eTrade 2007 Annual Report Download - page 111
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The Company actively sells loans including loans that it originally purchased from third parties. A summary
of these activities is presented below (dollars in thousands):
Year Ended December 31,
2007 2006 2005
Loans sold:
Originated $1,354,523 $ 907,524 $2,728,094
Purchased 885,026 590,211 1,028,747
Total loans sold $2,239,549 $1,497,735 $3,756,841
Gain (loss) on sales of loans:
Originated $ 5,227 $ 12,018 $ 54,847
Purchased (9,141) (6,775) (1,208)
Total gain (loss) on sales of loans, net $ (3,914) $ 5,243 $ 53,639
Activity in the allowance for loan losses is summarized as follows (dollars in thousands):
Year Ended December 31,
2007 2006 2005
Allowance for loan losses, beginning of period $ 67,628 $ 63,286 $ 47,681
Provision for loan losses 640,078 44,970 54,016
Charge-offs (227,679) (61,843) (56,847)
Recoveries 28,137 21,215 18,436
Net charge-offs (199,542) (40,628) (38,411)
Allowance for loan losses, end of period $ 508,164 $ 67,628 $ 63,286
During 2007, the allowance for loan losses increased by $440.5 million. This increase was driven primarily
by an increase of $427.5 million in the allowance allocated to the home equity loan portfolio, which deteriorated
significantly during the second half of 2007.
Net charge-offs for the year ended December 31, 2007 increased by $158.9 million compared to the same
period in 2006. The overall increase was primarily due to higher net charge-offs on home equity loans, which
was driven mainly by the deterioration of the home equity loan portfolio, described above.
We classify loans as nonperforming when full and timely collection of interest or principal becomes
uncertain or when they are 90 days past due. The following table provides the breakout of nonperforming loans
by type (dollars in thousands):
December 31,
2007 2006
One- to four-family(1) $181,315 $33,588
Home equity 229,523 32,216
Credit card 3,769 3,795
Recreational vehicle 2,235 2,579
Other 1,600 2,532
Total nonperforming loans $418,442 $74,710
(1) One- to four-family excludes held-for-sale loans of $0.1 million and $0.6 million at December 31, 2007 and 2006.
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