eTrade 2000 Annual Report Download - page 16

Land — — — 0.01 6 0.03 8 0.08 8 0.21
Lease financing — — 3 0.01 16 0.06 — — — —
Home equity lines of
credit and second
mortgage loans
29 0.10 9 0.05 57 0.64 5 0.16 20 0.41
Other consumer — 0.01 1 0.02 37 0.30 — — — —
Total allowance for loan
losses
$ 10,930 100.00 % $ 7,161 100.00 % $ 4,766 100.00 % $ 3,594 100.00 % $ 2,957 100.00 %
The above amounts include specific reserves at September 30, 2000, 1999, 1998, 1997 and 1996, totaling $391,000, $406,000,
$449,000, $510,000 and $579,000, respectively, related to non-performing loans.
The following table shows the activity in our allowance for loan losses during the periods indicated.
Years Ended September 30,
2000 1999 1998 1997 1996
(in thousands)
Allowance for loan losses at beginning of period $ 7,161 $ 4,715 $ 3,594 $ 2,957 $ 2,311
Charge-offs:
Real estate loans (240 ) (400 ) (463 ) (304 ) (409 )
Other consumer loans (13 ) (56 ) (76 ) — (28 )
Other loans — (2 ) (17 ) — —
Total charge-offs (253 ) (458 ) (556 ) (304 ) (437 )
Recoveries:
Real estate loans 19 38 13 13 148
Other consumer loans — 79 81 7 16
Other loan — 4 5 — —
Total recoveries 19 121 99 20 164
Net charge-offs (234 ) (337 ) (457 ) (284 ) (273 )
Loan loss allowance acquired in the acquisition
with DFC
— — 724 — —
Additions charged to operations 4,003 2,783 905 921 919
Allowance for loan losses at end of period $ 10,930 $ 7,161 $ 4,766 $ 3,594 $ 2,957
Mortgage-Backed Securities
We maintain a significant portfolio of mortgage-backed securities, primarily in the following forms:
privately insured mortgage pass through securities;
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Government National Mortgage Association (‘Ginnie Mae’ ’ ) participation certificates;
Federal National Home Loan Mortgage Corporation (‘Fannie Mae’ ’ ) participation certificates;
Federal Home Loan Mortgage Corporation (‘Freddie Mac’ ’ ) participation certificates; and
securities issued by other non-agency organizations.
Principal and interest on Ginnie Mae certificates are guaranteed by the full faith and credit of the United States government. Fannie
Mae and Freddie Mac certificates are each guaranteed by their respective agencies. Mortgage-backed securities generally entitle us to
receive a pro rata portion of the cash flows from an identified pool of mortgages. We also invest in collateralized mortgage obligations
(‘CMOs’ ’ ). CMOs are securities issued by special purpose entities generally collateralized by pools of mortgage-backed securities.
The cash flows from these pools are segmented and paid in accordance with a predetermined priority to various classes of securities
issued by the entity. Our CMOs are senior tranches collateralized by federal agency securities or whole loans. Over 99% of our CMO
portfolio is comprised of securities with a triple ‘A’ ’ rating. Although our CMO portfolio has maturity periods similar to our
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