E*Trade Posts Deep Loss on Charge

(Updated with details from E*Trade's conference call)

NEW YORK (TheStreet) -- E*Trade (ETFC Quote) reported a whopping third-quarter loss late Tuesday, primarily stemming from a charge the online broker took related to its debt swap this past summer.

The company lost $832 million, or 66 cents a share, for the three months ended Sept. 30, much wider than a loss of $143 million, or 22 cents a share, in its fiscal second quarter ended in June, and a loss of $50 million, or 9 cents a share, in the year-ago equivalent quarter.

The latest results included a $968 million pre-tax non-cash charge for debt extinguishment in relation the $1.74 billion debt exchange the company completed in August. After taxes, the impact of the charge was $773 million, or 61 cents per share.

Excluding this item, E*Trade posted a loss of $59 million, or 5 cents a share, in the latest quarter, edging the average analysts' estimate for a loss of 6 cents a share.

The debt exchange also resulted in a $708 million increase in paid-in-capital. The net effect of the exchange to book equity was a reduction of $65 million, E*Trade said.

"During the quarter we successfully completed a comprehensive recapitalization, substantially improving the company's financial position," outgoing Chairman and CEO Donald H. Layton said in a statement. "Our online brokerage business continues to perform strongly: brokerage accounts grew solidly, our average commission per trade is higher, and our interest rate spread remains strong despite very low market rates. While DARTs were down seasonally from the second quarter, year-over-year they were up seven percent and year-to-date, we have recorded our highest DART level for the first nine months of any year."