eTrade 2002 Annual Report Download - page 151

Table of Contents
Index to Financial Statements
Payable for Bank securities purchased, collateral not received represents a payable due to third party brokers for securities the Bank committed
to buy, but did not receive from the broker by the settlement date. The Bank’ s interest rate risk exposure related to this payable is mitigated by
its commitments to sell securities to other third party brokers at a fixed price.
As of March 14, 2003, the Bank received $130.3 million or 99.9% of its original commitment to buy from the sellers and made full payment.
The remaining balance due to brokers is $0.2 million, which the Company expects to pay for in the normal, ongoing course of business.
Other Short-Term Borrowing Arrangements
The principal source of financing for E*TRADE Clearings’ margin lending activity is cash balances in customers’ accounts and financing
obtained from other broker-dealers through E*TRADE Clearings’ stock loan program. E*TRADE Clearing, also maintains financing facilities
with banks totaling $275.0 million to finance margin lending. There was $5.5 million outstanding under these lines at December 31, 2002 and
none at December31, 2001.
The Company has multiple term loans from financial institutions. These loans are collateralized by equipment. Borrowings under these term
loans bear interest at 3.00% to 3.25% above LIBOR (4.382% to 4.632% at December31, 2002). The Company had approximately $23.7
million of principal outstanding under these loans at December 31, 2002, which is included above in other short-term borrowing arrangements.
The Company had a $50 million cash secured line of credit under an agreement with a bank that expired in October 2002. The Company did
not renew the line of credit.
16.COMPANY-OBLIGATED REDEEMABLE CAPITAL SECURITIES
ETFC raises capital through the formation of trusts, which sell trust preferred stock in the capital markets. The capital securities are mandatory
redeemable in whole at the due date; which is generally 30 years after issuance. Interest is paid quarterly or semi-annually. The proceeds from
the sale of securities by the trusts are used to purchase subordinated debentures issued by ETFC. The trust obligations are guaranteed by ETFC.
ETFC contributes proceeds from the sale of its subordinated debentures to the Bank in the form of a capital contribution. Details of the
mandatorily redeemable preferred capital securities are as follows (in thousands):
Subsidiary Issuer Dateof
Issue MandatorilyRedeemable PreferredCapitalSecurity December 31,
2002 2001
ETFC Capital Trust VIII 12/02 FloatingRateCumulativePreferred Securities due 2032 $ 15,520 $ —
ETFC Capital Trust VII 12/02 Floating Rate Cumulative Preferred Securities due
2033
14,550 —
ETFC Capital Trust VI 10/02 Floating Rate Cumulative Preferred Securities due
2032
19,403 —
ETFC Capital Trust V 06/02 Floating Rate Cumulative Preferred Securities due
2032
14,544 —
ETFC Capital Trust IV 04/02 Floating Rate MMCapS due 2032 9,698 —
ETFC Capital Trust III 11/01 Floating Rate Capital Securities due 2031 14,644 14,587
ETFC Capital Trust II 07/01 10.25% Fixed Rate Capital Securities due 2031 4,832 4,826
EFTC Capital Trust I 07/01 Floating Rate Capital Securities due 2031 19,386 19,365
TeleBanc Capital Trust II 07/98 9.0% Fixed Rate Beneficial Unsecured Securities due
2028
22,172 22,125
TeleBanc Capital Trust I 06/97 11.0% Fixed Rate Capital Securities due 2027 8,616 8,600
Total mandatorily redeemable preferred capital
securities
$ 143,365 $ 69,503
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2003. EDGAR Online, Inc.