eTrade 2007 Annual Report Download - page 46

BALANCE SHEET OVERVIEW
The following table sets forth the significant components of our consolidated balance sheet (dollars in
thousands):
December 31,
Variance
2007 vs. 2006
2007 2006 Amount %
Assets:
Cash and equivalents(1) $ 2,113,075 $ 1,493,856 $ 619,219 41 %
Trading securities 130,018 178,600 (48,582) (27)%
Available-for-sale mortgage-backed and investment
securities 11,255,048 13,677,771 (2,422,723) (18)%
Loans held-for-sale 100,539 283,496 (182,957) (65)%
Margin receivables 7,179,175 6,828,448 350,727 5 %
Loans receivable, net 30,038,843 26,372,697 3,666,146 14 %
Investment in FHLB stock 338,585 244,212 94,373 39 %
Other assets(2) 5,690,654 4,660,223 1,030,431 22 %
Total assets $56,845,937 $53,739,303 $ 3,106,634 6 %
Liabilities and shareholders’ equity:
Deposits $25,884,755 $24,071,012 $ 1,813,743 8 %
Wholesale borrowings(3) 16,379,197 15,116,384 1,262,813 8 %
Customer payables 5,514,675 6,182,672 (667,997) (11)%
Corporate debt 3,022,698 1,842,169 1,180,529 64 %
Accounts payable, accrued and other liabilities 3,215,547 2,330,696 884,851 38 %
Total liabilities 54,016,872 49,542,933 4,473,939 9 %
Shareholders’ equity 2,829,065 4,196,370 (1,367,305) (33)%
Total liabilities and shareholders’ equity $56,845,937 $53,739,303 $ 3,106,634 6 %
(1) Includes balance sheet line items cash and equivalents and cash and investments required to be segregated under Federal or other
regulations.
(2) Includes balance sheet line items property and equipment, net, goodwill, other intangibles, net and other assets.
(3) Includes balance sheet line items securities sold under agreements to repurchase and other borrowings.
During the first quarter of 2007, we re-presented our balance sheet to report margin receivables and
customer payables directly on the face of the balance sheet. The remaining components of brokerage receivables
and brokerage payables are now reported in the “Other assets” and “Accounts payable, accrued and other
liabilities” line items, respectively. During the fourth quarter of 2007, we re-presented our balance sheet to report
“Investment in FHLB stock” directly on the face of the balance sheet. This item was previously reported in the
“Available-for-sale mortgage-backed and investment securities” line item.
The increase in total assets was attributable primarily to an increase of $3.7 billion in loans receivable, net.
The increase in loans receivable, net was due principally to growth in our one- to four-family real estate loan
portfolio during the first and second quarters of 2007. Beginning in the second half of 2007, we altered our
strategy and halted the focus on growing the balance sheet. For the foreseeable future, we plan to allow our
interest earning assets, particularly our mortgage-backed securities and home equity loans, to pay down, resulting
in an overall decline in balance. During this period, we plan to increase our excess regulatory capital levels at
E*TRADE Bank as we focus on mitigating the credit risk inherent in our home equity loan portfolio.
The increase in total liabilities primarily was attributable to the increase in deposits, wholesale borrowings
and corporate debt. The $1.8 billion increase in deposits was due primarily to the significant growth in money
43