eTrade 2003 Annual Report Download - page 109

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Table of Contents
Index to Financial Statements
regulators, such as the SEC, the NYSE, the NASD or the OTS by dissatisfied customers or others are investigated by such regulators, and may,
if pursued, result in formal claims being filed against the Company by customers and/or disciplinary action being taken against the Company
by regulators. Any such claims or disciplinary actions that are decided against the Company could harm the Company’s business.
Insurance Matters
The Company maintains insurance coverage that management believes is reasonable and prudent. The principal insurance coverage it
maintains covers commercial general liability, property damage, hardware/software damage, directors and officers, employment practices
liability, certain criminal acts against the Company and errors and omissions. The Company believes that such insurance coverage is adequate
for the purpose of its business. The Company’s ability to maintain this level of insurance coverage in the future, however, is subject to the
availability of affordable insurance in the marketplace.
Commitments—Loans
In the normal course of business, the Bank makes various commitments to extend credit and incur contingent liabilities that are not
reflected in the consolidated balance sheets. The Bank had the following loan commitments (in thousands):
Significant changes in the economy or interest rate influence the impact that these commitments and contingencies has on the Company
in the future.
At December 31, 2003, the Bank had commitments to purchase $2.1 billion and sell $3.0 billion in securities. In addition, the Bank had
approximately $2.4 billion of certificates of deposit scheduled to mature in less than one year and $2.3 billion of unfunded commitments to
extend credit.
Guarantees
December 31, 2003
Fixed
Rate
Variable
Rate
Total
Commitments to purchase loans:
Mortgage loans
$
69,135
$
157,649
$
226,784
Other loans
9,872
—
9,872
Total commitments to purchase loans
$
79,007
$
157,649
$
236,656
Commitments to originate loans:
Mortgage loans
$
254,644
$
46,613
$
301,257
Other loans
466,705
—
466,705
Total commitments to originate loans
$
721,349
$
46,613
$
767,962
Commitments to sell mortgage loans
$
232,470
$
71,241
$
303,711
As part of business combinations completed during the last three years, the Company is obligated to make certain additional payments in
cash and/or stock in the event certain milestones are achieved by the acquired entities. See Note 3 for further information.
E*TRADE Bank provides guarantees to investors purchasing mortgage loans, which are considered standard representations and
warranties within the mortgage industry. The primary guarantees, are as follows:
96
•
The mortgage and the mortgage note have been duly executed and each is the legal, valid and binding obligation of E*TRADE Bank,
enforceable in accordance with its terms. The mortgage has been duly