Tuesday, online brokerage firm E*TRADE Financial Corp. (ETFC) reported a third quarter loss that widened from a year ago, on charge-offs and higher loan loss provisions, as well as a decline in quarterly revenues. Adjusted earnings for the quarter, however, beat analysts' estimate by a penny.
The New York-based company reported a net loss for the third quarter of $832 million or $0.66 per share, compared to a loss of $50 million or $0.09 per share in the year-ago quarter.
The third quarter results included a $968 million pre-tax non-cash charge for corporate debt extinguishment in relation to the company's successful $1.74 billion debt exchange, which had an after-tax impact of approximately $773 million, or $0.61 per share.
Excluding the impact of the item, the company reported a net loss of $59 million, or $0.05 per share for the third quarter of 2009.
On average, eleven analysts polled by Thomson Reuters expected the company to report a loss of $0.06 per share for the quarter. Analysts estimates typically exclude special items.
Total net revenues for the quarter decreased to $347.22 million from $517.80 million in the prior-year quarter. Seven analysts had a revenue consensus of $202.49 million for the third quarter.
The debt exchange in the third quarter resulted in a $708 million increase in paid-in-capital. The net effect of the exchange to book equity was a reduction of $65 million.
The company reported Bank Tier 1 capital ratios of 6.72% to total adjusted assets and 13.15% to risk-weighted assets. The Bank had excess risk-based capital, which is above the level regulators define as well-capitalized, of $985.4 million as of September 30, 2009.
Net operating interest income for the quarter was $321.38 million, compared to $342.77 million in the comparable quarter last year. Total non-interest income increased to $253.95 million from $52.96 million in the prior-year quarter.
At quarter end, E*TRADE reported 4.5 million customer accounts, which included a record 2.7 million brokerage accounts.
In the second quarter, E*TRADE Financial reported a net loss that widened to $143.24 million or $0.22 per share, also predominantly on charge-offs and higher loan loss provisions. Total net revenue for the quarter rose to $620.91 million.
Among the others in the industry, brokerage and investment manager Charles Schwab Corp. (SCHW) posted a 34% drop in third-quarter profit at $200 million or $0.17 per share as revenues declined due to reductions in short-term interest rates as well as an increase of money market fund fee waivers. Quarterly net revenues fell 19% to $1.01 billion.
Another peer, TD Ameritrade Holding Corp. (AMTD) reported a 8.9% decline in fourth-quarter profit of $156.74 million or $0.26 per share primarily due to the impact of some special items. Net revenues for the quarter grew 1.3% to $657.93 million.
For the quarter under review, in the home equity portfolio of E*TRADE Financial, representing company's greatest exposure to loan losses, special mention delinquencies for 30 to 89 days increased 1% in the quarter. Risk delinquencies in a period of 30-179 days declined 10%.
Total special mention delinquencies for the company's entire bank loan portfolio, which also includes one- to four-family and consumer and other loans, declined by 4% in the quarter.
Total operating expenses were $301.71 million, compared to operating expenses of $295.89 million in the same quarter of the prior year. Total other expenses increased to $1.08 billion from $65.63 million in the year-earlier quarter.
The company said it continued to make progress during the third quarter in reducing balance sheet risk as its loan portfolio contracted by $1.7 billion from last quarter, of which $0.9 billion was related to prepayments or scheduled principal reductions and $0.4 billion was related to the sale of a pool of home equity loans.
For the third quarter, the company recorded provision for loan losses of $347.22 million and net charge-offs of $352 million.
The company reported total Daily Average Revenue Trade or DART of 196,000 in the third quarter, a 7% increase from the year ago quarter.
For the nine-month period, the company's net loss widened to $1.21 billion or $1.45 per share from $236.23 million or $0.48 per share in the similar period of last year.
Total net revenue for the period rose to $1.69 billion from $1.44 billion in the prior-year period.
ETFC closed Tuesday's regular trading at $1.57, down $0.03 or 1.87%, on a volume of 92.23 million shares. In after-hours, the stock further lost $0.06 or 3.82%, to trade at $1.51. In the last 52-week period, the stock traded in the range of $0.59 to $2.90, with a three-month average volume of 103.06 million shares.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.