E*Trade Swings to Profit on Benefits From OptionsHouse Deal
October 20 2016 - 4:50PM
Dow Jones News
E*Trade Financial Corp. swung to a third-quarter profit as its
recent acquisition of online broker OptionsHouse LLC helped drive
customer accounts and assets, though a key trading metric
declined.
Earnings and revenue beat Wall Street expectations.
E*Trade has focused on making its brokerage business more
competitive. The company last month ousted Chief Executive Paul
Idzik, who had been in the post since January 2013. It also agreed
in July to buy Aperture New Holdings Inc., the parent of
OptionsHouse, for $725 million in cash, marking its first
acquisition in more than a decade.
Karl Roessner, previously the firm's general counsel, succeeded
Mr. Idzik as CEO. Mr. Roessner has been with E*Trade since 2007,
before mortgage exposure upended the firm during the financial
crisis and put it behind its rivals in the battle to win brokerage
business.
E*Trade ended the third quarter with 3.44 million brokerage
accounts, an increase of nearly 162,000 from the prior quarter,
including 148,000 from OptionsHouse.
The company said its customers added $5.4 billion in net new
brokerage assets during the period, including $3.7 billion from the
OptionsHouse deal. It ended the quarter with $306.8 billion in
total customer assets, up from $276.6 billion a year earlier and
$285.9 billion at the end of the prior quarter.
But its daily average revenue trades decreased 2.6% to 151,905
from a year earlier and fell 0.4% from the second quarter.
In all, E*Trade posted earnings of $139 million, or 51 cents a
share, compared with a year-earlier loss of $153 million, or 53
cents a share. The latest results include $19 million in severance
and restructuring charges, versus $409 million in charges a year
earlier. Revenue grew to $486 million.
Analysts polled by Thomson Reuters expected earnings of 39 cents
a share on revenue of $471 million.
Rival Charles Schwab Corp. reported stronger-than-expected
results earlier this week as an increase in new brokerage accounts
and higher asset-management fees helped offset a decline in trading
revenue. TD Ameritrade Corp. is slated to report Tuesday.
Write to Lauren Pollock at lauren.pollock@wsj.com
(END) Dow Jones Newswires
October 20, 2016 16:35 ET (20:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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