NEW YORK (
shares surged nearly 7% late Thursday after the online broker posted a surprise quarterly profit -- its first since the financial crisis began.
E*Trade reported earnings of $35 million, or 12 cents a share, for the June-ending quarter vs. a loss of $48 million, or 25 cents a share, in the March quarter and a loss of $143 million, or $2.16 a share, in the year-ago equivalent period. Total revenue fell 14% from the last year's quarter to $534 million, while the provision for loan losses also fell 38% from the prior quarter to $168 million.
Still Wall Street expectations for E*Trade were widely surpassed. The average analyst estimate called for E*Trade to post a loss of 11 cents a share in the June-ending quarter, according to
E*Trade's daily average revenue trades, or DARTs rose 10% from the prior quarter, and 16% from the second quarter of 2009 to 170,000. The brief spike in trading around the "flash crash" in early May contributed to the higher trading activity for E*Trade, as well as its rivals
"The second quarter marked an important milestone for E*Trade as we reported our first quarterly profit in three years," said Steven Freiberg,
E*Trade's chief executive
, in a statement. "Our results were supported by strength in our brokerage business, including growth in DARTs, new accounts, and margin receivables; continued improvement in loan performance trends; prudent expense management; and effective balance sheet strategies in an environment of declining interest rates."
E*Trade CEO Steven Freiberg
Freiberg continued: "We are proud of our second-quarter performance and remain focused on positioning the company for sustainable profitability and growth. At the same time, our significant progress increases our flexibility to invest in products, services, and technologies that should enhance our customer franchise and allow us to better realize growth opportunities to drive shareholder value."
E*Trade said that early delinquencies (those late by 30-89 days) fell 14% from the prior quarter, while all delinquencies dropped 13% in the same time-frame.
E*Trade brought in net new brokerage assets of $2.1 billion in the quarter down slightly from both comparable periods. The online broker's total customer assets fell 9.4% to $144 billion.
As the loan portfolio continues to shrink and the loss provisioning declines, Freiberg expects the "strength and the value of the brokerage business will continue to shine through," he said in an interview with
prior to the online broker's conference call. "We feel confident that the burden the business has carried will be less over time."
Freiberg continued: "The brokerage has performed not only well, but in line with the market ... during a period of great stress in the company where the company could have been distracted."
E*Trade shares finished Thursday's session up 4.5% at $13.35, and were recently up another 6.7% to $14.20 in afterhours action.
--Written by Laurie Kulikowski in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.