E-Trade Sees Earnings Rise

NEW YORK — E*TRADE Financial Corporation (NASDAQ: ETFC)¬† announced results for its fourth quarter ended December¬†31, 2016, reporting net income of $127 million, or $0.46 per diluted share. This compares to net income of $89 million, or $0.30 per diluted share, in the fourth quarter of 2015. Total net revenue of $509 million increased from net revenue of $439 million in the fourth quarter of 2015. Total non-interest expense in the quarter was $322 million compared to $305 million in the year-ago period.

E*TRADE offers stock and option trading online for $9.99 commission.

“We ended the year as a more focused and energized company, and I am exceptionally proud what our team has accomplished during the past four months,” said Karl Roessner, the company’s Chief Executive Officer. “The acquisition of OptionsHouse provided the catalyst to realign the leadership team and refocus the entire Company on business performance. After taking a hard look at our structure and list of projects, we exited 2016 as a leaner, more agile organization, poised to reclaim our position as the best home for active traders and investors alike, with the number one options platform in the industry. As for results, 2016 marks our strongest earnings in 10 years, demonstrating our commitment to managing expenses with discipline, deploying multiple capital initiatives, and diminishing risk associated with our legacy loan portfolio. With balance sheet expansion already well under way, and the team aligned and marching forward on our business growth objectives, I am confident in our ability to continue to create long-term value for our shareholders in the years to come.”

Fourth Quarter Results

  • Net income of $127 million, or $0.46 per diluted share, which includes a net benefit of $7 million, or $0.03 per diluted share, related to benefit to provision for loan losses, partially offset by restructuring and acquisition-related activities
  • Total net revenue of $509 million
  • Allowance for loan losses of $221 million, resulting in a benefit to provision for loan losses of $18 million
  • Total non-interest expense of $322 million, including restructuring and acquisition-related activities of $7 million
  • Operating margin of 40%; adjusted operating margin of 37%
  • Daily Average Revenue Trades (DARTs) of 188,000
  • Customer margin balances of $7.1 billion
  • Net new brokerage accounts of 24,000; annualized growth rate of 2.8 percent
  • Net new brokerage assets of $3.2 billion; annualized growth rate of 4.7 percent; end of period total customer assets of $311 billion

Full Year 2016 Results

  • Net income of $552 million, or $1.98 per diluted share, which includes a net benefit of $93 million, or $0.33 per diluted share, related to benefit to provision for loan losses and benefit to income tax related to the release of state valuation allowances, partially offset by executive severance and restructuring and acquisition-related activities
  • Total net revenue of $1.9 billion
  • Benefit to provision for loan losses of $149 million
  • Total non-interest expense of $1.3 billion, including executive severance of $6 million and restructuring and acquisition-related activities of $32 million related to the OptionsHouse acquisition and other corporate restructuring during the second half of 2016
  • Operating margin of 43%; adjusted operating margin of 35%(1)
  • DARTs of 164,000
  • Net new brokerage accounts of 249,000; excluding the OptionsHouse acquisition, net new brokerage accounts of 101,000 and growth rate of 3.2 percent
  • Net new brokerage assets of $13.1 billion; excluding the OptionsHouse acquisition, net new brokerage assets of $9.4 billion and growth rate of 3.8 percent