NEW YORK, Sep 15, 2009 (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. | ||||||
Loan Delinquency Data(1) | |||||||||||||||||||
| Aug-09 | Jul-09 | Jun-09 | % Chg. | % Chg. | QTD | ||||||||||||||
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 | )% | |||||||
(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 | ||
(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.
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