eTrade 2010 Annual Report Download - page 134

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The Company classifies loans as nonperforming and ceases accruing interest when they are 90 days past
due. If the Company’s nonperforming loans at December 31, 2010 had been performing in accordance with their
terms, the Company would have recorded interest income of approximately $121.5 million, $108.7 million and
$45.9 million for the years ended December 31, 2010, 2009 and 2008, respectively. During 2010, the Company
recognized $26.3 million in interest on loans that were in nonperforming status at December 31, 2010. At
December 31, 2010 and 2009 there were no commitments to lend additional funds to any of these borrowers.
Allowance for Loan Losses
The following table provides a roll-forward by loan portfolio of the allowance for loan losses for the years
ended December 31, 2010, 2009 and 2008 (dollars in thousands):
Year Ended December 31, 2010
One- to Four-
Family Home Equity
Consumer and
Other Total
Allowance for loan losses, beginning of period $ 489,887 $ 620,067 $ 72,784 $ 1,182,738
Provision for loan losses 202,302 529,461 47,649 779,412
Charge-offs (302,595) (600,035) (80,359) (982,989)
Recoveries — 26,596 25,412 52,008
Charge-offs, net (302,595) (573,439) (54,947) (930,981)
Allowance for loan losses, end of period $ 389,594 $ 576,089 $ 65,486 $ 1,031,169
Year Ended December 31, 2009
One- to Four-
Family Home Equity
Consumer and
Other Total
Allowance for loan losses, beginning of period $ 185,163 $ 833,835 $ 61,613 $ 1,080,611
Provision for loan losses 669,043 737,192 91,877 1,498,112
Charge-offs (364,319) (966,259) (111,609) (1,442,187)
Recoveries — 15,299 30,903 46,202
Charge-offs, net (364,319) (950,960) (80,706) (1,395,985)
Allowance for loan losses, end of period $ 489,887 $ 620,067 $ 72,784 $ 1,182,738
Year Ended December 31, 2008
One- to Four-
Family Home Equity
Consumer and
Other Total
Allowance for loan losses, beginning of period $ 18,831 $ 459,167 $ 30,166 $ 508,164
Provision for loan losses 303,851 1,186,625 93,190 1,583,666
Charge-offs (137,974) (820,201) (84,840) (1,043,015)
Recoveries 455 8,244 23,097 31,796
Charge-offs, net (137,519) (811,957) (61,743) (1,011,219)
Allowance for loan losses, end of period $ 185,163 $ 833,835 $ 61,613 $ 1,080,611
Impaired Loans—Troubled Debt Restructurings
The Company has an active loan modification program that focuses on the mitigation of potential losses in
the loan portfolio. As part of the program, the Company considers modifications in which it made an economic
concession to a borrower experiencing financial difficulty a TDR. The various types of economic concessions
that may be granted typically consist of interest rate reductions, maturity date extensions, principal or accrued
interest forgiveness or a combination of these concessions. The Company has also modified a number of loans
through traditional collections actions taken in the normal course of servicing delinquent accounts. These actions
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