eTrade 2003 Annual Report Download - page 17

Table of Contents
Index to Financial Statements
The following table shows our loan purchase, sale and repayment activity, including loans acquired through business combinations (in
thousands):
We primarily purchase pools of loans on the secondary market using our correspondent network. The following table shows the number
of pools and the associated number of loans that we purchased:
Delinquent, Nonperforming and Other Problem Assets
Year Ended December 31,
2003 2002 2001
Loans receivable
—
net, beginning of year
$
7,365,720
$
8,010,457
$
5,039,602
Loan purchases and originations:
One
-
to four
-
family variable
-
rate
4,035,699
3,565,449
4,451,489
One
-
to four
-
family fixed
-
rate
10,582,799
8,921,213
6,988,688
Consumer and other loans
4,528,864
2,756,830
2,017,950
Total loan purchases and originations
19,147,362
15,243,492
13,458,127
Loans sold
(13,515,811
)
(12,011,864
)
(7,899,991
)
Loans repurchased
1,418
—
1,189
Loans repaid
(3,885,916
)
(3,948,424
)
(2,653,385
)
Total loans sold, repurchased and repaid
(17,400,309
)
(15,960,288
)
(10,552,187
)
Net change in deferred discounts and loan fees
54,846
105,715
74,010
Net transfers to real estate owned and repossessed assets
(26,045
)
(25,864
)
(1,786
)
Net change in allowance for loan losses
(10,181
)
(7,792
)
(7,309
)
Increase (decrease) in total loans receivable
1,765,673
(644,737
)
2,970,855
Loans receivable
—
net, end of year
$
9,131,393
$
7,365,720
$
8,010,457
Year Ended December 31,
2003 2002 2001
Number of pools
5,686
4,448
1,649
Number of loans
18,767
10,527
15,346
We continually monitor our loan portfolio to anticipate and address potential and actual delinquencies. Based on the length of the
delinquency period, we reclassify these assets as nonperforming and, if necessary, take possession of the underlying collateral. Once we take
possession of the underlying collateral, we classify the property as other assets on our consolidated balance sheets.
Nonperforming Assets . We classify loans as nonperforming whenever principal or interest payments are more than 90 days past due or
when we have reason to believe the loan is uncollectible. When a loan is classified as nonperforming, we: 1) stop recognizing interest income
on the loan; 2) reverse any interest we accrued during the initial 90-day period; and 3) discontinue the accretion of deferred loan fees.
Whenever we receive a payment from a nonperforming loan, we apply the full payment to principal if we continue to doubt that both principal
and interest will be collected in full. We only recognize payments as interest income when the principal and interest on the loan is expected to
be collected in full or when the principal has been fully repaid.
Repossessed Assets and Nonperforming Loans. When we acquire the collateral underlying uncollectible loans, we record this Real
Estate Owned (“REO”) and other repossessed assets at estimated fair value, less estimated selling costs. We use appraisals and other
appropriate valuation methods to estimate the fair value of these assets. If the net estimated fair value of the collateral is less than the loan
balance, the difference is charged to the allowance for loan losses. We perform periodic valuations and establish a valuation allowance for REO
and repossessed assets through a charge to income, if the carrying value of a property exceeds its estimated fair
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