E*TRADE Financial Corp. Q1 2010 Earnings Call Transcript

E*TRADE Financial Corp. Q1 2010 Earnings Call Transcript
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E*TRADE Financial Corp. (ETFC)

Q1 2010 Earnings Call Transcript

April 21, 2010 5:00 pm ET

Executives

Susan Hickey – Media Relations

Steven Freiberg – CEO

Bruce Nolop – EVP & CFO

Paul Brandow – EVP & Chief Risk Officer

Bob Burton – EVP & President, E*TRADE Bank

Michael Curcio – EVP & President, E*TRADE Securities

Mike Peasy [ph] – Treasurer

Analysts

William Tanona – Collins Stewart

Roger Freeman – Barclays

Rich Repetto – Sandler O'Neill

Keith Walsh – Citi

Matt Snowling – FBR Capital Markets

Michael Carrier – Deutsche Bank

Mike Vinciquerra – BMO Capital Markets

Howard Chen – Credit Suisse

Joel Jeffrey – KBW

Daniel Harris – Goldman Sachs

Faye Elliott – Banc of America/Merrill Lynch

Presentation

Operator

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Welcome to the E*TRADE Financial first quarter 2010 earnings conference call. At this time, all participants have been placed in a listen-only mode. Following the formal remarks, we will open the call for Q&A. (Operator instructions)

Thank you. It is now my pleasure to turn the floor over to Susan Hickey from E*TRADE Financial. Please go ahead.

Susan Hickey

Good afternoon, and thank you for joining us for E*TRADE Financial’s first quarter 2010 conference call. Joining me today are Steven Freiberg, E*TRADE’s Chief Executive Officer; Bruce Nolop, our Chief Financial Officer, and other members of E*TRADE's management team.

Before turning the call over to Steve, I'd like to remind everyone that during this conference call, the company will be sharing with you certain projections or other forward-looking statements regarding future events or future performance. E*TRADE Financial cautions you that certain factors including risks and uncertainties referred to in the 10-Ks, 10-Qs and other documents E*TRADE files with the Securities and Exchange Commission could cause the company's actual results to differ materially from those indicated by its projections of forward-looking statements.

This call will present information as of April 21, 2010. Please note that E*TRADE Financial disclaims any duty to update any forward-looking statements made in the presentation. During this call, E*TRADE Financial may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of the call or in the company's press release, which can be found on its Website at investor.etrade.com.

This call will be recorded. A replay of this call will be available via phone, webcast and podcast beginning today at approximately 7:00 PM Eastern Time. The call is being webcast live at investor.etrade.com, and no other recordings or copies of this call are authorized or may be relied upon.

And with that, I will now turn the call over to Steve Freiberg.

Steven Freiberg

Thank you everyone for joining us this afternoon. I am pleased to be participating in my first call as E*TRADE’s Chief Executive Officer. To begin today’s call, I would like to share a few thoughts and then Bruce will take you through the first quarter results. From there, I will add a few closing comments, before we take your questions.

I have had a very busy and exciting first few weeks at E*TRADE, learning more about the company, our people, and our customers. This a pivotal time for the company and I am energized by the opportunity to lead the organization to its next phase of growth and innovation. My predecessors, Bob Druskin and Don Layton, the senior management team and really the entire organization navigated the company through very challenging times, and today, with a solid brokerage business, complemented by an improving balance sheet and a strength in capital structure, E*TRADE is well positioned for growth and profitability.

I was attracted to the CEO role at E*TRADE for a number of reasons. I am a builder of businesses, and I look forward to working with the team to build on the company’s current momentum. In addition, I believe E*TRADE’s focus on expanding customer relationships, both with active traders and long-term investors aligns well with my experience in building consumer franchises through enhanced value propositions, customer segmentation, product innovation, and world-class customer service.

E*TRADE remains a respected company with a powerful financial services brand, and as I spend time with our company and our people, I am even more confident about E*TRADE’s opportunity to reach its full potential, and I look forward to engaging with you on our progress. As Bruce will describe E*TRADE’s first quarter performance, exhibit several positive trends, earnings are headed in the right direction, our retail brokerage business continues to compete effectively, balanced levels in our loan portfolio declined at a consistent rate with improving delinquency metrics, and for the first time in two years, E*TRADE Bank internally generated rather than used capital.

These trends provide us with the flexibility to make investments that will drive our continued leadership as a trading and investing platform and our ongoing expansion in the long-term investor segment.

And with that brief introduction, I will turn the call over to Bruce.

Bruce Nolop

Thank you, Steve. We are pleased with our quarterly financial performance and the progress we continue to make in building out a comprehensive product and service offering that supports the needs of a broad range of investors. Before summarizing our financial results, I will review a few highlights of the quarter.

On the product side, a number of new customer offerings or enhancements were introduced. For long-term investors, E*TRADE capital management introduced managed investment portfolios, with a competitive fee structure and an accessible entry point of only $25,000. And Power E*TRADE Pro users now have access to an expanded feature set, including streaming CNBC broadcast.

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