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E*TRADE Financial Corporation Announces Second Quarter 2013 Results

E*TRADE Financial Corporation (NASDAQ: ETFC):

Second Quarter Results
  • Net loss of $54 million, or $0.19 loss per share on total net revenue of $440 million
  • Total operating expenses of $414 million, including goodwill impairment of $142 million and restructuring charges of $10 million
  • Excluding impact of the decision to exit the market making business, net income of $60 million (1) , or $0.21 per share (1)
  • Provision for loan losses of $46 million
  • Daily Average Revenue Trades (DARTs) of 150,000
  • Net new brokerage accounts of 30,000
  • Net new brokerage assets of $1.7 billion; end of period customer assets of $220 billion

E*TRADE Financial Corporation (NASDAQ: ETFC) today announced results for its second quarter ended June 30, 2013, reporting a net loss of $54 million, or $0.19 loss per share, including $142 million of goodwill impairment, and $10 million of restructuring charges. Excluding the goodwill impairment, the Company recorded net income of $60 million (1), or $0.21 earnings per share (1). This compares with net income of $35 million, or $0.12 per share in the prior quarter, and net income of $40 million, or $0.14 per share in the second quarter of 2012. Total net revenue of $440 million for the second quarter of 2013, compared favorably with $420 million in the prior quarter, and was down from $452 million in the second quarter of 2012.

During the second quarter, the Company decided to exit its market making business. As a result, the Company classified the market making unit as held-for-sale during the quarter and impaired the entire amount of the associated goodwill, resulting in a $142 million impairment charge, before tax. This goodwill impairment is a non-cash charge and has no impact on the Company’s tangible equity or regulatory capital position. The non-deductible nature of this charge and the impact of other state deferred tax items due to the decision to exit the market making business resulted in a consolidated effective tax rate of -14 percent for the quarter. Excluding this impact, the Company’s effective tax rate was 37 percent.

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