Online brokerage E*TRADE Financial Corp. (ETFC) reported Thursday a profit for the fourth quarter that declined from last year, despite revenue growth and improved margins, hurt by losses on early extinguishment of debt. Both adjusted earnings per share and quarterly revenues topped analysts' expectations.
The New York-based company reported net income of $41 million or $0.14 per share for the fourth quarter, lower than $58 million or $0.20 per share in the prior-year quarter.
Results for the latest quarter include net $0.12 per share of after-tax loss on early extinguishment of corporate debt.
Excluding items, adjusted net income for the latest quarter was $78 million or $0.26 per share. On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.23 per share for the quarter. Analysts' estimates typically exclude special items.
Total net revenues for the quarter grew to $461 million from $446 million in the same quarter last year, and topped fourteen Wall Street analysts' consensus estimate of $445.11 million.
Net operating interest income for the quarter was $283 million, up from $257 million in the year-ago quarter, while total non-interest income also declined to $178 million from $189 million in the prior-year quarter.
Provision for loan losses for the quarter dropped to $10 million from $17 million in the year-ago quarter.
Operating margin for th quarter improved 400 basis points to 34 percent from last year's 30 percent.
Daily average revenue trades or DARTs increased 5 percent to 168,318 from the year-ago quarter. Net new brokerage accounts were 17,447 during the quarter, down from 22,217 new accounts in the prior quarter. Net new brokerage assets totaled $3.5 billion, up from $3.2 billion in the prior-year quarter.
Average commission per trade for the quarter was $10.84, compared to $10.97 in the prior-year quarter.
The company ended the quarter with $290.3 billion in total customer assets, compared to $260.8 billion at the end of the year-ago quarter.
At quarter end, the company reported 4.77 million customer accounts, up 3 percent from the end of prior-year quarter. These included 3.14 million brokerage accounts, 1.26 million stock plan accounts, and 0.36 million banking accounts.
Additionally, the company noted that it has received regulatory approval to operate E*Trade Bank at a Tier 1 leverage ratio of 9.0 percent, and realign its organizational structure by moving its two broker-dealers, E*Trade Securities and E*Trade Clearing, from under E*Trade Bank, which will simplify the distribution of capital generated by those entities to the parent.
E*TRADE Securities will be moved in early February, while the move of E*TRADE Clearing is expected to be completed later in the year. The approval to move these subsidiaries will allow the company to distribute about $430 million of their excess capital to the parent.
"Entering 2015, our progress continues with approvals from our regulators - enabling us to operate the bank at a lower Tier 1 leverage ratio, remove our broker-dealers from under the bank, and distribute their excess capital to the parent," CEO Paul Idzik said in a statement.
ETFC closed Thursday's regular trading session at $22.65, up $0.63 or 2.86% on a volume of 6.83 million shares. The stock gained a further $1.01 or 4.46% in after-hours trading.
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