eTrade 2008 Annual Report Download - page 49

Margin Receivables
The margin receivables balance is a component of the margin debt balance, which is reported as a key retail
metric of $2.8 billion and $7.0 billion at December 31, 2008 and 2007, respectively. The total margin debt
balance is summarized as follows (dollars in thousands):
Variance
December 31, 2008 vs. 2007
2008 2007 Amount %
Margin receivables $2,791,168 $7,179,175 $(4,388,007) (61)%
Margin held by third parties and other 20,676 81,669 (60,993) (75)%
Margin held by the Canadian brokerage
business(1) — (274,180) 274,180 *
Margin debt $2,811,844 $6,986,664 $(4,174,820) (60)%
* Percentage not meaningful.
(1) Margin held by the Canadian brokerage business prior to its sale was excluded as it is part of discontinued operations.
We believe the decrease in our margin receivables is due to customers deleveraging and reducing their risk
exposure given the substantial volatility in the financial markets and is not due to an issue with the terms or
competitiveness of our margin product.
Loans, Net
Loans, net are summarized as follows (dollars in thousands):
Variance
December 31, 2008 vs. 2007
2008 2007 Amount %
Loans held-for-sale $ — $ 100,539 $ (100,539) *
One- to four-family 12,979,844 15,506,529 (2,526,685) (16)%
Home equity 10,017,183 11,901,324 (1,884,141) (16)%
Consumer and other loans:
Recreational vehicle 1,570,116 1,910,454 (340,338) (18)%
Marine 424,595 526,580 (101,985) (19)%
Commercial 214,084 272,156 (58,072) (21)%
Credit card 85,851 90,764 (4,913) (5)%
Other 4,024 23,334 (19,310) (83)%
Unamortized premiums, net 236,766 315,866 (79,100) (25)%
Allowance for loan losses (1,080,611) (508,164) (572,447) 113%
Total loans, net $24,451,852 $30,139,382 $(5,687,530) (19)%
* Percentage not meaningful.
Loans, net decreased 19% to $24.5 billion at December 31, 2008 from $30.1 billion at December 31, 2007.
This decline was due primarily to our strategy of reducing balance sheet risk and halting our previous focus on
growing the balance sheet. We do not expect to grow our loan portfolio for the foreseeable future. In addition, we
plan to allow our home equity loans to pay down resulting in an overall decline in the balance of the loan
portfolio.
In 2007, we entered into a credit default swap (“CDS”) on $4.0 billion of our first-lien residential real estate
loan portfolio through a synthetic securitization structure. As of December 31, 2008, the balance of the loans
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