- Established 2005 GAAP EPS guidance of $0.93 - $1.08 per share on Total
Net Revenue of $1.6 billion - $1.8 billion
- Announced an additional $200 million repurchase program
- In November, Retail DARTs increased 23.3 percent from October,
Professional DARTs increased 8.0 percent and Total DARTs increased
17.6 percent
- Total assets and deposits in customer accounts increased 5.6 percent
to $93.6 billion
- Month-end margin debt balances increased 4.7 percent to $2.12 billion
NEW YORK, Dec. 15 /PRNewswire-FirstCall/ -- E*TRADE FINANCIAL Corporation
(NYSE: ET) today established 2005 GAAP EPS guidance of $0.93 - $1.08 on Total
Net Revenue of $1.6 billion - $1.8 billion. The Company's Board of Directors
approved an additional $200 million dollar repurchase program. The plan is
effective immediately, not subject to a specific end date and provides the
flexibility to buy back common stock, retire debt or a combination of both. In
addition to this program, the Company has $49 million remaining in its active
program originally announced in April 2004, for total outstanding repurchase
authorizations of $249 million. The Company may conduct these repurchases on
the open market, in private transactions or a combination of both.
"2005 will be a year of innovation, reinvestment and growth. We have
built a differentiated and compelling franchise," said Mitchell H. Caplan,
Chief Executive Officer, E*TRADE FINANCIAL Corporation. "The Company is
positioned to deliver segment income growth ranging from 20 to 40 percent,
while at the same time making significant investments in functionality,
service, price and marketing."
The Company also reported that monthly US and International Daily Average
Revenue Trades (DARTs) increased 25.4 percent and 12.7 percent sequentially in
November, for an increase in Retail DARTs of 23.3 percent. Additionally,
Professional DARTs increased 8.0 percent resulting in a 17.6 percent increase
in Total DARTs. Margin debt balances increased 4.7 percent sequentially to
$2.12 billion at month end.
2005 GAAP Earnings Guidance
Key Driver Assumptions 2005 Estimates
Low High
Total DARTs (in thousands) 135 150
Average margin debt ($B) $2.0 $2.2
Average commission per revenue trade $9.30 $9.70
Direct mortgage originations ($B) $3.0 $3.5
Consumer loan originations, incl.
HELOCs ($B) $2.5 $3.0
Average interest rate spread
(basis points) 220 233
Average interest earning assets ($B) $27 $28
Net revenues ($MM) Estimated Annual
Growth Rate (1)
Brokerage $1,000 $1,138
Banking $673 $735
Intercompany elimination $(73) $(73)
Total net revenues $1,600 $1,800 5 - 19%
Total expenses excluding interest $1,070 $1,170 0 - 10%
Segment income (2) $530 $630 17 - 39%
Consolidated operating margin (3) 33% 35% 300 - 500 bps
Total other income $24 $24
Effective tax rate 36% 36%
Net income $355 $419
GAAP EPS $0.93 $1.08
Average diluted shares
outstanding (MM) 382 387
(1) Based on consensus 2004 earnings from continuing operations of $0.89.
(2) Income before other income, income taxes and discontinued operations.
(3) Income before other income, income taxes and discontinued operations
divided by total net revenues.
Points of Operating Leverage
Metric Annual Contribution (5)
(Estimated)
Additional 10,000 DARTs $0.05
Increase margin debt by $500 million $0.04
Grow bank balance sheet by $1 billion $0.04
Improve bank spread by 10 bps (4) $0.05
Bank spread increase on $1 billion of
additional sweep balances 10 bps
(4) Based on assumed average interest earning assets of $27 billion
to $28 billion.
(5) Earnings per share except increase in sweep balances.
Monthly Activity Data
Q404 QTD*
vs.
Nov-04 Qtr Qtr
vs. Q404 Ended Ended
Nov-04 Oct-04 Oct-04 QTD* 9/30/04 9/30/04
Trading days 20.5 21.0 N.M. 41.5 64.0 N.M.
Daily Average
Revenue Trades
(DARTs)
Retail 95,122 77,117 23.3% 86,011 62,771 37.0%
US 81,306 64,856 25.4% 72,982 53,050 37.6%
International 13,816 12,261 12.7% 13,029 9,721 34.0%
Professional 49,675 45,995 8.0% 47,813 34,633 38.1%
Total DARTs 144,797 123,112 17.6% 133,824 97,404 37.4%
Market Making
Equity shares
traded (MM) 14,585 30,871 (52.8)% 45,456 65,037 (30.1)%
Average revenue
capture per 1,000
equity shares $0.527 $0.217 142.9% $0.316 $0.234 35.0%
Gross New Accounts
Brokerage 42,260 58,466 N.M. 100,726 105,870 N.M.
Banking 10,341 19,643 N.M. 29,984 60,998 N.M.
Total gross new
accounts 52,601 78,109 N.M. 130,710 166,868 N.M.
Active Accounts
Brokerage 2,936,591 2,921,776 0.5% 2,936,591 2,895,106 1.4%
Banking 630,942 637,540 (1.0)% 630,942 632,328 (0.2)%
Total active
accounts end
of period 3,567,533 3,559,316 0.2% 3,567,533 3,527,434 1.1%
End of period
margin debt ($MM)$2,115 $2,021 4.7% $2,115 $2,042 3.6%
Total Assets/
Deposits ($MM)
Total client
assets in
investing
accounts $81,393 $76,590 6.3% $81,393 $71,399 14.0%
Total deposits
in banking
accounts $12,244 $12,052 1.6% $12,244 $12,027 1.8%
Total assets/
deposits in
customer
accounts $93,637 $88,642 5.6% $93,637 $83,426 12.2%
Loan Originations
($MM)
Direct mortgage
originations $244 $238 2.5% $482 $646 (25.4)%
Consumer loan
originations,
incl HELOCs $179 $189 (5.3)% $368 $563 (34.6)%
*Q404 quarter-to-date (QTD) includes results for the two months ended
November 30, 2004
Historical monthly metric data from January 2003 to November 2004 can be
found on the E*TRADE FINANCIAL investor relations site at http://www.etrade.com.
About E*TRADE FINANCIAL
The E*TRADE FINANCIAL family of companies provide financial services
including brokerage, banking and lending for retail, corporate and
institutional customers. Securities products and services are offered by
E*TRADE Securities LLC (Member NASD/SIPC). Bank and lending products and
services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or
its subsidiaries.
Important Notice
E*TRADE FINANCIAL and the E*TRADE FINANCIAL logo is a registered trademark
or trademark of E*TRADE FINANCIAL Corporation. The statements contained in
this news release that are forward-looking are based on current expectations
that are subject to a number of uncertainties and risks, and actual results
may differ materially. The uncertainties and risks include, but are not
limited to, changes in market activity, anticipated increases in the rate of
new customer acquisition, the conversion of new visitors to the site to
customers, seasonality, the development of new products and services, the
enhancement of existing products and services, competitive pressures
(including price competition), system failures, economic and political
conditions, changes in consumer behavior and the introduction of competing
products having technological and/or other advantages. Further information
about these risks and uncertainties can be found in the information included
in the annual reports previously filed by E*TRADE Group, Inc. or E*TRADE
FINANCIAL Corporation with the SEC on Form 10-K (including information under
the caption "Risk Factors") and quarterly reports on Form 10-Q.
E*TRADE FINANCIAL Media Contact
Pam Erickson
E*TRADE FINANCIAL Corporation
617-296-6080
pam.erickson@etrade.com
E*TRADE FINANCIAL Investor Relations Contact
Adam Townsend
E*TRADE FINANCIAL Corporation
703-236-8719
adam.townsend@etrade.com
SOURCE E*TRADE FINANCIAL Corporation
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Related links:
http://www.etrade.com
CONTACT:
media, Pam Erickson, +1-617-296-6080, or
pam.erickson@etrade.com, or investors, Adam Townsend,
+1-703-236-8719, or adam.townsend@etrade.com, both for E*TRADE
FINANCIAL Corporation
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