eTrade 2012 Annual Report Download - page 44
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Operating Expense
The components of operating expense and the resulting variances are as follows (dollars in millions):
Variance
Year Ended December 31, 2012 vs. 2011
2012 2011 Amount %
Compensation and benefits $ 352.7 $ 333.6 $ 19.1 6%
Advertising and market development 139.5 145.2 (5.7) (4)%
Clearing and servicing 128.6 147.1 (18.5) (13)%
FDIC insurance premiums 117.2 105.4 11.8 11%
Professional services 86.3 89.7 (3.4) (4)%
Occupancy and equipment 74.4 68.8 5.6 8%
Communications 73.1 67.3 5.8 8%
Depreciation and amortization 90.6 89.6 1.0 1%
Amortization of other intangibles 25.2 26.2 (1.0) (4)%
Facility restructuring and other exit activities 7.7 7.7 — 0%
Other operating expenses 66.8 154.3 (87.5) (57)%
Total operating expense $1,162.1 $1,234.9 $(72.8) (6)%
Compensation and Benefits
Compensation and benefits increased 6% to $352.7 million for the year ended December 31, 2012 compared
to 2011. The increase resulted primarily from $13 million in severance associated with the departure of our
former Chief Executive Officer that was recorded during the year ended December 31, 2012.
Clearing and Servicing
Clearing and servicing decreased 13% to $128.6 million for the year ended December 31, 2012 compared to
2011. These decreases resulted primarily from lower trading volumes and lower loan balances compared to 2011.
FDIC Insurance Premiums
FDIC insurance premiums increased 11% to $117.2 million for the year ended December 31, 2012
compared to 2011. The increase for the year ended December 31, 2012 was due primarily to the new FDIC
insurance premium assessment calculation, effective in the second quarter of 2011.
Other Operating Expenses
Other operating expenses decreased 57% to $66.8 million for the year ended December 31, 2012 compared
to 2011. The decrease was driven primarily by an estimated liability of $48 million related to an offer to purchase
auction rate securities from eligible holders recorded in 2011. The costs of this program, which expired on
May 15, 2012, were approximately $10.2 million less than our previous estimate and a $10.2 million benefit was
recorded during the year ended December 31, 2012. In addition, there was a decrease in expenses related to real
estate owned (“REO”) and repossessed assets for the year ended December 31, 2012 compared to 2011.
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