eTrade 2012 Annual Report Download - page 60

Loans Receivable, Net
Loans receivable, net are summarized as follows (dollars in millions):
Variance
December 31, 2012 vs. 2011
2012 2011 Amount %
One- to four-family $ 5,442.2 $ 6,615.8 $(1,173.6) (18)%
Home equity 4,223.4 5,328.7 (1,105.3) (21)%
Consumer and other 844.9 1,113.2 (268.3) (24)%
Unamortized premiums, net 68.9 97.9 (29.0) (30)%
Allowance for loan losses (480.7) (822.8) 342.1 (42)%
Total loans receivable, net $10,098.7 $12,332.8 $(2,234.1) (18)%
Loans receivable, net decreased 18% to $10.1 billion at December 31, 2012 from $12.3 billion at
December 31, 2011. This decline was due primarily to our strategy of reducing balance sheet risk by allowing the
loan portfolio to pay down, which we plan to do for the foreseeable future.
During the year ended December 31, 2012, the allowance for loan losses decreased by $342.1 million from
the level at December 31, 2011. During the first quarter of 2012, we completed an evaluation of certain programs
and practices that were designed in accordance with guidance from our former regulator, the OTS. This
evaluation was initiated in connection with our transition from the OTS to the OCC, our new primary banking
regulator. As a result of our evaluation, loan modification policies and procedures were aligned with the guidance
from the OCC. The review resulted in a significant increase in charge-offs during the first quarter of 2012. The
majority of the losses associated with these charge-offs were previously reflected in the specific valuation
allowance and qualitative component of the general allowance for loan losses at December 31, 2011. See
Summary of Critical Accounting Policies and Estimates for a discussion of the estimates and assumptions used in
the allowance for loan losses, including the qualitative component.
Deposits
Deposits are summarized as follows (dollars in millions):
Variance
December 31, 2012 vs. 2011
2012 2011 Amount %
Sweep deposits $21,253.6 $18,619.0 $2,634.6 14%
Complete savings deposits 4,981.6 5,720.8 (739.2) (13)%
Checking deposits 1,055.4 863.3 192.1 22%
Other money market and savings deposits 995.2 1,033.2 (38.0) (4)%
Time deposits 106.7 223.7 (117.0) (52)%
Total deposits $28,392.5 $26,460.0 $1,932.5 7%
Deposits represented 67% and 62% of total liabilities at December 31, 2012 and 2011, respectively. At
December 31, 2012, 92% of our customer deposits were covered by FDIC insurance. Deposits provide the
benefit of lower interest costs compared with wholesale funding alternatives. Deposits increased 7% to $28.4
billion at December 31, 2012 from $26.5 billion at December 31, 2011. The increase was driven primarily by an
increase of $2.6 billion in sweep deposits. The increase in sweep deposits was driven by an increase in customer
inflows during the year ended December 31, 2012, offset by a reduction of $1.7 billion in sweep deposits that
were transferred off of the balance sheet to third parties, as a result of deleveraging initiatives and the dissolution
of our third bank charter.
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