(Source: Business Wire)
E*TRADE FINANCIAL Corporation (NASDAQ: ETFC) today released its Monthly
Activity Report for August and provided an intra-quarter update on its
loan portfolio delinquencies and certain key financial and balance sheet
metrics.
The Company ended August with record brokerage accounts of more than 2.7
million, including gross new brokerage accounts of 31,324 and net new
brokerage accounts of 11,321 during the month. Total accounts ended the
month at more than 4.5 million. Total Daily Average Revenue Trades
("DARTs") for August were 208,495 -- an increase of 18.3 percent from
July and 37.4 percent from the year ago period. The Company reported
approximately 200,000 DARTs for September month to date (as of September
11).
Customer security holdings increased 2.9 percent and brokerage related
cash increased by $982 million in August. This was offset by a $380
million reduction in Bank related customer cash and deposits, as the
Company continued to execute on its balance sheet reduction strategy.
This led to a 2.6 percent increase in total customer assets in the month
and flat net new customer assets. Customers were net sellers of
approximately $600 million of securities in August.
The Company also provided an update concerning delinquencies in its loan
portfolio. Special mention delinquencies (30 to 89 days delinquent) for
its home equity portfolio, which represents the Company's greatest
exposure to loan losses, remained flat from June 30 to August 31. Home
equity "at risk" delinquencies (30 to 179 days delinquent) declined
seven percent from June 30 to August 31. Total special mention
delinquencies for the Company's loan portfolio, which includes one- to
four-family, home equity and consumer and other loans, declined by four
percent quarter to date, as of August 31, 2009.
Detailed information concerning loan delinquencies is provided in table
form on page 4 of this release.
The Company also provided an update to certain key financial and balance
sheet metrics through the first two months of the third quarter, as well
as certain forecasts for the third quarter 2009 results. The Company
cautions that this data is preliminary as of September 14, 2009 and
subject to change.
July and August Quarter-to-Date Results
Total Net Revenue $413 million
Commission, Fees and Other Revenue of $151 million
Operating Expense of $188 million
August Bank Capital Metrics
Bank Tier 1 and risk-based capital ratios of 6.6% and 13.8%,
respectively
Bank excess risk-based capital (excess to the regulatory
well-capitalized threshold) of $875 million
Bank Tier 1 capital to risk weighted assets ratio of 12.5%
The Company also forecasted a range for loan loss provision and expected
net charge-offs for the full third quarter:
Estimated provision for loan losses of $300 million to $375 million
Estimated net charge-offs of $350 million to $375 million
The estimated range for net charge-offs and provision expenses are based
on a combination of actual data from our loan servicers through the
second month of the quarter, a forecast for loan charge-offs and
recoveries for the month ended September 30, 2009 and an updated loan
loss forecast as of July 31, 2009, following our standard quarterly
procedures. The forecast is based on actual loan delinquencies through
July 31, 2009, and model calibration for delinquency roll rates was
based on results as of the same period. The Company's methodology for
estimating allowance for loan losses is more fully described in its
Quarterly Report on Form 10-Q for the three and six months ended June
30, 2009.
Monthly Activity Data
Aug-09 Jul-09 Aug-08 % Chg. M/M % Chg. Y/Y
Trading days 21.0 22.0 21.0 N.M. N.M.
Daily Average Revenue Trades 208,495 176,180 151,722 18.3 % 37.4 %
Gross new brokerage accounts 31,324 30,019 30,208 4.3 % 3.7 %
Gross new stock plan accounts 12,054 12,496 13,669 (3.5)% (11.8)%
Gross new banking accounts 3,402 3,406 16,472 (0.1)% (79.3)%
Total gross new accounts 46,780 45,921 60,349 1.9 % (22.5)%
Net new brokerage accounts 11,321 7,467 8,116 N.M. N.M.
Net new stock plan accounts 4,545 (9,696) 2,465 N.M. N.M.
Net new banking accounts (11,842) (12,052) 2,976 N.M. N.M.
Net new accounts 4,024 (14,281) 13,557 N.M. N.M.
End of period brokerage accounts 2,733,440 2,722,119 2,519,236 0.4 % 8.5 %
End of period stock plan accounts 1,014,825 1,010,280 1,024,100 0.4 % (0.9)%
End of period banking accounts 770,228 782,070 808,752 (1.5)% (4.8)%
End of period total accounts 4,518,493 4,514,469 4,352,088 0.1 % 3.8 %
Customer Assets ($MM)
Security holdings $ 107,308 $ 104,279 $ 129,666 2.9 % (17.2)%
Brokerage related cash 20,312 19,330 17,457 5.1 % 16.4 %
Other customer cash and deposits 14,698 15,078 16,375 (2.5)% (10.2)%
Total customer assets $ 142,318 $ 138,687 $ 163,498 2.6 % (13.0)%
Net new customer assets ($B) $ 0.0 $ 0.0 $ 0.3 N.M. N.M.
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Loan Delinquency Data(1)
Aug-09 Jul-09 Jun-09 % Chg.Aug 09 -Jul 09 % Chg.Jul 09 -Jun 09 QTD % Chg.Aug 09 -Jun 09
One- to Four-Family ($MM)
Current $ 9,733 $ 10,005 $ 10,259 (3 )% (2 )% (5 )%
30-89 days delinquent 528 527 563 0 % (6 )% (6 )%
90-179 days delinquent 404 436 445 (7 )% (2 )% (9 )%
Total 30-179 days delinquent 932 963 1,008 (3 )% (4 )% (8 )%
180+ days delinquent((2)) 755 724 673 4 % 8 % 12 %
Total delinquent loans 1,687 1,687 1,681 0 % 0 % 0 %
Gross loans receivable((3)) $ 11,420 $ 11,692 $ 11,940 (2 )% (2 )% (4 )%
Home Equity ($MM)
Current $ 8,236 $ 8,378 $ 8,515 (2 )% (2 )% (3 )%
30-89 days delinquent 268 265 268 1 % (1 )% 0 %
90-179 days delinquent 223 230 262 (3 )% (12 )% (15 )%
Total 30-179 days delinquent 491 495 530 (1 )% (7 )% (7 )%
180+ days delinquent((2)) 72 78 77 (8 )% 1 % (6 )%
Total delinquent loans 563 573 607 (2 )% (6 )% (7 )%
Gross loans receivable((3)) $ 8,799 $ 8,951 $ 9,122 (2 )% (2 )% (4 )%
Consumer and Other ($MM)
Current $ 1,962 $ 1,998 $ 2,038 (2 )% (2 )% (4 )%
30-89 days delinquent 31 28 29 11 % (3 )% 7 %
90-179 days delinquent 6 8 15 (25 )% (47 )% (60 )%
Total 30-179 days delinquent 37 36 44 3 % (18 )% (16 )%
180+ days delinquent((2)) 10 10 1 0 % 900 % 900 %
Total delinquent loans 47 46 45 2 % 2 % 4 %
Gross loans receivable((3)) $ 2,009 $ 2,044 $ 2,083 (2 )% (2 )% (4 )%
Total Loans Receivable ($MM)
Current $ 19,931 $ 20,381 $ 20,812 (2 )% (2 )% (4 )%
30-89 days delinquent 827 820 860 1 % (5 )% (4 )%
90-179 days delinquent 633 674 722 (6 )% (7 )% (12 )%
Total 30-179 days delinquent 1,460 1,494 1,582 (2 )% (6 )% (8 )%
180+ days delinquent((2)) 837 812 751 3 % 8 % 11 %
Total delinquent loans 2,297 2,306 2,333 (0 )% (1 )% (2 )%
Total gross loans receivable((3)) $ 22,228 $ 22,687 $ 23,145 (2 )% (2 )% (4 )%
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(1) Amounts and percentages may not calculate due to rounding.
(2) Loans that are delinquent for 180+ days have been written
down to the estimated current property value.
(3) Includes unpaid principal balances and premiums
(discounts).
Supplemental Metrics
Financial Metrics ($ '000s) QTD 8/31/2009
Net operating interest income $ 216,647
Gain on loans and securities, net((1)) 44,869
Commission, fees and other revenue((2)) 151,419
Total net revenue $ 412,935
Operating expense $ 187,560
Balance Sheet Management Metrics ($MM) Aug-09
E*TRADE Bank Tier 1 Capital ratio((3)) 6.6%
E*TRADE Bank Tier 1 Capital to risk weighted assets ratio((3)) 12.5%
E*TRADE Bank risk-based capital ratio((3)) 13.8%
E*TRADE Bank excess Tier 1 Capital((3)) $ 691.9
E*TRADE Bank excess Tier 1 Capital to risk weighted assets((3)) $ 1,496.6
E*TRADE Bank excess risk-based capital((3)) $ 875.2
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(1) Gain on loans and securities, net does not reflect
other-than-temporary impairment, which is calculated and booked at
quarter end. The Company expects the impairment for Q309 to be
consistent with prior quarters.
(2) Commission, fees and other revenue consists of the
commission, fees and service charges, principal transactions and other
revenue line items on the consolidated statement of loss.
(3) Monthly capital metrics are estimates and are prepared on
a basis consistent with the capital information in the quarterly
regulatory filings.
About E*TRADE FINANCIAL
The E*TRADE FINANCIAL family of companies provides financial services
including online brokerage and related banking products and services to
retail investors. Specific business segments include Trading and
Investing and Balance Sheet Management. Securities products and services
are offered by E*TRADE Securities LLC (Member FINRA/SIPC). Bank products
and services are offered by E*TRADE Bank, a Federal savings bank, Member
FDIC, or its subsidiaries.
Important Notices
E*TRADE FINANCIAL, E*TRADE and the E*TRADE logo are trademarks or
registered trademarks of E*TRADE FINANCIAL Corporation.
The statements contained in this news release that are forward looking
are based on current expectations that are subject to a number of
uncertainties and risks, and actual results may differ materially. The
uncertainties and risks include, but are not limited to, potential
negative regulatory consequences resulting from actions by the Office of
Thrift Supervision or other regulators and related matters. Additional
uncertainties and risks affecting the business, financial condition,
results of operations and prospects of the Company include, but are not
limited to, potential changes in market activity, anticipated changes in
the rate of new customer acquisition, the conversion of new visitors to
the site to customers, the activity of customers and assets held at the
institution, seasonality, macro trends of the economy in general and the
residential real estate market, instability in the consumer credit
markets and credit trends, rising mortgage interest rates, tighter
mortgage lending guidelines across the industry, increased mortgage loan
delinquency and default rates, portfolio growth, portfolio seasoning and
resolution through collections, sales or charge-offs, the development
and enhancement of products and services, competitive pressures
(including price competition), system failures, economic and political
conditions, including changes to the U.S. Treasury's Troubled Asset
Relief Program, changes in consumer behavior and the introduction of
competing products having technological and/or other advantages. Further
information about these risks and uncertainties can be found in the
"Risk Factors" section of the Company's prospectus supplement dated
September 14, 2009, and in the information included or incorporated in
the annual, quarterly and current reports on Form 10-K, Form 10-Q and
Form 8-K previously filed by E*TRADE FINANCIAL Corporation with the SEC
(including information under the caption "Risk Factors"). Any
forward-looking statement included in this release speaks only as of the
date of this communication; the Company disclaims any obligation to
update any information.
Registration Statement. The issuer has filed a registration statement
(including a prospectus) and a prospectus supplement with the SEC for
the offering to which this communication relates. Before you invest, you
should read the prospectus in that registration statement, the
prospectus supplement and other documents the issuer has filed with the
SEC for more complete information about the issuer and this offering.
You may get these documents for free by visiting EDGAR on the SEC Web
site at www.sec.gov.
Alternatively, the issuer, any underwriter or any dealer participating
in the offering will arrange to send you the prospectus and prospectus
supplement if you request it by calling Sandler O'Neill & Partners, L.P.
toll-free at 866.805.4128.
© 2009 E*TRADE FINANCIAL Corporation. All rights reserved.
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