eTrade 2008 Annual Report Download - page 63

The following table allocates the allowance for loan losses by loan category (dollars in thousands):
December 31,
2008 2007 2006 2005 2004
Amount %(1) Amount %(1) Amount %(1) Amount %(1) Amount %(1)
One- to four- family $ 185,163 51.3%$ 18,831 51.3%$ 7,760 41.7%$ 4,858 37.0%$ 2,812 32.3%
Home equity 833,835 39.6 459,167 39.4 31,671 45.3 26,049 42.3 15,183 31.9
Consumer and other loans:
Recreational vehicle 36,896 6.2 12,622 6.3 11,077 8.8 13,465 14.1 11,343 22.4
Marine 8,339 1.7 4,171 1.7 3,648 2.5 4,590 3.9 4,116 6.3
Commercial 4,063 0.9 2,407 0.9 1,635 0.9 669 0.5 22 —
Credit card 11,786 0.3 10,123 0.3 10,611 0.5 11,714 1.0 9,078 1.8
Other 529 0.0 843 0.1 1,226 0.3 1,941 1.2 5,127 5.3
Total consumer and
other loans 61,613 9.1 30,166 9.3 28,197 13.0 32,379 20.7 29,686 35.8
Total allowance for
loan losses $1,080,611 100.0%$508,164 100.0%$67,628 100.0%$63,286 100.0%$47,681 100.0%
(1) Represents percentage of loans receivable in category to total loans receivable, excluding premium (discount).
Loan losses are recognized when it is probable that a loss will be incurred. Our policy is to charge-off
closed-end consumer loans when the loan is 120 days delinquent or when we determine that collection is not
probable. For credit cards, our policy is to charge-off loans when collection is not probable or the loan has been
delinquent for 180 days. Our policy for one- to four-family loan charge-offs prior to January 1, 2008 was to
recognize a charge-off when we foreclosed on the property. For home equity loans, our policy prior to January 1,
2008 was to charge-off loans when we foreclosed on the property or when the loan had been delinquent for 180
days. As of January 1, 2008, we adjusted our charge-off policy mainly for loans in the process of foreclosure.
Our updated policy for both one- to four-family and home equity loans is to assess the value of the property when
the loan has been delinquent for 180 days or is in bankruptcy, regardless of whether or not the property is in
foreclosure, and charge-off the amount of the loan balance in excess of the estimated current property value. As a
result of this change, nonperforming loans included a $73.5 million write down as of December 31, 2008.
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