eTrade 2012 Annual Report Download - page 58

a decrease in incentive compensation during the year ended December 31, 2011 compared to 2010. The increase
in professional services was due primarily to a $6.0 million credit in connection with a legal settlement in the
third quarter of 2010, which decreased professional services for the year ended December 31, 2010. Other
operating expenses increased 34% to $34.5 million primarily due to the recording of a net estimated liability of
$10.8 million related a memorandum of understanding that was entered into to settle the Freudenberg Action
during the year ended December 31, 2011.
Total other income (expense) consisted primarily of $177.8 million in corporate interest expense for the year
ended December 31, 2011 on interest-bearing corporate debt. In addition to the stated interest on corporate debt,
the corporate interest expense line item included the benefit of discontinued fair value hedges on corporate debt,
which decreased $7.8 million for the year ended December 31, 2011 compared to 2010. Offsetting interest
expense for the year ended December 31, 2011 was a $3.1 million gain on early extinguishment of debt related to
the call of the 7
3
⁄ 8 % Notes in the second quarter of 2011.
BALANCE SHEET OVERVIEW
The following table sets forth the significant components of the consolidated balance sheet (dollars in
millions):
Variance
December 31, 2012 vs. 2011
2012 2011 Amount %
Assets:
Cash and equivalents $ 2,761.5 $ 2,099.8 $ 661.7 32%
Segregated cash 376.9 1,275.6 (898.7) (70)%
Securities(1) 23,084.2 21,785.4 1,298.8 6%
Margin receivables 5,804.0 4,826.3 977.7 20%
Loans receivable, net 10,098.7 12,332.8 (2,234.1) (18)%
Investment in FHLB stock 67.4 140.2 (72.8) (52)%
Other(2) 5,194.0 5,480.4 (286.4) (5)%
Total assets $47,386.7 $47,940.5 $ (553.8) (1)%
Liabilities and shareholders’ equity:
Deposits $28,392.5 $26,460.0 $ 1,932.5 7%
Wholesale borrowings(3) 5,715.6 7,752.4 (2,036.8) (26)%
Customer payables 4,964.9 5,590.9 (626.0) (11)%
Corporate debt 1,765.0 1,493.5 271.5 18%
Other liabilities 1,644.2 1,715.7 (71.5) (4)%
Total liabilities 42,482.2 43,012.5 (530.3) (1)%
Shareholders’ equity 4,904.5 4,928.0 (23.5) (1)%
Total liabilities and shareholders’ equity $47,386.7 $47,940.5 $ (553.8) (1)%
(1) Includes balance sheet line items trading, available-for-sale and held-to-maturity securities.
(2) Includes balance sheet line items property and equipment, net, goodwill, other intangibles, net and other assets.
(3) Includes balance sheet line items securities sold under agreements to repurchase and FHLB advances and other borrowings.
Segregated Cash
Segregated cash decreased by $0.9 billion during the year ended December 31, 2012. The level of cash
required to be segregated under federal or other regulations, or segregated cash, is driven largely by customer
cash and securities lending balances we hold as a liability in excess of the amount of margin receivables and
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