eTrade 2005 Annual Report Download - page 188

Table of Contents
The table below summarizes the minimum excess capital requirements for the Company’s broker-dealer subsidiaries (in thousands):
December31, 2005
RequiredNet
Capital
Net
Capital
ExcessNet
Capital
E*TRADE Clearing LLC
(1)
$
57,914
$
345,957
$
288,043
BrownCo LLC
(1)
67,292
309,576
242,284
E*TRADE Securities LLC
(1)
250
33,720
33,470
E*TRADE Capital Markets, LLC
1,206
24,018
22,812
Harris
direct
LLC
(2)
250
19,376
19,126
E*TRADE Global Asset Management, Inc.
(2)
1,177
18,862
17,685
E*TRADE Capital Markets—Execution Services, LLC
(2)
449
3,533
3,084
E*TRADE Professional Trading, LLC
(1)
250
2,044
1,794
VERSUS Brokerage Service (U.S.) Inc.
(2)
100
797
697
International broker-dealers
28,871
68,452
39,581
Totals
$
157,759
$
826,335
$
668,576
(1 )
Elected to use the Alternative method to compute net capital.
(2)
Elected to use the Aggregate Indebtedness method to compute net capital.
Banking
The Bank is subject to various regulatory capital requirements administered by Federal banking agencies. Failure to meet minimum
capital requirements can trigger certain mandatory and possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework
for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets,
liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and
classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios
of Total and Tier I Capital to Risk-weighted assets and Tier I Capital to Adjusted total assets. As shown in the table below, at
December31, 2005, the most recent date of notification, the Office of Thrift Supervision (“OTS”) categorized the Bank as “well
capitalized” under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that
management believes have changed the Bank’s category. At December31, 2005, management believes that the Bank meets all capital
adequacy requirements to which it is subject. However, events beyond management’s control, such as fluctuations in interest rates or
a downturn in the economy in areas in which the Bank’s loans or securities are concentrated, could adversely affect future earnings
and consequently, the Bank’s ability to meet its future capital requirements.
120

2006. EDGAR Online, Inc.