eTrade 2006 Annual Report Download - page 64

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Our mortgage-backed securities portfolio is composed primarily of:
• Federal National Mortgage Association (“Fannie Mae”) participation certificates, guaranteed by Fannie
Mae;
• Government National Mortgage Association participation certificates, guaranteed by the full faith and
credit of the United States;
• Collateralized Mortgage Obligations;
• Federal Home Loan Mortgage Corporation (“Freddie Mac”) participation certificates, guaranteed by
Freddie Mac; and
• Privately insured mortgage pass-through securities;.
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 statement of income as gain on sales of loans and securities, net.
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 (dollars in thousands):
December 31,
2006 2005 2004
Cost Basis Fair Value Cost Basis Fair Value Cost Basis Fair Value
Mortgage-backed securities:
Backed by U.S. Government
sponsored and Federal Agencies $ 9,375,444 $ 9,109,307 $ 9,687,666 $ 9,427,521 $ 7,938,135 $ 7,793,207
Collateralized mortgage obligations
and other 1,127,650 1,108,385 1,014,582 995,891 1,266,736 1,258,862
Total mortgage-backed
securities 10,503,094 10,217,692 10,702,248 10,423,412 9,204,871 9,052,069
Investment securities:
Asset-backed securities 2,163,538 2,161,728 1,376,315 1,365,754 2,789,471 2,796,429
FHLB stock 244,212 244,212 198,700 198,700 92,005 92,005
Municipal bonds 620,261 632,747 167,848 168,850 136,362 136,671
Corporate bonds 74,293 72,661 74,931 72,760 87,959 84,515
Other debt securities 80,623 74,880 78,989 73,485 79,467 74,700
Publicly traded equity securities:
Preferred stock 455,846 458,719 290,240 288,365 274,205 274,619
Corporate investments ———— 89117
Total investment securities 3,638,773 3,644,947 2,187,023 2,167,914 3,459,558 3,459,056
Total available-for-sale
securities $14,141,867 $13,862,639 $12,889,271 $12,591,326 $12,664,429 $12,511,125
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