eTrade 2012 Annual Report Download - page 54

Trading and investing fees and service charges decreased 7% to $119.4 million for the year ended
December 31, 2012 compared to 2011. This decrease for the year ended December 31, 2012 was driven by lower
reorganization fee revenue in 2012 related to a large public company reorganization in the second quarter of
2011.
Trading and investing principal transactions decreased 12% to $93.2 million for the year ended
December 31, 2012 compared to 2011. 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, when compared
to 2011.
Trading and investing operating expense decreased 7% to $769.2 million for the year ended December 31,
2012 compared to 2011. The decrease for the year ended December 31, 2012 was driven primarily by an
estimated liability of $48 million that was recorded in 2011 related to an offer to purchase auction rate securities
from eligible holders. 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.
As of December 31, 2012, we had approximately 2.9 million brokerage accounts, 1.1 million stock plan
accounts and 0.4 million banking accounts. For the years ended December 31, 2012 and 2011, our brokerage
products contributed 71% and 69%, respectively, and our banking products contributed 29% and 31%,
respectively, of total trading and investing net revenue.
2011 Compared to 2010
Trading and investing segment income decreased 14% to $621.0 million for the year ended December 31,
2011 compared to 2010. We continued to generate net new brokerage accounts, ending the year with 2.8 million
accounts. Brokerage related cash increased by $3.2 billion when compared to 2010.
Trading and investing commissions increased 1% to $436.2 million for the year ended December 31, 2011
compared to 2010. The increase in commissions was primarily the result of an increase in DARTs of 5% to
157,475 for the year ended December 31, 2011 compared to 2010.
Trading and investing fees and service charges decreased 8% to $128.0 million for the year ended
December 31, 2011 compared to 2010. The decrease for the year ended December 31, 2011 was driven primarily
by the elimination of all account activity fees, which took effect in the second quarter of 2010.
Trading and investing principal transactions increased 2% to $105.4 million for the year ended
December 31, 2011 compared to 2010. The increase in principal transactions revenue was driven by a favorable
mix of trading volume and revenue earned per share, as well as the continued focus on expanding our external
customer base, when compared to 2010.
Trading and investing operating expense increased 10% to $825.9 million for the year ended December 31,
2011 compared to 2010. The increase for the year ended December 31, 2011 was driven primarily by an
estimated liability of $48 million related to an offer to purchase auction rate securities held by customers of
E*TRADE Securities LLC, as well as former customers who purchased auction rate securities through
E*TRADE Securities LLC. This estimated liability related primarily to our estimate of the securities’ current fair
value relative to their par value and included penalties and other estimated settlement costs. In addition,
compensation and benefits expense increased 8% to $245.8 million as a result of an increase of 42% in financial
consultants.
As of December 31, 2011, we had approximately 2.8 million brokerage accounts, 1.1 million stock plan
accounts and 0.5 million banking accounts. For the years ended December 31, 2011 and 2010, our brokerage
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