Company deploys excess capital to eliminate wholesale funding
obligations
E*TRADE Financial Corporation (NASDAQ:ETFC) today announced a
restructuring of its bank balance sheet liabilities to eliminate the
entirety of its $4.4 billion of wholesale funding obligations by quarter
end. The action significantly improves the Company’s balance sheet
composition by immediately removing high-cost funding, while creating
capacity to onboard low-cost deposits over the next several quarters.
“Today’s announcement marks another significant step forward for E*TRADE
and its capital plan,” said Paul Idzik, Chief Executive Officer. “As the
Company continues to deploy excess capital, this action provides us with
very clear and immediate benefits in the form of accelerating the path
to normalized earnings and creating opportunities for balance sheet
growth funded by core customer deposits. E*TRADE is in a position of
financial strength that it has not seen in many years, and we are eager
to keep progressing down this path, unlocking value for our owners each
step of the way.”
In connection with the restructuring, the Company will record a pre-tax
charge of approximately $410 million in the current quarter — the vast
majority of which is non-cash. The Company is offsetting the impact of
this charge by decreasing its balance sheet size commensurate with the
reduction in liabilities, utilizing excess bank capital, and
contributing $110 million of parent capital to the bank.
In relation to the bank’s expected net loss in the current quarter, the
Company does not intend to issue a dividend from bank to parent during
the fourth quarter of 2015, though it intends to resume quarterly bank
dividends in the following quarter.
About E*TRADE Financial
E*TRADE Financial and its subsidiaries provide 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
Forward-Looking Statements
The statements contained in this news release that are forward looking,
including statements regarding the Company's ability to continue to
deploy excess capital, accelerating the path to normalized earnings,
creating opportunities for balance sheet growth and unlocking value for
our owners are “forward-looking statements” within the meaning of the
safe harbor provisions of the U.S. Private Securities Litigation Reform
Act of 1995, and are subject to a number of uncertainties and risks.
Actual results may differ materially from those indicated in the
forward-looking statements. The uncertainties and risks include, but are
not limited to, macro trends of the economy in general and the
residential real estate market, instability in the consumer credit
markets and credit trends, increased mortgage loan delinquency and
default rates, portfolio growth, portfolio seasoning and resolution
through collections, sales or charge-offs, the uncertainty surrounding
the foreclosure process, and the potential negative regulatory
consequences resulting from the implementation of financial regulatory
reform as well as from actions by or more restrictive policies or
interpretations of the Federal Reserve and the Office of the Comptroller
of the Currency or other regulators. Further information about these
risks and uncertainties can be found in the annual, quarterly, and
current reports on Form 10-K, Form 10-Q, and Form 8-K previously filed
by E*TRADE Financial Corporation with the Securities and Exchange
Commission (including information in these reports under the caption
“Risk Factors”). Any forward-looking statement included in this release
speaks only as of the date of this communication; the Company disclaims
any obligation to update any information.
© 2015 E*TRADE Financial Corporation. All rights reserved.
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