eTrade 2005 Annual Report Download - page 51

Table of Contents
higher consumer loan related losses resulted from higher losses on RV and higher credit card bankruptcy activity as a significant
number of customers filed for personal bankruptcy before the enactment of the new bankruptcy laws in October 2005. We expect
provision on our consumer loans to decrease in 2006, as the increase in 2005 was primarily due to the enactment of the bankruptcy
laws. We expect this to be more than offset by increased provision in the mortgage portfolio due to planned growth in 2006 as well as
seasoning of the purchases made in 2005.
During the third quarter of 2005, Hurricane Katrina inflicted significant damage to the gulf coast region. We currently do not estimate
any related significant loss exposure in our loan portfolio. We have mortgage loans approximating $582 million in the
FEMA-designated impact areas. Many of the loans are to borrowers where repayment ability has not yet been determined to be
diminished, or are in areas where the properties may have suffered little, to no damage or may not yet have been inspected. Of the $582
million in loans, approximately 99% were still performing as of December31, 2005. We currently do not estimate any significant
exposure from this natural disaster and will continue to refine our estimates as more information becomes available.
See “Balance Sheet Overview” for additional information regarding factors impacting the provision for loan losses.
Expenses Excluding Interest
As shown in the following table, expenses excluding interest increased 7% to $1.1 billion in 2005 compared to 2004 (dollars in
thousands):
Variance
Year Ended December31,
2005 vs. 2004
2005
2004
2003
$ Amount
%
Expenses excluding interest:
Compensation and benefits
$
380,803
$
350,440
$
364,598
$
30,363
9
%
Occupancy and equipment
69,089
69,572
78,381
(483
)
(1
)
%
Communications
82,485
69,674
73,650
12,811
18
%
Professional services
75,237
67,747
55,716
7,490
11
%
Commissions, clearance and floor brokerage
140,806
129,696
124,868
11,110
9
%
Advertising and marketing development
105,935
62,155
57,887
43,780
70
%
Servicing and other banking expenses
52,326
35,971
37,575
16,355
45
%
Fair value adjustments of financial derivatives
4,892
(2,299
)
15,338
7,191
*
Depreciation and amortization
74,981
77,892
85,615
(2,911
)
(4
)
%
Amortization of other intangibles
43,765
19,443
24,758
24,322
125
%
Facility restructuring and other exit activities
(30,017
)
15,688
134,187
(45,705
)
*
Other
53,751
91,144
101,042
(37,393
)
(41
)
%
Total expenses excluding interest
$
1,054,053
$
987,123
$
1,153,615
$
66,930
7
%
*
Percentage not meaningful
The increase in expenses was primarily driven by the following:

2006. EDGAR Online, Inc.