eTrade 2004 Annual Report Download - page 22

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Table of Contents
Index to Financial Statements
Our allowance for loan losses at December 31, 2004 totaled $47.7 million or 0.41% of total loans held-for-investment and at December
31, 2003 totaled $37.8 million or 0.46% of total loans held-for-investment. Based on the loan portfolio’s historical loss experience and our
estimate of projected losses inherent in the loan portfolio, we believe our allowance for loan losses during the reported periods was appropriate
and complied with our internal policy, accounting principles generally accepted in the United States of America and applicable regulatory
requirements. Our financial condition and earnings could be adversely affected, if the actual loan losses realized by the Company were to
significantly exceed the amounts assumed by management in its determination of the allowance for loan losses. The following table provides
an analysis of the Bank’s allowance for loan losses during the past five years (in thousands):
16
Year Ended December 31,
Three Months
Ended
December 31,
2000
Year Ended
September 30,
2000
2004
2003
2002
2001
Allowance for loan losses—
beginning of
year
$
37,847
$
27,666
$
19,874
$
12,565
$
10,930
$
7,161
Loan charge
-
offs:
Real estate
(186
)
(364
)
(460
)
(94
)
(12
)
(240
)
Home equity lines of credit
and second mortgage
(1,464
)
(75
)
—
(
79
)
—
(
13
)
Recreational vehicle
(18,419
)
(20,341
)
(3,456
)
—
—
—
Marine
(6,003
)
(7,369
)
—
—
—
—
Automobile
(13,796
)
(22,695
)
(28,046
)
(5,395
)
—
—
Credit card
(10,313
)
(919
)
—
—
—
—
Other
(160
)
(1,971
)
—
—
—
—
Total loan charge
-
offs
(50,341
)
(53,734
)
(31,962
)
(5,568
)
(12
)
(253
)
Loan recoveries:
Real estate
—
223
30
29
—
19
Home equity lines of credit
and second mortgage
310
—
—
4
—
—
Recreational vehicle
9,088
9,738
—
—
—
—
Marine
3,225
3,806
—
—
—
—
Automobile
7,464
8,335
10,632
669
—
—
Credit card
141
1
—
—
—
—
Other
279
541
—
—
—
—
Total recoveries
20,507
22,644
10,662
702
—
19
Net charge
-
offs
(29,834
)
(31,090
)
(21,300
)
(4,866
)
(12
)
(234
)
Allowance acquired through acquisitions
(1)
1,547
2,748
14,428
4,699
—
—
Provision for loan losses
38,121
38,523
14,664
7,476
1,647
4,003
Allowance for loan losses
—
end of year
$
47,681
$
37,847
$
27,666
$
19,874
$
12,565
$
10,930
Net charge
-offs to average loans
outstanding
0.30
%
0.41
%
0.28
%
0.07
%
0.00
%
0.01
%
(1) Acquisition of credit card portfolios in 2004 and 2003, the E*TRADE Consumer Finance portfolio in 2002 and the automobile portfolio in 2001.