E*Trade Reveals Balance Sheet Reconciliation of $4.4 Billion

Per the brokerage’s latest restructuring move, E*Trade has opted to pay off its debt amidst an aggressive refinancing agenda.

E*Trade Financial Corp. has unveiled its intentions to eliminate $4.4 billion of wholesale funding obligations from its bank balance sheet by the end of Q3 2015, according to an E*Trade statement.

Per the brokerage’s latest restructuring move, E*Trade has opted to pay off its debt amidst an aggressive refinancing agenda. This has taken shape in the form of a capital plan and interest rate tinkering, which was bolstered by shareholder enthusiasm as of late – the targeted timetable for these moves is Q3 2015.

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As such, E*Trade is eying a pre-tax charge of approximately $410 million in the current quarter, which will be incurred during its next earnings release in a couple months. Ultimately, the company has portended that this would effectively offset the hit by decreasing its balance sheet size in line with the reduction in liabilities by utilizing excess bank capital and contributing nearly $110 million of parent capital to the bank.

Consequently, E*Trade’s plan was to reduce balance sheet liabilities whereby creating a capacity for low-cost deposits over the next several quarters forthcoming. According to E*Trade’s Chief Executive Paul Idzik in a recent statement on the restructuring, “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.”

Nearly one month ago, E*Trade reported its metrics for the month ending July 2015. In particular, E*TRADE’s Daily Average Revenue Trades (DARTs) came in at 149,283 in July 2015, growing 6.6% MoM from 140,003 in June 2015. At the time of writing, E*Trade (NASDAQ: ETFC) shareprices are trading at $27.39, up a steadfast 7.96% during Tuesday’s US trading.

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