eTrade 2008 Annual Report Download - page 47

Total institutional segment expense increased 38% to $636.2 million for the year ended December 31, 2007
compared to 2006 and was due primarily to the impairment of goodwill associated with the decline in fair value
of our balance sheet management business during the fourth quarter of 2007. The increase was also driven by the
expenses associated with certain legal and regulatory matters.
BALANCE SHEET OVERVIEW
The following table sets forth the significant components of our consolidated balance sheet (dollars in
thousands):
December 31,
Variance
2008 vs. 2007
2008 2007 Amount %
Assets:
Cash(1) $ 4,995,447 $ 2,113,075 $ 2,882,372 136%
Trading securities 55,481 130,018 (74,537) (57)%
Available-for-sale mortgage-backed and investment
securities 10,806,094 11,255,048 (448,954) (4)%
Margin receivables 2,791,168 7,179,175 (4,388,007) (61)%
Loans, net 24,451,852 30,139,382 (5,687,530) (19)%
Investment in FHLB stock 200,892 338,585 (137,693) (41)%
Other assets(2) 5,237,281 5,690,654 (453,373) (8)%
Total assets $48,538,215 $56,845,937 $(8,307,722) (15)%
Liabilities and shareholders’ equity:
Deposits $26,136,246 $25,884,755 $ 251,491 1%
Wholesale borrowings(3) 11,735,056 16,379,197 (4,644,141) (28)%
Customer payables 3,753,332 5,514,675 (1,761,343) (32)%
Corporate debt 2,750,532 3,022,698 (272,166) (9)%
Accounts payable, accrued and other liabilities 1,571,553 3,215,547 (1,643,994) (51)%
Total liabilities 45,946,719 54,016,872 (8,070,153) (15)%
Shareholders’ equity 2,591,496 2,829,065 (237,569) (8)%
Total liabilities and shareholders’ equity $48,538,215 $56,845,937 $(8,307,722) (15)%
(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.
The decrease in total assets was attributable primarily to a decrease of $5.7 billion in loans, net and a
decrease of $4.4 billion in margin receivables for the period ended December 31, 2008 compared to 2007. These
decreases were partially offset by an increase in cash of $2.9 billion. The decrease in loans, net is due to our
strategy of reducing balance sheet risk and halting our previous focus on growing the balance sheet. For the
foreseeable future, we plan to allow our home equity loans to pay down resulting in an overall decline in the
balance of the loan portfolio. During this period, we plan to maintain excess regulatory capital at E*TRADE
Bank as we focus on strengthening our capital position. We believe the decrease in our margin receivables is due
to customers deleveraging and reducing their risk exposure due to the volatility in the financial markets and is not
due to a specific issue with the terms or competitiveness of our margin product.
The decrease in total liabilities was attributable primarily to a decrease of $4.6 billion in wholesale
borrowings, a decrease in customer payables of $1.8 billion and a decrease of $1.6 billion in accounts payable,
accrued and other liabilities for the period ended December 31, 2008 compared to 2007. Repurchase agreements
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