eTrade 2006 Annual Report Download - page 135

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Quantitative measures established by regulation to ensure capital adequacy require E*TRADE 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 December 31, 2006, the most recent date of notification,
the OTS categorized E*TRADE 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 E*TRADE Bank’s category. At December 31, 2006, management believes that E*TRADE 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 E*TRADE Bank’s loans or
securities are concentrated, could adversely affect future earnings and E*TRADE Bank’s ability to meet its
future capital requirements.
E*TRADE Bank’s required actual capital amounts and ratios are presented in the table below (dollars in
thousands):
Actual
Minimum Required
to Qualify as
Adequately
Capitalized
Minimum Required to
be Well Capitalized
Under
Prompt Corrective
Action Provisions
Amount Ratio Amount Ratio Amount Ratio
December 31, 2006:
Total Capital to risk-weighted assets $2,593,081 10.55% >$1,967,129 >8.0% >$2,458,911 >10.0%
Tier I Capital to risk-weighted assets $2,525,453 10.27% >$ 983,565 >4.0% >$1,475,347 > 6.0%
Tier I Capital to adjusted total assets $2,525,453 6.07% >$1,665,062 >4.0% >$2,081,328 > 5.0%
December 31, 2005:
Total Capital to risk-weighted assets $2,021,091 10.94% >$1,478,238 >8.0% >$1,847,797 >10.0%
Tier I Capital to risk-weighted assets $1,957,805 10.60% >$ 739,119 >4.0% >$1,108,678 > 6.0%
Tier I Capital to adjusted total assets $1,957,805 5.92% >$1,322,343 >4.0% >$1,652,929 > 5.0%
E*TRADE Bank is also required by OTS regulations to maintain tangible capital of at least 1.50% of
tangible assets. E*TRADE Bank satisfied this requirement at both December 31, 2006 and 2005.
E*TRADE Bank is subject to certain restrictions on the amount of dividends it may declare without prior
regulatory approval. At December 31, 2006, E*TRADE Bank had approximately $149.1 million of capital
available for dividend declaration without regulatory approval while still maintaining a “well capitalized” status.
NOTE 24—LEASE ARRANGEMENTS
The Company has non-cancelable and cancelable operating leases for facilities through 2022. Future
minimum rental commitments under these leases are as follows (dollars in thousands):
Years ending December 31,
2007 $ 38,478
2008 36,315
2009 30,874
2010 28,348
2011 21,184
Thereafter 75,414
Total future minimum lease payments $230,613
Certain leases contain provisions for renewal options and rent escalations based on increases in certain costs
incurred by the lessor. Rent expense was $28.6 million, $22.2 million and $23.9 million for the years ended
December 31, 2006, 2005 and 2004, respectively.
132