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E*TRADE Financial Corporation Announces Fourth Quarter And Full Year 2012 Results

Total assets ended the quarter at $47.4 billion, decreasing $3.0 billion from the prior quarter, as the Company completed deleveraging actions of approximately $3.6 billion. Deleveraging included approximately $2.6 billion in brokerage-related customer cash directed to third party institutions, consisting of $1.2 billion in sweep deposits; $0.9 billion in customer payables; and $0.5 billion from newly-opened accounts. Additionally, approximately $1 billion in wholesale funding obligations were reduced in the quarter, resulting in a pre-tax loss of $28 million on early extinguishment of debt. The corresponding reduction to assets resulted in a gain on sale of securities, included in the $62 million of total net gains recorded during the quarter.

The Company’s loan portfolio ended the quarter at $10.6 billion, contracting $557 million from the prior quarter and a reduction of $2.6 billion from the year ago quarter, primarily related to $455 million and $1.9 billion of paydowns for the respective periods. Fourth quarter provision for loan losses decreased from $141 million in the prior quarter to $74 million.

Net charge-offs in the quarter were $102 million, a decrease of $57 million from the prior quarter. The allowance for loan losses at quarter-end was $481 million, down $28 million from the previous quarter.

For the Company’s entire loan portfolio, special mention delinquencies increased five percent sequentially, and total at-risk delinquencies increased one percent versus the third quarter. As compared to the year-ago period, special mention delinquencies declined 27 percent and total at-risk delinquencies declined 28 percent.

As of December 31, 2012, the Company reported consolidated Tier 1 leverage and risk-based ratios (1) of 5.5 percent and 13.7 percent, respectively; down from 5.8 percent and 14.3 percent in the prior period. The Company’s consolidated Tier 1 common ratio (2) ended the quarter at 10.3 percent, down from 10.9 percent in the prior period. E*TRADE Bank ended the quarter with Tier 1 leverage (3) and total risk-based capital ratios of 8.7 percent and 20.6 percent, up from 7.9 percent and 19.3 percent, respectively, at the end of the prior period.

Historical metrics and financials can be found on the E*TRADE Financial Investor Relations website at

The Company will host a conference call to discuss the results beginning at 5:00 p.m. EST today. This conference call will be available to domestic participants by dialing 800-709-0218 and international participants by dialing 212-231-2910. A live audio webcast and replay of this conference call will also be available at

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 and affiliates. More information is available at ETFC-E

Important Notices

E*TRADE Financial, E*TRADE and the E*TRADE logo are trademarks or registered trademarks of E*TRADE Financial Corporation.

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