eTrade 2012 Annual Report Download - page 42

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Fees and Service Charges
Fees and service charges decreased 6% to $122.2 million for the year ended December 31, 2012 compared to 2011.
The table below shows the components of fees and service charges and the resulting variances (dollars in millions):
Variance
Year Ended December 31, 2012 vs. 2011
2012 2011 Amount %
Order flow revenue $ 58.4 $ 59.1 $(0.7) (1)%
Mutual fund service fees 16.4 15.7 0.7 4%
Foreign exchange revenue 10.3 11.0 (0.7) (6)%
Reorganization fees 7.7 13.4 (5.7) (43)%
Advisor management fees 6.4 4.4 2.0 45%
Other fees and service charges 23.0 26.8 (3.8) (14)%
Total fees and service charges $122.2 $130.4 $(8.2) (6)%
The decrease in fees and services charges for the year ended December 31, 2012 was driven primarily by
lower reorganization fee revenue in 2012 related to a large public company reorganization in the second quarter
of 2011, and by a decline in other fees and service charges due to decreased customer activity.
Principal Transactions
Principal transactions decreased 12% to $93.1 million for the year ended December 31, 2012 compared to
2011. Principal transactions are derived from our market making business in which we act as a market-maker for
our brokerage customers’ orders as well as orders from third party customers. The decrease in principal
transactions revenue was driven primarily by a decrease in trading volume, partially offset by an increase in
average revenue per share earned.
Gains on Loans and Securities, Net
Gains on loans and securities, net increased 67% to $200.4 million for the year ended December 31, 2012
compared to 2011. We recognized additional gains from securities sold as a result of our continued deleveraging
efforts, primarily related to a reduction in wholesale funding obligations, which resulted in losses on early
extinguishment of debt of $78.3 million during the year ended December 31, 2012. The table below shows the
activity and resulting variances (dollars in millions):
Variance
Year Ended December 31, 2012 vs. 2011
2012 2011 Amount %
Gains on loans, net $ 0.6 $ 0.1 $ 0.5 *
Gains on available-for-sale securities, net 207.3 124.4 82.9 67%
Losses on trading securities, net (0.3) (1.9) 1.6 *
Hedge ineffectiveness (7.2) (2.4) (4.8) *
Gains on securities, net 199.8 120.1 79.7 66%
Gains on loans and securities, net $200.4 $120.2 $80.2 67%
* Percentage not meaningful.
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