eTrade 2007 Annual Report Download - page 142

ETBH raises capital through the formation of trusts, which sell trust preferred stock in the capital markets.
The capital securities are mandatorily redeemable in whole at the due date, which is generally 30 years after
issuance. Each trust issues Floating Rate Cumulative Preferred Securities at par, with a liquidation amount of
$1,000 per capital security. The proceeds from the sale of issuances are invested in ETBH’s Floating Rate Junior
Subordinated Debentures.
During the 30-year period prior to the redemption of the Floating Rate Cumulative Preferred Securities,
ETBH guarantees the accrued and unpaid distributions on these securities, as well as the redemption price of the
securities and certain costs that may be incurred in liquidating, terminating or dissolving the trusts (all of which
would otherwise be payable by the trusts). At December 31, 2007, management estimated that the maximum
potential liability under this arrangement is equal to approximately $441.5 million or the total face value of these
securities plus dividends, which may be unpaid at the termination of the trust arrangement.
NOTE 24—SEGMENT AND GEOGRAPHIC INFORMATION
The segments presented below reflect the manner in which the Company’s chief operating decision maker
assesses the Company’s performance. The Company has two segments: retail and institutional.
Retail includes:
• trading, investing, banking and lending products and services to individuals; and
• stock plan administration products and services.
Institutional includes:
• balance sheet management activities including generation of institutional net interest spread, gain on
loans and securities, net and management income;
• market-making; and
• global equity execution and settlement services.
The retail segment originates loans through lending activities. Retail segment loan originations that are not
sold directly to outside parties are sold at arm’s length prices to the institutional segment which manages the
Company’s balance sheet. The Company evaluates the performance of its segments based on segment
contribution (net revenue less expense excluding operating interest). All corporate overhead, administrative and
technology charges are allocated to segments either in proportion to their respective direct costs or based upon
specific operating criteria.
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