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E*TRADE Financial Corporation Reports Monthly Activity For August 2013; Provides Updates To Its Loan Delinquencies

E*TRADE Financial Corporation (NASDAQ: ETFC) today released its Monthly Activity Report for August 2013.

Daily Average Revenue Trades (“DARTs”) for August were 147,517, a five percent increase from July and a 21 percent increase from the year-ago period. The Company added 30,132 gross new brokerage accounts in August, ending the month with approximately 3.0 million brokerage accounts – an increase of 9,466 from July. Total accounts ended the month at approximately 4.6 million.

Net new brokerage assets were positive $1.1 billion in the month. During the month, customer security holdings decreased by one percent, or $0.8 billion, and brokerage-related cash ended the month unchanged at $36.8 billion. Bank-related cash and deposits also ended the month unchanged, at $6.5 billion. Customers were net buyers of approximately $1.0 billion in securities during the month.

The Company also updated delinquency statistics in its loan portfolio. For the Company’s entire loan portfolio, total special mention delinquencies (30 to 89 days delinquent) increased nine percent from June 30, 2013 to August 31, 2013 and decreased 21 percent from July 31, 2013 to August 31, 2013, while total “at risk” delinquencies (30 to 179 days delinquent) increased four percent from June 30, 2013 to August 31, 2013 and decreased 17 percent from July 31, 2013 to August 31, 2013. Additional loan delinquency data is provided in the second table of this release.

The Company recently completed a servicer transfer of $1.6 billion in 1-4 family mortgages, prompted by changes to a servicer relationship. Servicer transfers typically create a temporary spike in delinquencies resulting from changes to borrower payment processes, which was demonstrated in July’s increase in special mention delinquencies. Based on data received to date, and consistent with previous servicer transfers, the Company expects this temporary increase in delinquencies to revert to pre-transfer levels for the September reporting period.

Monthly Activity Data

                   
 
Aug-13 Jul-13 Aug-12 % Chg. M/M % Chg. Y/Y
 
 
Trading days 22.0 21.5 23.0 N.M. N.M.
 
DARTs 147,517 140,898 121,570 4.7 % 21.3 %
 
Gross new brokerage accounts 30,132 25,030 33,303 20.4 % (9.5)%
Gross new stock plan accounts 26,827 20,310 26,649 32.1 % 0.7 %
Gross new banking accounts   803   852   1,365 (5.8)% (41.2)%
Total gross new accounts 57,762 46,192 61,317 25.0 % (5.8)%
 
Net new brokerage accounts 9,466 (1,859) 18,034 N.M. N.M.
Net new stock plan accounts 13,616 5,691 9,478 N.M. N.M.
Net new banking accounts   (2,432)   (2,497)   (2,507) N.M. N.M.
Net new accounts 20,650 1,335 25,005 N.M. N.M.
 
End of period brokerage accounts 2,970,338 2,960,872 2,888,276 0.3 % 2.8 %
End of period stock plan accounts 1,205,114 1,191,498 1,119,088 1.1 % 7.7 %
End of period banking accounts   408,667   411,099   440,296 (0.6)% (7.2)%
End of period total accounts 4,584,119 4,563,469 4,447,660 0.5 % 3.1 %
 

Customer Assets ($B)

Security holdings $ 158.3 $ 159.1 $ 139.3 (0.5)% 13.6 %
Customer payables (cash) 5.4 5.6 5.8 (3.6)% (6.9)%

Customer cash balances held by third parties (1)

12.0 11.8 3.9 1.7 % 207.7 %
Unexercised stock plan customer options (vested)   30.7   31.7   22.3 (3.2)% 37.7 %
Customer assets in brokerage and stock plan accounts   206.4   208.2   171.3 (0.9)% 20.5 %
Sweep deposits 19.4 19.4 21.7 0.0 % (10.6)%
Savings, transaction and other   6.5   6.5   7.3 0.0 % (11.0)%
Customer assets in banking accounts   25.9   25.9   29.0 0.0 % (10.7)%
Total customer assets $ 232.3 $ 234.1 $ 200.3 (0.8)% 16.0 %
 

Net new brokerage assets ($B) (2)

$ 1.1 $ 0.6 $ 1.1 N.M. N.M.

Net new banking assets ($B) (2)

  (0.0)   (0.1)   0.0 N.M. N.M.

Net new customer assets ($B) (2)

$ 1.1 $ 0.5 $ 1.1 N.M. N.M.
 
Brokerage related cash ($B) $ 36.8 $ 36.8 $ 31.4 0.0 % 17.2 %
Other customer cash and deposits ($B)   6.5   6.5   7.3 0.0 % (11.0)%
Total customer cash and deposits ($B) $ 43.3 $ 43.3 $ 38.7 0.0 % 11.9 %
 
Customer net (purchase) / sell activity ($B) $ (1.0) $ 0.9 $ 1.2 N.M. N.M.
 
 
(1) Customer cash balances held by third parties are held outside E*TRADE Financial and include money market funds and sweep deposit accounts at unaffiliated financial institutions.

(2) Net new customer assets are total inflows to all new and existing customer accounts less total outflows from all closed and existing customer accounts. The net new banking assets and net new brokerage assets metrics treat asset flows between E*TRADE entities in the same manner as unrelated third party accounts.

 
 

Loan Delinquency Data

                       
 
Aug-13 Jul-13 Jun-13

% Chg. Aug 13 - Jul 13

% Chg. Jul 13 - Jun 13

% Chg. Aug 13 - Jun 13

One- to Four-Family ($MM)

 
Current $ 4,305 $ 4,309 $ 4,495 (0)% (4)% (4)%
30-89 days delinquent 216 296 187 (27)% 58% 16%
90-179 days delinquent   70   74   76 (5)% (3)% (8)%
Total 30-179 days delinquent 286 370 263 (23)% 41% 9%
180+ days delinquent   243   252   262 (4)% (4)% (7)%

Total delinquent loans (1)

  529   622   525 (15)% 18% 1%

Gross loans receivable (2)

$ 4,834 $ 4,931 $ 5,020 (2)% (2)% (4)%
 

Home Equity ($MM)

 
Current $ 3,555 $ 3,621 $ 3,689 (2)% (2)% (4)%
30-89 days delinquent 66 67 70 (1)% (4)% (6)%
90-179 days delinquent   38   39   42 (3)% (7)% (10)%
Total 30-179 days delinquent 104 106 112 (2)% (5)% (7)%
180+ days delinquent   39   41   41 (5)% 0% (5)%

Total delinquent loans (1)

  143   147   153 (3)% (4)% (7)%

Gross loans receivable (2)

$ 3,698 $ 3,768 $ 3,842 (2)% (2)% (4)%
 

Consumer and Other ($MM)

 
Current $ 648 $ 666 $ 681 (3)% (2)% (5)%
30-89 days delinquent 12 11 12 9% (8)% 0%
90-179 days delinquent   2   2   2 0% 0% 0%
Total 30-179 days delinquent 14 13 14 8% (7)% 0%
180+ days delinquent   -   -   - N.M. N.M. N.M.
Total delinquent loans   14   13   14 8% (7)% 0%

Gross loans receivable (2)

$ 662 $ 679 $ 695 (3)% (2)% (5)%
 

Total Loans Receivable ($MM)

 
Current $ 8,508 $ 8,596 $ 8,865 (1)% (3)% (4)%
30-89 days delinquent 294 374 269 (21)% 39% 9%
90-179 days delinquent   110   115   120 (4)% (4)% (8)%
Total 30-179 days delinquent 404 489 389 (17)% 26% 4%
180+ days delinquent   282   293   303 (4)% (3)% (7)%

Total delinquent loans (1)

  686   782   692 (12)% 13% (1)%

Total gross loans receivable (2)

$ 9,194 $ 9,378 $ 9,557 (2)% (2)% (4)%
 
(1) Delinquent loans include charge-offs for loans that are in bankruptcy or are 180 days past due which have been written down to their expected recovery value.
(2) Includes unpaid principal balances and premiums (discounts).
 
 

Historical metrics and financials can be found on E*TRADE Financial’s corporate website at https://about.etrade.com.

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. More information is available at www.etrade.com.

Important Notices

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

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