eTrade 2002 Annual Report Download - page 49

Table of Contents
Index to Financial Statements
The following table sets forth the components of both gross and net revenues and percentage change information related to certain items on our
consolidated statements of operations for the periods indicated (dollars in thousands):
Percentage Change
Year Ended December31, Year Ended September30,
2000 2002 Versus
2001
2001 Versus
2000
2002 2001
Brokerage Revenues:
Commissions $ 301,778 $ 377,704 $ 675,791 (20)% (44)%
Principal transactions 216,544 157,949 146,995 37% 7%
Other brokerage-related 178,744 156,690 164,006 14% (4)%
Interest income 182,103 305,581 463,590 (40)% (34)%
Interest expense (12,515 ) (86,489 ) (222,553 ) (86)% (61)%
Net brokerage revenues 866,654 911,435 1,227,829 (5)% (26)%
Banking Revenues:
Gain on sales of originated loans 128,506 95,478 — 35% —
Gain on sales of loans held-for-sale and
securities, net
83,953 75,836 8,491 11% 793%
Other banking-related 46,184 38,587 17,543 20% 120%
Interest income 763,890 854,290 496,768 (11)% 72%
Interest expense (548,659 ) (692,786 ) (378,310 ) (21)% 83%
Provision for loan losses (14,664 ) (7,476 ) (4,003 ) 96% 87%
Net banking revenues 459,210 363,929 140,489 26% 159%
Total net revenues $ 1,325,864 $ 1,275,364 $ 1,368,318 4% (7)%
Revenues
Total net revenues increased 4% from fiscal 2001 to fiscal 2002 and decreased 7% from fiscal 2000 to fiscal 2001. Net brokerage revenues
decreased 5% from fiscal 2001 to fiscal 2002 and 26% from fiscal 2000 to fiscal 2001. The decrease in net brokerage revenues was mainly due
to decreases in commission revenues and net interest income, offset by increases in principal transactions reflecting our acquisition of Dempsey
in October 2001 as well as the decrease in interest expenses. Net banking revenues increased 26% from fiscal 2001 to fiscal 2002. This increase
is due to a widening of the net interest spread at the Bank from fiscal 2001 to fiscal 2002, the continued decline in interest rates throughout
fiscal 2002 to 40-year lows that favorably impacted our mortgage origination business, which we acquired in fiscal 2001, and our correspondent
business. This resulted in an increase in gain on sales of originated loans and an increase in gain on sales of loans held-for-sale and securities,
net, offset by impairments and losses on sale of securities.
Brokerage Revenues
Commissions, which are earned as retail customers execute securities transactions, decreased 20% from fiscal 2001 to fiscal 2002 and 44%
from fiscal 2000 to fiscal 2001. These revenues are primarily affected by brokerage transaction volume, average commission per brokerage
transactions, transaction mix and our professional trading business.
Total retail brokerage transactions, excluding professional trading, decreased 22% from fiscal 2001 to fiscal 2002 and 34% from fiscal 2000 to
fiscal 2001, largely reflective of continuing global market declines. Average commission per brokerage transactions, excluding professional
trading, decreased 4% from $13.38 for fiscal 2001 to $12.78 for fiscal 2002 and decreased16% from $15.88 for fiscal 2000 to $13.38 for fiscal
2001. The decreases in average commission per brokerage transactions can be attributed to transaction mix and the
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