eTrade 2005 Annual Report Download - page 91

Table of Contents
Our mortgage-backed securities portfolio is composed primarily of:
•
privately insured mortgage pass-through securities;
•
Government National Mortgage Association (“Ginnie Mae”) participation certificates, guaranteed by the full faith and credit of
the United States;
•
Federal National Mortgage Association (“Fannie Mae”) participation certificates, guaranteed by Fannie Mae;
•
Federal Home Loan Mortgage Corporation (“Freddie Mac”) participation certificates, guaranteed by Freddie Mac; and
•
securities issued by other non-agency organizations.
We buy and hold mortgage-backed trading securities principally for the purpose of selling them in the near term. These securities are
carried at market value and any realized or unrealized gains and losses are reflected in our consolidated statements of income as gain
on sales of loans and securities, net. The following table shows the Bank’s trading securities and the related the realized and unrealized
gains (losses) (in thousands):
As of December31,
Balance
RealizedGains
(Losses)
UnrealizedGains
2005
$
125,262
$
18,572
$
560
2004
$
566,935
$
(729
)
$
2,509
2003
$
821,162
$
(21,517
)
$
4,835
Trading securities decreased in 2005 from 2004 due to market fluctuations which presented an opportunity to sell certain positions at a
gain.
Our investments classified as available-for-sale are carried at estimated fair value with the unrealized gains and losses reflected as a
component of accumulated other comprehensive income.
The following table shows the cost basis and fair value of our mortgage-backed securities and investment portfolio that the Bank held
and classified as available-for-sale (in thousands):
December31,
2005
2004
2003
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