. Margin receivables are a key driver of net operating interest income.
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