E*TRADE Financial Corporation Announces Third Quarter 2016 Results
Third Quarter Results
-
Net income of
\\$139 million , or\\$0.51 per diluted share, which includes\\$19 million , or\\$0.07 per diluted share, related to executive severance, restructuring and other acquisition-related activities, and benefit to provision for loan losses -
Total net revenue of
\\$486 million -
Allowance for loan losses of
\\$235 million resulting in a benefit to provision for loan losses of\\$62 million -
Total non-interest expense of
\\$323 million , including executive severance of\\$6 million and restructuring and acquisition-related activities of\\$25 million -
Acquired
OptionsHouse (1) for\\$725 million , funded through the issuance of\\$400 million of non-cumulative perpetual preferred stock and\\$325 million of corporate cash -
Daily Average Revenue Trades (DARTs) of 152,000, including 6,500
DARTs from the
OptionsHouse acquisition(1) -
Customer margin balances(2) of
\\$6.8 billion , including\\$0.3 billion from theOptionsHouse acquisition -
Net new brokerage accounts of 162,000, including 148,000 from the
OptionsHouse acquisition, and an annualized attrition rate of 8.0 percent -
Net new brokerage assets of
\\$5.4 billion , including\\$3.7 billion from theOptionsHouse acquisition; end of period total customer assets of\\$307 billion
"This quarter was transformative for
Karl Roessner, Chief Executive Officer. "We have a handful
of clear-cut objectives around which we have aligned: First, to swiftly
and flawlessly integrate
Historical metrics and financials can be found on the
The Company will host a conference call to discuss the results beginning
at
About
Important Notices
Forward-Looking Statements
The statements contained in this news release that are forward looking,
including statements regarding the Company's ability to integrate
© 2016
Financial Statements | |||||||||||||||||||||||||||
E*TRADE FINANCIAL CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||
Consolidated Statement of Income (Loss)(4) | |||||||||||||||||||||||||||
(In millions, except share data and per share amounts) | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
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2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||
Interest income | \\$ | 309 | \\$ | 306 | \\$ | 297 | \\$ | 923 | \\$ | 923 | |||||||||||||||||
Interest expense | (22 | ) | (20 | ) | (48 | ) | (63 | ) | (172 | ) | |||||||||||||||||
Net interest income | 287 | 286 | 249 | 860 | 751 | ||||||||||||||||||||||
Commissions | 107 | 106 | 108 | 320 | 325 | ||||||||||||||||||||||
Fees and service charges | 68 | 62 | 52 | 188 | 159 | ||||||||||||||||||||||
Gains (losses) on securities and |
14 | 10 | (358 | ) | 34 | (333 | ) | ||||||||||||||||||||
Other revenue | 10 | 10 | 10 | 30 | 29 | ||||||||||||||||||||||
Total non-interest income (loss) | 199 | 188 | (188 | ) | 572 | 180 | |||||||||||||||||||||
Total net revenue | 486 | 474 | 61 | 1,432 | 931 | ||||||||||||||||||||||
Provision (benefit) for loan losses | (62 | ) | (35 | ) | (25 | ) | (131 | ) | (17 | ) | |||||||||||||||||
Non-interest expense: | |||||||||||||||||||||||||||
Compensation and benefits | 123 | 125 | 123 | 374 | 354 | ||||||||||||||||||||||
Advertising and market development | 27 | 30 | 23 | 100 | 89 | ||||||||||||||||||||||
Clearing and servicing | 26 | 25 | 23 | 75 | 72 | ||||||||||||||||||||||
Professional services | 26 | 22 | 24 | 70 | 77 | ||||||||||||||||||||||
Occupancy and equipment | 24 | 24 | 21 | 71 | 64 | ||||||||||||||||||||||
Communications | 22 | 20 | 24 | 65 | 62 | ||||||||||||||||||||||
Depreciation and amortization | 20 | 20 | 21 | 60 | 61 | ||||||||||||||||||||||
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6 | 6 | 7 | 18 | 36 | ||||||||||||||||||||||
Amortization of other intangibles | 5 | 5 | 5 | 15 | 15 | ||||||||||||||||||||||
Restructuring and acquisition-related |
25 | 1 | 2 | 28 | 8 | ||||||||||||||||||||||
Losses on early extinguishment of |
— | — | 39 | — | 112 | ||||||||||||||||||||||
Other non-interest expenses | 19 | 17 | 20 | 54 | 64 | ||||||||||||||||||||||
Total non-interest expense | 323 | 295 | 332 | 930 | 1,014 | ||||||||||||||||||||||
Income (loss) before income tax |
225 | 214 | (246 | ) | 633 | (66 | ) | ||||||||||||||||||||
Income tax expense (benefit) | 86 | 81 | (93 | ) | 208 | (245 | ) | ||||||||||||||||||||
Net income (loss) | \\$ | 139 | \\$ | 133 | \\$ | (153 | ) | \\$ | 425 | \\$ | 179 | ||||||||||||||||
Basic earnings (loss) per share | \\$ | 0.51 | \\$ | 0.48 | \\$ | (0.53 | ) | \\$ | 1.53 | \\$ | 0.62 | ||||||||||||||||
Diluted earnings (loss) per share | \\$ | 0.51 | \\$ | 0.48 | \\$ | (0.53 | ) | \\$ | 1.52 | \\$ | 0.61 | ||||||||||||||||
Shares used in computation of per |
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Basic (in thousands) | 274,362 | 277,013 | 290,480 | 278,864 | 290,105 | ||||||||||||||||||||||
Diluted (in thousands) | 275,472 | 277,978 | 290,480 | 280,136 | 294,998 | ||||||||||||||||||||||
E*TRADE FINANCIAL CORPORATION AND SUBSIDIARIES | ||||||||||||||||||
Consolidated Balance Sheet | ||||||||||||||||||
(In millions, except share data) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
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2016 | 2016 | 2015 | ||||||||||||||||
ASSETS | ||||||||||||||||||
Cash and equivalents | \\$ | 1,467 | \\$ | 2,393 | \\$ | 2,233 | ||||||||||||
Cash required to be segregated under federal or other |
2,159 | 1,821 | 1,057 | |||||||||||||||
Available-for-sale securities | 13,493 | 13,895 | 12,589 | |||||||||||||||
Held-to-maturity securities | 16,189 | 15,716 | 13,013 | |||||||||||||||
Margin receivables | 6,552 | 6,824 | 7,398 | |||||||||||||||
Loans receivable, net | 3,832 | 4,089 | 4,613 | |||||||||||||||
Receivables from brokers, dealers and clearing |
1,118 | 692 | 520 | |||||||||||||||
Property and equipment, net | 231 | 231 | 236 | |||||||||||||||
|
2,370 | 1,792 | 1,792 | |||||||||||||||
Other intangibles, net | 328 | 164 | 174 | |||||||||||||||
Deferred tax assets, net | 725 | 830 | 1,033 | |||||||||||||||
Other assets | 735 | 755 | 769 | |||||||||||||||
Total assets | \\$ | 49,199 | \\$ | 49,202 | \\$ | 45,427 | ||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||
Liabilities: | ||||||||||||||||||
Deposits | \\$ | 31,697 | \\$ | 32,964 | \\$ | 29,445 | ||||||||||||
Customer payables | 7,827 | 6,712 | 6,544 | |||||||||||||||
Payables to brokers, dealers and clearing organizations | 1,227 | 1,744 | 1,576 | |||||||||||||||
Other borrowings | 409 | 409 | 491 | |||||||||||||||
Corporate debt | 994 | 993 | 997 | |||||||||||||||
Other liabilities | 729 | 595 | 575 | |||||||||||||||
Total liabilities | 42,883 | 43,417 | 39,628 | |||||||||||||||
Shareholders' equity: | ||||||||||||||||||
Preferred stock, |
394 | — | — | |||||||||||||||
Common stock, |
3 | 3 | 3 | |||||||||||||||
Additional paid-in-capital | 6,916 | 6,911 | 7,356 | |||||||||||||||
Accumulated deficit | (1,036 | ) | (1,175 | ) | (1,461 | ) | ||||||||||||
Accumulated other comprehensive income (loss) | 39 | 46 | (99 | ) | ||||||||||||||
Total shareholders' equity | 6,316 | 5,785 | 5,799 | |||||||||||||||
Total liabilities and shareholders' equity | \\$ | 49,199 | \\$ | 49,202 | \\$ | 45,427 | ||||||||||||
Key Performance Metrics(5) | ||||||||||||||||||
Corporate |
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Operating margin %(6) | 46% | 45% | 1% | N.M. | N.M | |||||||||||||
Adjusted operating margin %(3) | 34% | 38% | (4)% | 32% | 2% | |||||||||||||
Employees | 3,655 | 3,588 | 2% | 3,310 | 10% | |||||||||||||
Consultants and other | 130 | 180 | (28)% | 105 | 24% | |||||||||||||
Total headcount | 3,785 | 3,768 | —% | 3,415 | 11% | |||||||||||||
Common equity book value per share(7) | \\$ | 21.63 | \\$ | 21.14 | 2% | \\$ | 20.01 | 8% | ||||||||||
Tangible common equity book value per share(7) | \\$ | 13.82 | \\$ | 15.74 | (12)% | \\$ | 14.78 | (6)% | ||||||||||
Cash and equivalents (\\$MM) | \\$ | 1,467 | \\$ | 2,393 | (39)% | \\$ | 1,453 | 1% | ||||||||||
Corporate cash (\\$MM)(8) | \\$ | 306 | \\$ | 523 | (41)% | \\$ | 432 | (29)% | ||||||||||
Net interest margin (basis points) | 259 | 264 | (2)% | 247 | 5% | |||||||||||||
Interest-earning assets, average (\\$MM) | \\$ | 44,489 | \\$ | 43,422 | 2% | \\$ | 40,485 | 10% | ||||||||||
Customer Activity(1) |
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Trading days | 64.0 | 64.0 | N.M. | 64.0 | N.M. | |||||||||||||
DARTs | 151,905 | 152,488 | —% | 155,985 | (3)% | |||||||||||||
Derivative DARTs % | 26% | 24% | 2% | 25% | 1% | |||||||||||||
Total trades (MM) | 9.7 | 9.8 | (1)% | 10.0 | (3)% | |||||||||||||
Average commission per trade | \\$ | 10.97 | \\$ | 10.82 | 1% | \\$ | 10.87 | 1% | ||||||||||
Key Performance Metrics(5) | ||||||||||||||||||
Customer Activity(1) |
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Gross new brokerage accounts | 227,309 | 90,779 | 150% | 93,324 | 144% | |||||||||||||
Gross new stock plan accounts | 62,144 | 68,362 | (9)% | 110,731 | (44)% | |||||||||||||
Gross new banking accounts | 1,061 | 1,157 | (8)% | 1,158 | (8)% | |||||||||||||
Closed accounts(9) | (122,336) | (124,546) | N.M. | (145,359) | N.M. | |||||||||||||
Net new accounts | 168,178 | 35,752 | N.M. | 59,854 | N.M. | |||||||||||||
Net new brokerage accounts(9) | 161,885 | 23,090 | N.M. | 2,205 | N.M. | |||||||||||||
Net new stock plan accounts | 11,368 | 18,488 | N.M. | 64,513 | N.M. | |||||||||||||
Net new banking accounts | (5,075) | (5,826) | N.M. | (6,864) | N.M. | |||||||||||||
Net new accounts | 168,178 | 35,752 | N.M. | 59,854 | N.M. | |||||||||||||
End of period brokerage accounts(9) | 3,438,975 | 3,277,090 | 5% | 3,203,531 | 7% | |||||||||||||
End of period stock plan accounts | 1,454,421 | 1,443,053 | 1% | 1,358,470 | 7% | |||||||||||||
End of period banking accounts | 324,650 | 329,725 | (2)% | 344,089 | (6)% | |||||||||||||
End of period total accounts | 5,218,046 | 5,049,868 | 3% | 4,906,090 | 6% | |||||||||||||
Annualized brokerage account attrition rate(9)(10) | 8.0% | 8.3% | N.M. | 11.4% | N.M. | |||||||||||||
Customer margin balances(2) (\\$B) | \\$ | 6.8 | \\$ | 6.8 | —% | \\$ | 7.9 | (14)% | ||||||||||
Customer Assets(1) (\\$B) |
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Security holdings | \\$ | 222.1 | \\$ | 208.8 | 6% | \\$ | 197.0 | 13% | ||||||||||
Sweep deposits | 26.5 | 27.8 | (5)% | 20.3 | 31% | |||||||||||||
Customer assets held by third parties(11) | 14.0 | 8.5 | 65% | 13.9 | 1% | |||||||||||||
Customer payables (cash) | 7.8 | 6.7 | 16% | 6.0 | 30% | |||||||||||||
Brokerage customer assets | 270.4 | 251.8 | 7% | 237.2 | 14% | |||||||||||||
Unexercised stock plan holdings (vested) | 31.2 | 28.9 | 8% | 34.1 | (9)% | |||||||||||||
Savings, checking and other banking assets | 5.2 | 5.2 | —% | 5.3 | (2)% | |||||||||||||
Total customer assets | \\$ | 306.8 | \\$ | 285.9 | 7% | \\$ | 276.6 | 11% | ||||||||||
Net new brokerage assets(12) | \\$ | 5.4 | \\$ | 1.6 | N.M. | \\$ | 2.1 | N.M. | ||||||||||
Net new banking assets(12) | — | (0.2) | N.M. | (0.2) | N.M. | |||||||||||||
Net new customer assets(12) | \\$ | 5.4 | \\$ | 1.4 | N.M. | \\$ | 1.9 | N.M. | ||||||||||
Brokerage related cash | \\$ | 48.3 | \\$ | 43.0 | 12% | \\$ | 40.2 | 20% | ||||||||||
Other cash and deposits | 5.2 | 5.2 | —% | 5.3 | (2)% | |||||||||||||
Total customer cash and deposits | \\$ | 53.5 | \\$ | 48.2 | 11% | \\$ | 45.5 | 18% | ||||||||||
Stock plan customer holdings (unvested) | \\$ | 73.4 | \\$ | 64.6 | 14% | \\$ | 66.6 | 10% | ||||||||||
Customer net (buy) / sell activity | \\$ | 2.4 | \\$ | (1.4) | N.M. | \\$ | (3.7) | N.M. | ||||||||||
Key Performance Metrics(5) | |||||||||||||||||||||||||
Loans |
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Loans receivable (\\$MM) |
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Average loans receivable | \\$ | 4,202 | \\$ | 4,512 | \\$ | (310 | ) | \\$ | 5,441 | \\$ | (1,239 | ) | |||||||||||||
Ending loans receivable, net | \\$ | 3,832 | \\$ | 4,089 | \\$ | (257 | ) | \\$ | 4,906 | \\$ | (1,074 | ) | |||||||||||||
Loan servicing expense | \\$ | 7 | \\$ | 8 | \\$ | (1 | ) | \\$ | 8 | \\$ | (1 | ) | |||||||||||||
Loan performance detail (all loans, including |
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One- to Four-Family |
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Current | \\$ | 1,927 | \\$ | 2,062 | \\$ | (135 | ) | \\$ | 2,440 | \\$ | (513 | ) | |||||||||||||
30-89 days delinquent | 65 | 68 | (3 | ) | 60 | 5 | |||||||||||||||||||
90-179 days delinquent | 19 | 26 | (7 | ) | 22 | (3 | ) | ||||||||||||||||||
180+ days delinquent (net of |
97 | 103 | (6 | ) | 116 | (19 | ) | ||||||||||||||||||
Total delinquent loans(13) | 181 | 197 | (16 | ) | 198 | (17 | ) | ||||||||||||||||||
Gross loans receivable(14) | \\$ | 2,108 | \\$ | 2,259 | (151 | ) | \\$ | 2,638 | (530 | ) | |||||||||||||||
Home Equity |
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Current | \\$ | 1,569 | \\$ | 1,695 | \\$ | (126 | ) | \\$ | 2,149 | \\$ | (580 | ) | |||||||||||||
30-89 days delinquent | 38 | 47 | (9 | ) | 47 | (9 | ) | ||||||||||||||||||
90-179 days delinquent | 24 | 27 | (3 | ) | 28 | (4 | ) | ||||||||||||||||||
180+ days delinquent (net of |
55 | 59 | (4 | ) | 50 | 5 | |||||||||||||||||||
Total delinquent loans(13) | 117 | 133 | (16 | ) | 125 | (8 | ) | ||||||||||||||||||
Gross loans receivable(14) | \\$ | 1,686 | \\$ | 1,828 | (142 | ) | \\$ | 2,274 | (588 | ) | |||||||||||||||
Consumer and Other |
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Current | \\$ | 269 | \\$ | 290 | \\$ | (21 | ) | \\$ | 363 | \\$ | (94 | ) | |||||||||||||
30-89 days delinquent | 4 | 5 | (1 | ) | 6 | (2 | ) | ||||||||||||||||||
90-179 days delinquent | — | — | — | 1 | (1 | ) | |||||||||||||||||||
180+ days delinquent | — | — | — | — | — | ||||||||||||||||||||
Total delinquent loans | 4 | 5 | (1 | ) | 7 | (3 | ) | ||||||||||||||||||
Gross loans receivable(14) | \\$ | 273 | \\$ | 295 | (22 | ) | \\$ | 370 | (97 | ) | |||||||||||||||
Total Loans Receivable |
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Current | \\$ | 3,765 | \\$ | 4,047 | \\$ | (282 | ) | \\$ | 4,952 | \\$ | (1,187 | ) | |||||||||||||
30-89 days delinquent | 107 | 120 | (13 | ) | 113 | (6 | ) | ||||||||||||||||||
90-179 days delinquent | 43 | 53 | (10 | ) | 51 | (8 | ) | ||||||||||||||||||
180+ days delinquent (net of |
152 | 162 | (10 | ) | 166 | (14 | ) | ||||||||||||||||||
Total delinquent loans(13) | 302 | 335 | (33 | ) | 330 | (28 | ) | ||||||||||||||||||
Gross loans receivable(14) | \\$ | 4,067 | \\$ | 4,382 | (315 | ) | \\$ | 5,282 | (1,215 | ) | |||||||||||||||
Key Performance Metrics(5) | |||||||||||||||||||||||||
Loans |
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TDR performance detail (\\$MM)(15) |
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One- to Four-Family TDRs |
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Current | \\$ | 196 | \\$ | 202 | \\$ | (6 | ) | \\$ | 224 | \\$ | (28 | ) | |||||||||||||
30-89 days delinquent | 18 | 18 | — | 18 | — | ||||||||||||||||||||
90-179 days delinquent | 4 | 6 | (2 | ) | 8 | (4 | ) | ||||||||||||||||||
180+ days delinquent (net of |
40 | 44 | (4 | ) | 46 | (6 | ) | ||||||||||||||||||
Total delinquent TDRs | 62 | 68 | (6 | ) | 72 | (10 | ) | ||||||||||||||||||
TDRs | \\$ | 258 | \\$ | 270 | (12 | ) | \\$ | 296 | (38 | ) | |||||||||||||||
Home Equity TDRs |
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Current | \\$ | 166 | \\$ | 168 | \\$ | (2 | ) | \\$ | 171 | \\$ | (5 | ) | |||||||||||||
30-89 days delinquent | 8 | 10 | (2 | ) | 10 | (2 | ) | ||||||||||||||||||
90-179 days delinquent | 5 | 6 | (1 | ) | 7 | (2 | ) | ||||||||||||||||||
180+ days delinquent (net of |
23 | 24 | (1 | ) | 20 | 3 | |||||||||||||||||||
Total delinquent TDRs | 36 | 40 | (4 | ) | 37 | (1 | ) | ||||||||||||||||||
TDRs | \\$ | 202 | \\$ | 208 | (6 | ) | \\$ | 208 | (6 | ) | |||||||||||||||
Total TDRs |
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Current | \\$ | 362 | \\$ | 370 | \\$ | (8 | ) | \\$ | 395 | \\$ | (33 | ) | |||||||||||||
30-89 days delinquent | 26 | 28 | (2 | ) | 28 | (2 | ) | ||||||||||||||||||
90-179 days delinquent | 9 | 12 | (3 | ) | 15 | (6 | ) | ||||||||||||||||||
180+ days delinquent (net of |
63 | 68 | (5 | ) | 66 | (3 | ) | ||||||||||||||||||
Total delinquent TDRs | 98 | 108 | (10 | ) | 109 | (11 | ) | ||||||||||||||||||
TDRs | \\$ | 460 | \\$ | 478 | (18 | ) | \\$ | 504 | (44 | ) | |||||||||||||||
Activity in Allowance for Loan Losses | |||||||||||||||||
Three Months Ended |
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One- to Four- Family | Home Equity | Consumer and Other | Total | ||||||||||||||
(In millions) | |||||||||||||||||
Allowance for loan losses, ending |
\\$ | 42 | \\$ | 245 | \\$ | 6 | \\$ | 293 | |||||||||
Provision (benefit) for loan losses | 2 | (64 | ) | — | (62 | ) | |||||||||||
(Charge-offs) recoveries, net | 3 | 2 | (1 | ) | 4 | ||||||||||||
Allowance for loan losses, ending |
\\$ | 47 | \\$ | 183 | \\$ | 5 | \\$ | 235 | |||||||||
Three Months Ended |
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One- to Four- |
Home Equity |
Consumer |
Total | ||||||||||||||
(In millions) | |||||||||||||||||
Allowance for loan losses, ending |
\\$ | 49 | \\$ | 267 | \\$ | 6 | \\$ | 322 | |||||||||
Provision (benefit) for loan losses | (8 | ) | (28 | ) | 1 | (35 | ) | ||||||||||
(Charge-offs) recoveries, net | 1 | 6 | (1 | ) | 6 | ||||||||||||
Allowance for loan losses, ending |
\\$ | 42 | \\$ | 245 | \\$ | 6 | \\$ | 293 | |||||||||
Three Months Ended |
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One- to Four- |
Home Equity |
Consumer |
Total | ||||||||||||||
(In millions) | |||||||||||||||||
Allowance for loan losses, ending |
\\$ | 49 | \\$ | 345 | \\$ | 8 | \\$ | 402 | |||||||||
Provision (benefit) for loan losses | (10 | ) | (15 | ) | — | (25 | ) | ||||||||||
(Charge-offs) recoveries, net | — | — | (1 | ) | (1 | ) | |||||||||||
Allowance for loan losses, ending |
\\$ | 39 | \\$ | 330 | \\$ | 7 | \\$ | 376 | |||||||||
Specific Valuation Allowance Activity(16) | |||||||||||||||||||||||||||||||
As of |
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Recorded |
Charge- |
Recorded |
Specific |
Net |
Specific |
Total |
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(Dollars in millions) | |||||||||||||||||||||||||||||||
One- to four-family | \\$ | 200 | \\$ | (44 | ) | \\$ | 156 | \\$ | (6 | ) | \\$ | 150 | 4% | 25% | |||||||||||||||||
Home equity | 279 | (110 | ) | 169 | (51 | ) | 118 | 30% | 57% | ||||||||||||||||||||||
Total | \\$ | 479 | \\$ | (154 | ) | \\$ | 325 | \\$ | (57 | ) | \\$ | 268 | 17% | 44% | |||||||||||||||||
As of |
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Recorded |
Charge- |
Recorded |
Specific |
Net |
Specific |
Total |
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(Dollars in millions) | |||||||||||||||||||||||||||||||
One- to four-family | \\$ | 205 | \\$ | (46 | ) | \\$ | 159 | \\$ | (7 | ) | \\$ | 152 | 4% | 26% | |||||||||||||||||
Home equity | 285 | (112 | ) | 173 | (50 | ) | 123 | 29% | 57% | ||||||||||||||||||||||
Total | \\$ | 490 | \\$ | (158 | ) | \\$ | 332 | \\$ | (57 | ) | \\$ | 275 | 17% | 44% | |||||||||||||||||
As of |
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Recorded |
Charge- |
Recorded |
Specific |
Net |
Specific |
Total |
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(Dollars in millions) | |||||||||||||||||||||||||||||||
One- to four-family | \\$ | 220 | \\$ | (45 | ) | \\$ | 175 | \\$ | (11 | ) | \\$ | 164 | 6% | 26% | |||||||||||||||||
Home equity | 294 | (125 | ) | 169 | (56 | ) | 113 | 33% | 62% | ||||||||||||||||||||||
Total | \\$ | 514 | \\$ | (170 | ) | \\$ | 344 | \\$ | (67 | ) | \\$ | 277 | 20% | 46% | |||||||||||||||||
Capital |
Qtr ended |
Qtr ended |
Qtr ended |
Qtr ended |
Qtr ended |
|||||||||||||
|
||||||||||||||||||
Tier 1 leverage ratio(18) | 7.3% | 7.5% | (0.2)% | 8.5% | (1.2)% | |||||||||||||
Common Equity Tier 1 capital ratio(18) | 34.0% | 35.6% | (1.6)% | 39.5% | (5.5)% | |||||||||||||
Tier 1 risk-based capital ratio(18) | 35.1% | 35.6% | (0.5)% | 39.5% | (4.4)% | |||||||||||||
Total risk-based capital ratio(18) | 40.7% | 41.2% | (0.5)% | 44.3% | (3.6)% | |||||||||||||
|
||||||||||||||||||
Tier 1 leverage ratio(19) | 8.5% | 8.2% | 0.3% | 9.2% | (0.7)% | |||||||||||||
Common Equity Tier 1 capital ratio(19) | 36.7% | 34.2% | 2.5% | 36.0% | 0.7% | |||||||||||||
Tier 1 risk-based capital ratio(19) | 36.7% | 34.2% | 2.5% | 36.0% | 0.7% | |||||||||||||
Total risk-based capital ratio(19) | 38.0% | 35.5% | 2.5% | 37.3% | 0.7% | |||||||||||||
Average Balance Sheet Data(a) | |||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||
Average | Interest | Average | Average | Interest | Average | ||||||||||||||||||||||
Balance | Inc./Exp. | Yield/Cost | Balance | Inc./Exp. | Yield/Cost | ||||||||||||||||||||||
Cash and equivalents | \\$ | 1,989 | \\$ | 2 | 0.42% | \\$ | 1,589 | \\$ | 1 | 0.36% | |||||||||||||||||
Cash required to be segregated under federal or |
1,885 | 2 | 0.33% | 1,599 | 1 | 0.34% | |||||||||||||||||||||
Available-for-sale securities | 13,301 | 66 | 1.99% | 13,503 | 68 | 2.01% | |||||||||||||||||||||
Held-to-maturity securities | 15,937 | 109 | 2.73% | 15,354 | 107 | 2.80% | |||||||||||||||||||||
Margin receivables | 6,479 | 60 | 3.68% | 6,502 | 61 | 3.76% | |||||||||||||||||||||
Loans | 4,202 | 46 | 4.44% | 4,512 | 49 | 4.32% | |||||||||||||||||||||
Broker-related receivables and other | 696 | — | 0.13% | 363 | 1 | 0.29% | |||||||||||||||||||||
Subtotal interest-earning assets | 44,489 | 285 | 2.56% | 43,422 | 288 | 2.65% | |||||||||||||||||||||
Other interest revenue(b) | — | 24 | — | 18 | |||||||||||||||||||||||
Total interest-earning assets | 44,489 | 309 | 2.77% | 43,422 | 306 | 2.83% | |||||||||||||||||||||
Total non-interest earning assets | 4,793 | 4,815 | |||||||||||||||||||||||||
Total assets | \\$ | 49,282 | \\$ | 48,237 | |||||||||||||||||||||||
Deposits | \\$ | 32,285 | \\$ | 1 | 0.01% | \\$ | 31,865 | \\$ | 1 | 0.01% | |||||||||||||||||
Customer payables | 7,592 | 2 | 0.06% | 6,913 | 1 | 0.07% | |||||||||||||||||||||
Broker-related payables and other | 1,258 | — | 0.00% | 1,345 | — | 0.00% | |||||||||||||||||||||
Other borrowings | 409 | 4 | 4.15% | 410 | 4 | 4.43% | |||||||||||||||||||||
Corporate debt | 993 | 13 | 5.40% | 993 | 14 | 5.40% | |||||||||||||||||||||
Subtotal interest-bearing liabilities | 42,537 | 20 | 0.19% | 41,526 | 20 | 0.19% | |||||||||||||||||||||
Other interest expense(c) | — | 2 | — | — | |||||||||||||||||||||||
Total interest-bearing liabilities | 42,537 | 22 | 0.20% | 41,526 | 20 | 0.20% | |||||||||||||||||||||
Total non-interest-bearing liabilities | 719 | 969 | |||||||||||||||||||||||||
Total liabilities | 43,256 | 42,495 | |||||||||||||||||||||||||
Total shareholders' equity | 6,026 | 5,742 | |||||||||||||||||||||||||
Total liabilities and shareholders' equity | \\$ | 49,282 | \\$ | 48,237 | |||||||||||||||||||||||
Excess interest earning assets over interest |
\\$ | 1,952 | \\$ | 287 | 2.59% | \\$ | 1,896 | \\$ | 286 | 2.64% | |||||||||||||||||
(a) | Beginning in 2016, corporate interest income and corporate interest expense are presented within net interest income. In addition, the Company transitioned to net interest margin as the key metric for measuring balance sheet performance. Prior periods have been reclassified to conform with the current period presentation. | |
(b) | Represents interest revenue on securities loaned for the periods presented. | |
(c) | Represents interest expense on securities borrowed for the periods presented. | |
Three Months Ended(a) | ||||||||||||||
|
||||||||||||||
Average | Interest | Average | ||||||||||||
Balance | Inc./Exp. | Yield/Cost | ||||||||||||
Cash and equivalents | \\$ | 1,806 | \\$ | 1 | 0.18% | |||||||||
Cash required to be segregated under federal or other regulation | 318 | 1 | 0.18% | |||||||||||
Available-for-sale securities | 12,584 | 57 | 1.83% | |||||||||||
Held-to-maturity securities | 11,879 | 85 | 2.84% | |||||||||||
Margin receivables | 7,984 | 70 | 3.51% | |||||||||||
Loans | 5,453 | 58 | 4.25% | |||||||||||
Broker-related receivables and other | 461 | — | 0.69% | |||||||||||
Subtotal interest-earning assets | 40,485 | 272 | 2.68% | |||||||||||
Other interest revenue (b) | — | 25 | ||||||||||||
Total interest-earning assets | 40,485 | 297 | 2.93% | |||||||||||
Total non-interest-earning assets | 4,220 | |||||||||||||
Total assets | \\$ | 44,705 | ||||||||||||
Deposits | \\$ | 25,659 | \\$ | 1 | 0.01% | |||||||||
Customer payables | 6,348 | 2 | 0.07% | |||||||||||
Broker-related payables and other | 1,749 | — | 0.00% | |||||||||||
Other borrowings | 3,582 | 30 | 3.38% | |||||||||||
Corporate debt | 1,023 | 13 | 5.23% | |||||||||||
Subtotal interest-bearing liabilities | 38,361 | 46 | 0.48% | |||||||||||
Other interest expense(c) | — | 2 | ||||||||||||
Total interest-bearing liabilities | 38,361 | 48 | 0.49% | |||||||||||
Total non-interest-bearing liabilities | 573 | |||||||||||||
Total liabilities | 38,934 | |||||||||||||
Total shareholders' equity | 5,771 | |||||||||||||
Total liabilities and shareholders' equity | \\$ | 44,705 | ||||||||||||
Excess interest earning assets over interest bearing liabilities/ |
\\$ | 2,124 | \\$ | 249 | 2.47% | |||||||||
(a) | Beginning in 2016, corporate interest income and corporate interest expense are presented within net interest income. In addition, the Company transitioned to net interest margin as the key metric for measuring balance sheet performance. Prior periods have been reclassified to conform with the current period presentation. | |
(b) | Represents interest revenue on securities loaned for the periods presented. | |
(c) | Represents interest expense on securities borrowed for the periods presented. | |
Explanation of Non-GAAP Measures and Certain Metrics
Management believes that adjusting GAAP measures by excluding or including certain items is helpful to investors and analysts who may wish to use some or all of this information to analyze the Company's current performance, prospects and valuation. Management uses this non-GAAP information internally to evaluate operating performance and in formulating the budget for future periods. Management believes that the non-GAAP measures and metrics discussed below are appropriate for evaluating the operating and liquidity performance of the Company.
Adjusted Net Revenue, Adjusted Net Income and Adjusted EPS
Management believes that excluding the loss on termination of legacy wholesale funding obligations and the impact of other early extinguishment of debt from net revenue, net income and EPS provides more useful information about the Company's ongoing operating performance because these items are not directly related to our performance. See endnote (3) for a reconciliation of these non-GAAP measures to the comparable GAAP measures.
Adjusted Operating Margin
Adjusted operating margin is calculated by dividing adjusted income before income taxes by adjusted net revenue. Adjusted income before income taxes excludes the provision (benefit) for loan losses and the losses on early extinguishment of debt line item. The related loss on termination of legacy wholesale funding obligations recognized in the gains (losses) on securities and other line item is excluded from both adjusted income before income taxes and adjusted net revenue. Management believes that excluding these items from operating margin provides a useful measure of the Company's ongoing operating performance because management excludes these items when evaluating operating margin performance. See endnote (3) for a reconciliation of this non-GAAP measure to the comparable GAAP measure.
Corporate Cash
Corporate cash represents cash held at the parent company as well as cash held in certain subsidiaries, not including bank and broker-dealer subsidiaries, that can distribute cash to the parent company without any regulatory approval or notification. The Company believes that corporate cash is a useful measure of the parent company's liquidity as it is the primary source of capital above and beyond the capital deployed in regulated subsidiaries. See endnote (8) for a reconciliation of this non-GAAP measure to the comparable GAAP measure.
Tangible Common Equity Book Value per Share
Tangible common equity book value per share represents common shareholders' equity, which excludes preferred stock, less goodwill and other intangible assets (net of related deferred tax liabilities) divided by common stock outstanding. The Company believes that tangible common equity book value per share is a measure of the Company's capital strength. See endnote (7) for a reconciliation of this non-GAAP measure to the comparable GAAP measure.
It is important to note that these metrics and other non-GAAP measures
may involve judgment by management and should be considered in addition
to, not as substitutes for, or superior to, net income or other measures
prepared in accordance with GAAP. For additional information on the
adjustments to these non-GAAP measures, please see the Company's
financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" that will be included in
the periodic report the Company expects to file with the
ENDNOTES
(1) The following table provides information about
Customer Activity - |
Qtr ended |
||||
DARTs | 27,699 | ||||
Derivative DARTs % | 65 | % | |||
Total trades (MM) | 0.4 | ||||
Average commission per trade | \\$ | 8.36 | |||
Customer margin balances held by third party(2) (\\$B) | \\$ | 0.3 | |||
Gross new brokerage accounts | 1,956 | ||||
Net new brokerage accounts | 578 | ||||
Customer Assets (\\$B) |
|||||
Security holdings | \\$ | 2.2 | |||
Customer assets held by third party | 1.5 | ||||
|
\\$ | 3.7 | |||
Net new brokerage assets (\\$MM) | \\$ | 28 | |||
Brokerage related cash | \\$ | 1.5 | |||
Customer net (buy) / sell activity | \\$ | 0.1 | |||
(2) Customer margin balances include the following (dollars in billions):
Q3 2016 | Q2 2016 | Q3 2015 | ||||||||||||
Margin receivables held on balance sheet | \\$ | 6.5 | \\$ | 6.8 | \\$ | 7.9 | ||||||||
Customer margin balances held by third party | 0.3 | — | — | |||||||||||
Total customer margin balances | \\$ | 6.8 | \\$ | 6.8 | \\$ | 7.9 | ||||||||
(3) The following tables provide reconciliations of non-GAAP adjusted net income, adjusted EPS, adjusted net revenue, and adjusted operating margin percentage to the comparable GAAP measures (dollars in millions except for per share amounts):
Q3 2016 | Q2 2016 | Q3 2015 | ||||||||||||||||||||||||||||
Amount |
Diluted |
Amount |
Diluted |
Amount |
Diluted |
|||||||||||||||||||||||||
Net income (loss) | \\$ | 139 | \\$ | 0.51 | \\$ | 133 | \\$ | 0.48 | \\$ | (153 | ) | \\$ | (0.53 | ) | ||||||||||||||||
Add back impact of termination of legacy wholesale |
||||||||||||||||||||||||||||||
Loss included in Gains (losses) on securities |
— | — | 370 | |||||||||||||||||||||||||||
Loss included in Losses on early extinguishment |
— | — | 43 | |||||||||||||||||||||||||||
Total loss on termination of legacy wholesale |
— | — | 413 | |||||||||||||||||||||||||||
Income tax related to loss on termination of |
— | — | (162 | ) | ||||||||||||||||||||||||||
Net of tax | \\$ | — | \\$ | 251 | ||||||||||||||||||||||||||
Deduct other early extinguishment of debt: | ||||||||||||||||||||||||||||||
Gain included in Losses on early extinguishment |
— | — | (4 | ) | ||||||||||||||||||||||||||
Income tax related to early extinguishment of |
— | — | 2 | |||||||||||||||||||||||||||
Net of tax | \\$ | — | \\$ | — | \\$ | (2 | ) | |||||||||||||||||||||||
Adjusted net income and adjusted EPS(a) | \\$ | 139 | \\$ | 0.51 | \\$ | 133 | \\$ | 0.48 | \\$ | 96 | \\$ | 0.32 | ||||||||||||||||||
Q3 2016 | Q2 2016 | Q3 2015 | ||||||||||||
Net revenue | \\$ | 486 | \\$ | 474 | \\$ | 61 | ||||||||
Add back impact of termination of legacy wholesale funding |
||||||||||||||
Loss included in Gains (losses) on securities and other |
— | — | 370 | |||||||||||
Adjusted net revenue | \\$ | 486 | \\$ | 474 | \\$ | 431 | ||||||||
Q3 2016 | Q2 2016 | Q3 2015 | |||||||||||||||||||||||||
Amount |
Operating |
Amount |
Operating |
Amount |
Operating |
||||||||||||||||||||||
Income (loss) before income tax expense |
\\$ | 225 | 46% | \\$ | 214 | 45% | \\$ | (246 | ) | N.M. | |||||||||||||||||
Add back impact of pre-tax items: | |||||||||||||||||||||||||||
Loss included in Gains (losses) on |
— | — | 370 | ||||||||||||||||||||||||
Provision (benefit) for loan losses |
(62 | ) | (35 | ) | (25 | ) | |||||||||||||||||||||
Losses on early extinguishment of
|
— | — | 39 | ||||||||||||||||||||||||
Adjusted income before income tax |
\\$ | 163 | 34% | \\$ | 179 | 38% | \\$ | 138 | 32% | ||||||||||||||||||
(a) | Adjusted net income per share for the third quarter 2015 is calculated based on 295,148 diluted shares. | |
(b) | Includes \\$43 million losses on early extinguishment of debt during the three months ended September 30, 2015 related to the termination of legacy wholesale funding obligations offset by a \\$4 million gain related to the repurchase of trust preferred securities. | |
(4) Beginning in the first quarter of 2016, the Company updated the presentation of its consolidated income statement line items for all periods presented as follows:
- Reclassified corporate interest income and corporate interest expense from other income (expense) to net interest income;
- Reclassified losses on early extinguishment of debt from other income (expense) to non-interest expense; and
- Reclassified other income (expense) from other income (expense) to gains (losses) on securities and other.
Although the Company issued preferred stock during the third quarter of 2016, it has not presented the net income available to common shareholders line item as no related preferred stock dividends were declared during the same period.
(5) Amounts and percentages may not recalculate due to rounding.
(6) Operating margin is the percentage of net revenue that results in income before income taxes. The percentage is calculated by dividing income before income taxes by total net revenue.
(7) The following tables provide a reconciliation of GAAP common equity book value and common equity book value per share to non-GAAP tangible common equity book value and tangible common equity book value per share at period end (dollars in millions, except per share amounts):
Q3 2016 | Q2 2016 | Q3 2015 | |||||||||||||||||||||||||||
Amount |
Per |
Amount |
Per |
Amount |
Per |
||||||||||||||||||||||||
Common equity book value | \\$ | 5,922 | \\$ | 21.63 | \\$ | 5,785 | \\$ | 21.14 | \\$ | 5,812 | \\$ | 20.01 | |||||||||||||||||
Less: |
(2,698 | ) | (1,956 | ) | (1,971 | ) | |||||||||||||||||||||||
Add: Deferred tax liabilities related to |
560 | 478 | 452 | ||||||||||||||||||||||||||
Tangible common equity book value | \\$ | 3,784 | \\$ | 13.82 | \\$ | 4,307 | \\$ | 15.74 | \\$ | 4,293 | \\$ | 14.78 | |||||||||||||||||
(8) The following table provides a reconciliation of GAAP consolidated cash and equivalents to non-GAAP corporate cash at period end (dollars in millions):
Q3 2016 | Q2 2016 | Q3 2015 | |||||||||||||
Consolidated cash and equivalents | \\$ | 1,467 | \\$ | 2,393 | \\$ | 1,453 | |||||||||
Less: Bank cash | (482 | ) | (1,306 | ) | (443 | ) | |||||||||
Less: |
(646 | ) | (537 | ) | (549 | ) | |||||||||
Less: Other | (33 | ) | (27 | ) | (29 | ) | |||||||||
Corporate cash | \\$ | 306 | \\$ | 523 | \\$ | 432 | |||||||||
(a) |
|
|
(9) Net new and end of period brokerage accounts during the third
quarter of 2016 include 147,761 accounts acquired as part of the
(10) The brokerage account attrition rate is calculated by dividing attriting brokerage accounts, which are gross new brokerage accounts less net new brokerage accounts, by total brokerage accounts at the previous period end. This rate is presented on an annualized basis.
(11) Customer assets held by third parties are held outside
Q3 2016 | Q2 2016 | Q3 2015 | ||||||||||||
Sweep deposits at unaffiliated financial institutions | \\$ | 12.3 | \\$ | 4.6 | \\$ | 3.3 | ||||||||
Customer assets held by third party | 1.5 | — | — | |||||||||||
Municipal funds and other | 0.2 | 3.6 | 3.5 | |||||||||||
Money market fund | — | 0.3 | 7.1 | |||||||||||
Total customer assets held by third parties | \\$ | 14.0 | \\$ | 8.5 | \\$ | 13.9 | ||||||||
(12) Net new brokerage assets and net new customer assets during the
third quarter of 2016 include \\$3.7 billion of assets from the
(13) Delinquent loans include charge-offs for loans that are in bankruptcy or are 180 days past due which have been written down to their expected recovery value. The following table shows the total amount of charge-offs on loans that are still held by the Company at the end of the periods presented (dollars in millions):
Q3 2016 | Q2 2016 | Q3 2015 | ||||||||||||
One- to four-family | \\$ | 101 | \\$ | 108 | \\$ | 117 | ||||||||
Home equity | 200 | 206 | 234 | |||||||||||
Total charge-offs | \\$ | 301 | \\$ | 314 | \\$ | 351 | ||||||||
(14) Includes unpaid principal balances and premiums (discounts).
(15) The TDR loan performance detail is a subset of the Company's total loan performance. TDRs include loan modifications performed under the Company's modification programs and loans that have been charged-off due to bankruptcy notification.
(16) Modifications are a subset of TDRs, and represent loan modifications performed under the Company's modification programs. They do not include loans that have been charged-off due to the Company receiving notification of bankruptcy if the loan has not been modified previously by the Company. The following table shows the reconciliation of total TDRs that had a modification and those for which the Company received a notification of bankruptcy (dollars in millions):
Q3 2016 | Q2 2016 | Q3 2015 | ||||||||||||
Modified loans | \\$ | 325 | \\$ | 332 | \\$ | 344 | ||||||||
Bankruptcy loans | 135 | 146 | 160 | |||||||||||
Total TDRs | \\$ | 460 | \\$ | 478 | \\$ | 504 | ||||||||
(17) The total expected losses on modifications includes both the previously recorded charge-offs and the specific valuation allowance.
(18) E*TRADE Financial's capital ratios are calculated as follows and are preliminary for the current period (dollars in millions):
Q3 2016 | Q2 2016 | Q3 2015 | |||||||||||||
|
\\$ | 6,316 | \\$ | 5,785 | \\$ | 5,812 | |||||||||
DEDUCT: | |||||||||||||||
Preferred stock | (394 | ) | — | — | |||||||||||
E*TRADE Financial Common Equity Tier 1 capital before regulatory |
\\$ | 5,922 | \\$ | 5,785 | \\$ | 5,812 | |||||||||
ADD: | |||||||||||||||
(Gains) losses in other comprehensive income on available-for-sale
debt |
(37 | ) | (43 | ) | 14 | ||||||||||
DEDUCT: | |||||||||||||||
|
(2,043 | ) | (1,422 | ) | (1,428 | ) | |||||||||
Disallowed deferred tax assets | (556 | ) | (857 | ) | (873 | ) | |||||||||
Other(a) | — | — | 105 | ||||||||||||
E*TRADE Financial Common Equity Tier 1 capital | \\$ | 3,286 | \\$ | 3,463 | \\$ | 3,630 | |||||||||
ADD: | |||||||||||||||
Preferred stock | 394 | — | — | ||||||||||||
DEDUCT: | |||||||||||||||
Disallowed deferred tax assets | (284 | ) | — | — | |||||||||||
E*TRADE Financial Tier 1 capital | \\$ | 3,396 | \\$ | 3,463 | \\$ | 3,630 | |||||||||
ADD: | |||||||||||||||
Allowable allowance for loan losses | 128 | 129 | 126 | ||||||||||||
Non-qualifying capital instruments subject to phase-out (trust
preferred |
414 | 414 | 314 | ||||||||||||
|
\\$ | 3,938 | \\$ | 4,006 | \\$ | 4,070 | |||||||||
|
\\$ | 49,240 | \\$ | 48,255 | \\$ | 44,732 | |||||||||
DEDUCT: | |||||||||||||||
|
(2,043 | ) | (1,422 | ) | (1,428 | ) | |||||||||
Disallowed deferred tax assets | (840 | ) | (857 | ) | (873 | ) | |||||||||
Other(a) | — | — | 105 | ||||||||||||
|
\\$ | 46,357 | \\$ | 45,976 | \\$ | 42,536 | |||||||||
|
\\$ | 9,678 | \\$ | 9,731 | \\$ | 9,196 | |||||||||
E*TRADE Financial Tier 1 leverage ratio (Tier 1 capital / Adjusted
average |
7.3 | % | 7.5 | % | 8.5 | % | |||||||||
E*TRADE Financial Common Equity Tier 1 capital / Total risk-weighted assets | 34.0 | % | 35.6 | % | 39.5 | % | |||||||||
E*TRADE Financial Tier 1 capital / Total risk-weighted assets | 35.1 | % | 35.6 | % | 39.5 | % | |||||||||
|
40.7 | % | 41.2 | % | 44.3 | % | |||||||||
(a) |
As a result of applying the transition provisions under Basel III in
2015, the Company included 25% of the TRUPs in the calculation of
E*TRADE Financial's Tier 1 capital and 75% of the TRUPs in the
calculation of E*TRADE Financial's total capital. In accordance with
the transition provisions, the TRUPs were fully phased out of
|
|
(b) | Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets. | |
(19) E*TRADE Bank's capital ratios are calculated as follows and are preliminary for the current period (dollars in millions):
Q3 2016 | Q2 2016 | Q3 2015 | |||||||||||||
|
\\$ | 3,278 | \\$ | 3,207 | \\$ | 3,171 | |||||||||
ADD: | |||||||||||||||
(Gains) losses in other comprehensive income on available-for-sale
debt |
(36 | ) | (43 | ) | 14 | ||||||||||
DEDUCT: | |||||||||||||||
|
(38 | ) | (38 | ) | (38 | ) | |||||||||
Disallowed deferred tax assets | (135 | ) | (186 | ) | (187 | ) | |||||||||
E*TRADE Bank Common Equity Tier 1 capital / Tier 1 capital | \\$ | 3,069 | \\$ | 2,940 | \\$ | 2,960 | |||||||||
ADD: | |||||||||||||||
Allowable allowance for loan losses | 107 | 112 | 108 | ||||||||||||
|
\\$ | 3,176 | \\$ | 3,052 | \\$ | 3,068 | |||||||||
|
\\$ | 36,301 | \\$ | 36,292 | \\$ | 32,466 | |||||||||
DEDUCT: | |||||||||||||||
|
(38 | ) | (38 | ) | (38 | ) | |||||||||
Disallowed deferred tax assets | (135 | ) | (186 | ) | (187 | ) | |||||||||
|
\\$ | 36,128 | \\$ | 36,068 | \\$ | 32,241 | |||||||||
|
\\$ | 8,368 | \\$ | 8,594 | \\$ | 8,230 | |||||||||
E*TRADE Bank Tier 1 leverage ratio (Tier 1 capital / Adjusted
average assets |
8.5% | 8.2% | 9.2% | ||||||||||||
E*TRADE Bank Common Equity Tier 1 capital / Total risk-weighted assets | 36.7% | 34.2% | 36.0% | ||||||||||||
E*TRADE Bank Tier 1 capital / Total risk-weighted assets | 36.7% | 34.2% | 36.0% | ||||||||||||
|
38.0% | 35.5% | 37.3% | ||||||||||||
(a) | Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets. |
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