E-Trade Restructures Balance Sheet
September 08 2015 - 09:40AM
Dow Jones News
E-Trade Financial Corp. said Tuesday that it is eliminating all
of its $4.4 billion of wholesale funding obligations by quarter-end
in an effort to boost its bank balance sheet by removing high-cost
funding.
"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," said Chief Executive Paul Idzik.
The online brokerage said the restructuring of its bank balance
sheet liabilities would create capacity for low-cost deposits over
the next several quarters.
In connection with the restructuring, the company said it would
record a pretax charge of about $410 million in the current
quarter. E-Trade said it would offset the hit by decreasing its
balance sheet size in line with the reduction in liabilities, using
excess bank capital and contributing $110 million of parent capital
to the bank.
In relation to the bank's expected loss in the current quarter,
E-Trade doesn't intend to issue a dividend from bank to parent
during the final quarter this year, though it intends to resume
quarterly bank dividends in the following quarter.
Shares rose 3.4% to $26.23 in premarket trading and are up 4.6%
this year through Friday's close.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 08, 2015 09:25 ET (13:25 GMT)
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