eTrade 2012 Annual Report Download - page 53

Trading and Investing
The following table summarizes trading and investing financial information and key metrics as of and for
the years ended December 31, 2012, 2011 and 2010 (dollars in millions, except for key metrics):
Year Ended December 31,
Variance
2012 vs. 2011
2012 2011 2010 Amount %
Net operating interest income $ 640.5 $ 746.1 $ 763.0 $ (105.6) (14)%
Commissions 377.8 436.2 431.0 (58.4) (13)%
Fees and service charges 119.4 128.0 139.1 (8.6) (7)%
Principal transactions 93.2 105.4 103.4 (12.2) (12)%
Other revenues 32.0 31.2 37.9 0.8 3%
Total net revenue 1,262.9 1,446.9 1,474.4 (184.0) (13)%
Total operating expense 769.2 825.9 752.6 (56.7) (7)%
Trading and investing income $ 493.7 $ 621.0 $ 721.8 $ (127.3) (20)%
Key Metrics:
DARTs 138,112 157,475 150,532 (19,363) (12)%
Average commission per trade $ 11.01 $ 11.01 $ 11.21 $ — 0%
Margin receivables (dollars in billions) $ 5.8 $ 4.8 $ 5.1 $ 1.0 21%
End of period brokerage accounts 2,903,191 2,783,012 2,684,311 120,179 4%
Net new brokerage accounts 120,179 98,701 54,232 21,478 22%
Brokerage account attrition rate 9.0% 10.3% 12.2% (1.3)% *
Customer assets (dollars in billions) $ 201.2 $ 172.4 $ 176.2 $ 28.8 17%
Net new brokerage assets (dollars in billions) $ 10.4 $ 9.7 $ 8.1 $ 0.7 7%
Brokerage related cash (dollars in billions) $ 33.9 $ 27.7 $ 24.5 $ 6.2 22%
* Percentage not meaningful.
The trading and investing segment offers products and services to individual retail investors, generating
revenue from these brokerage and banking relationships and from market making and corporate services
activities. This segment generates five main sources of revenue: net operating interest income; commissions; fees
and service charges; principal transactions; and other revenues. Net operating interest income is generated
primarily from margin receivables and from a deposit transfer pricing arrangement with the balance sheet
management segment. The balance sheet management segment utilizes the vast majority of customer cash and
deposits and compensates the trading and investing segment via a market-based transfer pricing arrangement.
This compensation is reflected in segment results as operating interest income for the trading and investing
segment and operating interest expense for the balance sheet management segment and is eliminated in
consolidation. Customer cash and deposits utilized by the balance sheet management segment include retail
deposits and customer payables. Other revenues include results from providing software and services for
managing equity compensation plans from corporate customers, as we ultimately service retail investors through
these corporate relationships.
2012 Compared to 2011
Trading and investing income decreased 20% to $493.7 million for the year ended December 31, 2012
compared to 2011. We continued to generate net new brokerage accounts, ending the year with 2.9 million
accounts. Brokerage related cash, which is one of our most profitable sources of funding, increased by $6.2
billion when compared to 2011.
Trading and investing commissions decreased 13% to $377.8 million for the year ended December 31, 2012
compared to 2011. This decrease in commissions was primarily the result of a decrease in DARTs of 12% to
138,112 for the year ended December 31, 2012 compared to 2011.
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