eTrade 2008 Annual Report Download - page 61

In addition to the factors described above, we monitor credit trends in loans by acquisition channel and
vintage, which are summarized below as of December 31, 2008 and 2007 (dollars in thousands):
One- to
Four-Family Home Equity
Acquisition Channel
December 31,
2008
December 31,
2007
December 31,
2008
December 31,
2007
Purchased from a third party $10,646,324 $12,904,759 $ 8,873,156 $10,638,021
Originated by the Company 2,333,520 2,601,770 1,144,027 1,263,303
Total real estate loans $12,979,844 $15,506,529 $10,017,183 $11,901,324
One- to
Four-Family Home Equity
Vintage Year
December 31,
2008
December 31,
2007
December 31,
2008
December 31,
2007
2003 and prior $ 577,408 $ 844,670 $ 754,054 $ 901,240
2004 1,309,985 1,669,492 990,138 1,156,867
2005 2,695,718 3,084,336 2,426,000 2,790,423
2006 4,890,407 5,829,146 4,668,721 5,760,906
2007 3,475,661 4,078,885 1,161,667 1,291,888
2008 30,665 — 16,603 —
Total real estate loans $12,979,844 $15,506,529 $10,017,183 $11,901,324
Allowance for Loan Losses
The allowance for loan losses is management’s estimate of credit losses inherent in our loan portfolio as of
the balance sheet date. The estimate of the allowance for loan losses is based on a variety of factors, including the
composition and quality of the portfolio; delinquency levels and trends; probable expected losses for the next
twelve months; current and historical charge-off and loss experience; current industry charge-off and loss
experience; the condition of the real estate market and geographic concentrations within the loan portfolio; the
interest rate climate; the overall availability of housing credit; and general economic conditions. Determining the
adequacy of the allowance is complex and requires judgment by management about the effect of matters that are
inherently uncertain. Subsequent evaluations of the loan portfolio, in light of the factors then prevailing, may
result in significant changes in the allowance for loan losses in future periods. We believe our allowance for loan
losses at December 31, 2008 is representative of probable losses inherent in the loan portfolio at the balance
sheet date.
In determining the allowance for loan losses, we allocate a portion of the allowance to various loan products
based on an analysis of individual loans and pools of loans. However, the entire allowance is available to absorb
credit losses inherent in the total loan portfolio as of the balance sheet date.
The following table presents the allowance for loan losses by major loan category (dollars in thousands):
One- to Four-Family Home Equity Consumer and Other Total
Allowance
Allowance
asa%of
Loans
Receivable(1) Allowance
Allowance
asa%of
Loans
Receivable(1) Allowance
Allowance
asa%of
Loans
Receivable(1) Allowance
Allowance
asa%of
Loans
Receivable(1)
December 31, 2008 $185,163 1.42% $833,835 8.19% $61,613 2.65% $1,080,611 4.23%
December 31, 2007 $ 18,831 0.12% $459,167 3.79% $30,166 1.05% $ 508,164 1.66%
(1) Allowance as a percentage of loans receivable is calculated based on the gross loans receivable for each respective category.
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