eTrade 2007 Annual Report Download - page 120

Equity Method Investments
Equity method investments are reported as part of the other investments balance within the other assets line
item on the consolidated balance sheet and consist of the following (dollars in thousands):
December 31,
2007 2006
Investsmart(1) (2) $158,236 $ 61,815
Arrowpath Fund II, L.P. 25,311 19,861
MMA Mid-Atlantic Affordable Housing Fund III 3,859 4,188
Softbank Capital Partners Inc. 5,520 4,050
International Securities Exchange 2,516 4,000
KAP Group, L.L.C. 225 3,507
Other 12,167 8,681
Total equity method investments $207,834 $106,102
(1) Investsmart is an India-based financial services organization providing individuals and corporations with customized financial
management solutions.
(2) Includes $77.0 million of goodwill recorded at December 31, 2007. There was $43.0 million of goodwill at December 31, 2006 that was
recorded in the goodwill line item on the balance sheet, prior to being reclassified to the other assets line item during 2007.
NOTE 12—ASSET SECURITIZATION
Collateralized Debt Obligations (“CDO”)
As of December 31, 2007, there were five outstanding CDOs issued by the Company (CDOs I, III, IV, V
and VI; CDO II was called on November 1, 2006) with a combined carrying and fair value of approximately
$0.1 million. CDOs I and III are static CDOs involving qualifying special purpose entities. CDOs IV-VI are
managed CDOs involving special purpose entities in which the Company is not the primary beneficiary and did
not have a variable interest that would absorb a majority of the entity’s expected losses. The Company purchased
only 20% of the equity interests (i.e., preference shares) in CDOs IV-VI and as Collateral Manager has the right
to receive collateral management fees under each deal.
During the fourth quarter of 2007, the Company reached an agreement to sell all of its residual interests in
the CDOs as well as the collateral management agreements under which they serve as Collateral Manager to a
third party. The closing of this sale is expected to occur in the first quarter of 2008.
NOTE 13—DEPOSITS
Deposits are summarized as follows (dollars in thousands):
Weighted-Average
Rate Amount
Percentage
to Total
December 31, December 31, December 31,
2007 2006 2007 2006 2007 2006
Sweep deposit accounts(1) 0.87% 0.94% $10,112,123 $10,837,124 39.1% 45.0%
Money market and savings accounts 4.55% 4.33% 10,028,115 7,634,241 38.7 31.7
Certificates of deposit(2) 4.93% 5.02% 4,156,674 4,737,253 16.1 19.7
Brokered certificates of deposit(3) 4.51% 3.95% 1,092,225 483,777 4.2 2.0
Checking accounts 1.79% 1.06% 495,618 378,617 1.9 1.6
Total deposits 3.12% 2.88% $25,884,755 $24,071,012 100.0% 100.0%
(1) A sweep product that transfers brokerage customer balances to the Bank, who holds these funds as customer deposits in FDIC-insured
Negotiable Order of Withdrawal and money market deposit accounts.
(2) Includes retail brokered certificates of deposit.
(3) Includes institutional brokered certificates of deposit.
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