E*TRADE Financial Corporation Improves Balance Sheet Composition Through Termination of High-Cost Legacy Funding
September 08 2015 - 8:05AM
Business Wire
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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version on businesswire.com: http://www.businesswire.com/news/home/20150908005620/en/
E*TRADE Media
RelationsThayer Fox,
646-521-4418thayer.fox@etrade.comorE*TRADE
Investor RelationsBrett Goodman,
646-521-4406brett.goodman@etrade.com
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