eTrade 2010 Annual Report Download - page 43

On April 1, 2009, we adopted the amended guidance for the recognition of OTTI for debt securities as well
as the presentation of OTTI on the consolidated financial statements. As a result of the adoption, we recognized a
$20.2 million after-tax decrease to beginning accumulated deficit and a corresponding offset in accumulated
other comprehensive loss on our consolidated balance sheet. This adjustment represents the after-tax difference
between the impairment reported in prior periods for securities on our balance sheet as of April 1, 2009 and the
level of impairment that would have been recorded on these same securities under the new accounting guidance.
Additionally, in accordance with the new guidance, we changed the presentation of the consolidated statement of
loss to state net impairment as a separate line item, as well as the credit and noncredit components of net
impairment. Prior to this new presentation, OTTI was included in the gains (losses) on loans and securities, net
line item on the consolidated statement of loss.
Revenue
The components of net revenue and the resulting variances are as follows (dollars in millions):
Variance
Year Ended December 31, 2009 vs. 2008
2009 2008 Amount %
Net operating interest income $1,260.6 $1,268.0 $ (7.4) (1)%
Commissions 548.0 515.5 32.5 6%
Fees and service charges 192.5 200.0 (7.5) (4)%
Principal transactions 88.1 84.9 3.2 4%
Gains (losses) on loans and securities, net 169.1 (100.5) 269.6 *
Net impairment (89.1) (95.0) * *
Other revenues 47.8 52.7 (4.9) (9)%
Total non-interest income 956.4 657.6 298.8 45%
Total net revenue $2,217.0 $1,925.6 $291.4 15%
* Percentage not meaningful.
Total net revenue increased 15% to $2.2 billion for the year ended December 31, 2009 compared to 2008.
This was driven by our gains (losses) on loans and securities, net, which increased from net losses of $100.5
million to net gains of $169.1 million for the year ended December 31, 2009 compared to 2008. Commissions
also increased $32.5 million to $548.0 million for the year ended December 31, 2009 compared to 2008.
Net Operating Interest Income
Net operating interest income decreased 1% to $1.3 billion for the year ended December 31, 2009 compared
to 2008. The slight decrease in net operating interest income was due primarily to a decrease in our average
interest earning assets of $2.3 billion during the year ended December 31, 2009, which was largely offset by an
increase in our net operating interest spread during the same period.
Average enterprise interest-earning assets decreased 5% to $44.5 billion for the year ended December 31,
2009 compared to 2008. This decrease was primarily a result of the decrease in our average loans portfolio and
our average margin receivables, partially offset by an increase in average cash and equivalents.
Average enterprise interest-bearing liabilities decreased 6% to $41.8 billion for the year ended
December 31, 2009 compared to 2008. The decrease in average enterprise interest-bearing liabilities was
primarily due to a decrease in average FHLB advances, average brokered certificates of deposit and average
securities loaned and other.
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