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E*Trade: How we get from $441M in income to nearly $1B

Sep. 08, 2014 11:01 AM ETE*TRADE Financial, LLC (ETFC) StockETFCBy: Stephen Alpher, SA News Editor1 Comment
  • E*Trade (ETFC +1.1%) earned $441M over the last 12 months, according to CFO Matt Audette, presenting at the Barclays Financial Services conference.
  • Presentation slides
  • The path to about $1B begins with interest rates, and a normal interest rate environment will boost revenue by $240M. Next are loan loss provisions which cost $70M in the last year falling to $0 as the legacy portfolio runs off. Servicing those legacy assets cost $43M last year, and that too should fall to $0.
  • FDIC expenses cost E*Trade $93M last year and that's expected to fall to $47M as the company's risk profile improves.
  • Finally, there's corporate interest expense of $114M dropping to $0 as excess bank capital is upstreamed to the parent and used to pay off corporate debt.
  • Alongside the presentation, E*Trade today showed August DARTs of 146,165, down 5% from July and 1% from a year ago. Additionally, E*Trade Bank was approved to send another $75M upstairs to the parent company.

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