eTrade 2008 Annual Report Download - page 26

Management monitors a number of metrics in evaluating the Company’s performance. The most significant
of these are shown in the table and discussed in the text below:
As of or For the Year Ended December 31, Variance
2008 2007 2006 2008 vs. 2007
Customer Activity Metrics(1):
Retail customer assets (dollars in billions) $ 112.2 $ 185.0 $ 191.3 (39)%
Net new customer assets (dollars in billions)(2) $ 5.4 $ (11.3) $ 3.2 *
Customer cash and deposits (dollars in billions) $ 32.3 $ 32.7 $ 33.0 (1)%
Total daily average revenue trades 188,116 177,900 153,146 6%
Average commission per trade $ 10.88 $ 11.72 $ 11.97 (7)%
End of period total accounts 4,533,034 4,287,240 4,002,496 6%
Company Financial Metrics(1):
Corporate cash (dollars in millions) $ 434.9 $ 312.4 $ 244.4 39%
E*TRADE Bank excess risk-based capital $ 714.7 $ 435.1 $ 134.2 64%
Allowance for loan losses (dollars in millions) $ 1,080.6 $ 508.2 $ 67.6 113%
Allowance for loan losses as a % of nonperforming
loans 114.70% 121.44% 90.52% (6.74)%
Nonperforming loans as a % of gross loans receivable 3.69% 1.37% 0.28% 2.32%
Enterprise net interest spread (basis points) 252 264 285 (5)%
Enterprise interest-earning assets (average in billions) $ 46.9 $ 56.1 $ 44.9 (16)%
* Percentage not meaningful.
(1) Metrics have been represented to exclude activity from discontinued operations. All discussions, unless otherwise noted, are based on
metrics from continuing operations.
(2) For the year ended December 31, 2008, net new customer assets were $6.4 billion excluding the sale of Retirement Advisors of America
(“RAA”).
Customer Activity Metrics
• Changes in retail customer assets are an indicator of the value of our relationship with the customer. An
increase in retail customer assets generally indicates that the use of our products and services by
existing and new customers is expanding. Changes in this metric are also driven by changes in the
valuations of our customers’ underlying securities, which declined substantially in 2008.
• Net new customer assets are total inflows to all new and existing customer accounts less total outflows
from all closed and existing customer accounts and are a general indicator of the use of our products
and services by existing and new customers.
• Customer cash and deposits are an indicator of a deepening engagement with our customers and are a
key driver of net operating interest income.
• DARTs are the predominant driver of commission revenue from our retail customers.
• Average commission per trade is an indicator of changes in our customer mix, product mix and/or
product pricing. As a result, this metric is impacted by both the mix between our retail domestic and
international businesses and the mix between active traders, mass affluent and main street customers.
• End of period total accounts is an indicator of the Company’s ability to attract and retain customers.
Company Financial Metrics
• Corporate cash is an indicator of the liquidity at the parent company. It is the primary source of capital
above and beyond the capital deployed in our regulated subsidiaries.
• E*TRADE Bank excess risk-based capital is the excess capital that E*TRADE Bank has compared to
the regulatory minimum well-capitalized threshold and is an indicator of E*TRADE Bank’s ability to
absorb future loan losses.
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