EXHIBIT 99.1
FOR IMMEDIATE RELEASE
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
916-463-2889
adam.townsend@etrade.com
E*TRADE FINANCIAL CORPORATION ISSUES 2004 EARNINGS
GUIDANCE, REPORTS NOVEMBER ACTIVITY AND
ANNOUNCES REPURCHASE PROGRAM
• | Established 2004 GAAP EPS guidance of $0.70—$0.85 per share on Total Net Revenue of $1.5 billion - $1.7 billion |
• | Raised 2003 GAAP EPS guidance to $0.50—$0.54 from $0.40—$0.48 per share and affirmed 2003 EPS from Ongoing Operations of $0.56—$0.58 per share |
• | Announced a $100 million repurchase program |
• | Through November, U.S. DARTs in the fourth quarter are tracking ahead of the third quarter results by 12 percent at 84,400 and Total DARTs are tracking ahead by 9 percent at 144,500 |
• | U.S. DARTs in November increased 3 percent vs. October, while Total DARTs increased 2 percent |
New York, December 17, 2003– E*TRADE FINANCIAL Corporation (NYSE: ET) today established 2004 GAAP EPS guidance of $0.70—$0.85 on Total Net Revenue of $1.5 billion—$1.7 billion. In addition, management increased 2003 GAAP EPS guidance to $0.50—$0.54 from the previous range of $0.40—$0.48, and reiterated 2003 guidance for EPS from Ongoing Operations of $0.56—$0.58. The Company’s Board of Directors approved a $100 million dollar repurchase program. The plan is effective immediately, not subject to a specific end date and provides the flexibility to buy back common stock, retire debt or a combination of both.
“Based on the strategic initiatives we have implemented this year and the resulting growth opportunities created, the Company is better positioned today than ever before to unleash the real earnings potential of our model,” said R. Jarrett Lilien, President and Chief Operating Officer, E*TRADE FINANCIAL Corporation.
E*TRADE FINANCIAL 2004 Earnings Guidance & Monthly Activity Report for November 2003
Page 2
2004 GAAP Earnings Guidance
Key Driver Assumptions | 2004 Estimate | |||||||
Low | High | |||||||
Brokerage: | ||||||||
Total DARTs (in thousands) | 145 | 160 | ||||||
Average margin debt ($B) | $ | 1.4 | $ | 1.8 | ||||
Average commission per revenue trade | $ | 11.00 | $ | 11.26 | ||||
Bank: | ||||||||
Direct mortgage originations ($B) | $ | 3.4 | $ | 4.4 | ||||
Consumer loan originations, incl HELOCs ($B) | $ | 3.7 | $ | 4.8 | ||||
Average interest rate spread (basis points) | 175 | 195 | ||||||
Average interest earning assets ($B) | $ | 20 | $ | 21 | ||||
Net revenues ($MM) | ||||||||
Brokerage | $ | 980 | $ | 1,115 | ||||
Banking | $ | 565 | $ | 630 | ||||
Intercompany elimination | $ | (45 | ) | $ | (45 | ) | ||
Total net revenues | $ | 1,500 | $ | 1,700 | ||||
Total expenses ($MM) | $ | 1,066 | $ | 1,161 | ||||
Pre-tax income | $ | 434 | $ | 539 | ||||
Effective tax rate | 38 | % | 38 | % | ||||
Net income | $ | 270 | $ | 334 | ||||
Pre-tax income before other corporate income (expense) as a percentage of total net revenue | ||||||||
Brokerage | 31 | % | 34 | % | ||||
Banking | 22 | % | 24 | % | ||||
Total | 28 | % | 31 | % |
“If Converted” EPS Calculation(1):
Numerator ($MM) | ||||||
Net income | $ | 270 | $ | 334 | ||
Add back interest & amortization expense (net of tax) | $ | 29 | $ | 29 | ||
Adjusted net income under “if converted” | $ | 299 | $ | 363 | ||
Denominator (MM) | ||||||
Weighted average diluted shares | 380 | 380 | ||||
Additional shares issued under “if converted” | 45 | 45 | ||||
Adjusted diluted shares under “if converted” | 425 | 425 | ||||
Net income per share—diluted | $ | 0.70 | $ | 0.85 |
(1) The “if converted” accounting method includes the additional dilutive impact assuming conversion of our subordinated convertible debt
Points of Operating Leverage
Metric | Annual EPS Contribution | ||
(Estimated) | |||
Additional 10,000 DARTs per day | $ | 0.06 | |
Increase margin debt by $400 million | $ | 0.04 | |
Improve bank spread by 15 bps(2) | $ | 0.04 | |
Downstream $30 million in capital to the bank | $ | 0.01 | |
Additional $500 million in consumer loan originations | $ | 0.01 |
(2) Based on Q3 2003 ending bank total assets
E*TRADE FINANCIAL 2004 Earnings Guidance & Monthly Activity Report for November 2003
Page 3
The Company also released its Monthly Activity Report for November. U.S. DARTs totaled 85,600; up 3 percent compared to October results, while Total DARTs equaled 146,000; an increase of 2 percent sequentially. Month-end margin debt increased 8 percent sequentially to over $1.7 billion in November.
“We are pleased by the 12 percent growth in our U.S. DART volume that we have seen through the first two months of the quarter,” continued Mr. Lilien. “Despite a somewhat volatile market and an expected holiday slowdown, investors remained engaged in November, maintaining the heightened activity levels that we have experienced since September.”
Monthly Activity Data
Nov-03 | Oct-03 | Nov-03 vs. Oct-03 | Q403 QTD* | Qtr Ended 9/30/03 | Q403 QTD* vs. Qtr Ended 9/30/03 | |||||||||||
Trading days | 18.5 | 23.0 | N.M. | 41.5 | 63.5 | N.M. | ||||||||||
Daily Average Revenue Trades (DARTs) | ||||||||||||||||
US | 85,616 | 83,443 | 2.6% | 84,411 | 75,605 | 11.6% | ||||||||||
International | 9,684 | 9,060 | 6.9% | 9,338 | 8,624 | 8.3% | ||||||||||
Professional | 50,686 | 50,738 | (0.1)% | 50,715 | 48,332 | 4.9% | ||||||||||
Total DARTs | 145,986 | 143,241 | 1.9% | 144,464 | 132,561 | 9.0% | ||||||||||
Market Making | ||||||||||||||||
Equity shares traded (MM) | 7,630 | 10,346 | (26.3)% | 17,976 | 18,460 | N.M. | ||||||||||
Gross New Accounts | ||||||||||||||||
Brokerage | 34,914 | 35,027 | N.M. | 69,941 | 127,384 | N.M. | ||||||||||
Banking | 8,143 | 26,010 | N.M. | 34,153 | 42,209 | N.M. | ||||||||||
Total gross new accounts | 43,057 | 61,037 | N.M. | 104,094 | 169,593 | N.M. | ||||||||||
Active Accounts | ||||||||||||||||
Brokerage | 2,864,382 | 2,860,553 | 0.1% | 2,864,382 | 2,854,900 | 0.3% | ||||||||||
Banking | 652,705 | 661,247 | (1.3)% | 652,705 | 657,646 | (0.8)% | ||||||||||
Total active accounts end of period | 3,517,087 | 3,521,800 | (0.1)% | 3,517,087 | 3,512,546 | 0.1% | ||||||||||
End of period margin debt ($MM) | $ | 1,714 | $ | 1,581 | 8.4% | $ | 1,714 | $ | 1,454 | 17.9% | ||||||
Total Assets / Deposits | ||||||||||||||||
Total client assets in investing accounts ($MM) | $ | 69,006 | $ | 67,392 | 2.4% | $ | 69,006 | $ | 60,271 | 14.5% | ||||||
Total deposits in banking accounts ($MM) | $ | 11,301 | $ | 11,405 | (0.9)% | $ | 11,301 | $ | 11,534 | (2.0)% | ||||||
Total assets / deposits in customer accounts ($MM) | $ | 80,307 | $ | 78,797 | 1.9% | $ | 80,307 | $ | 71,805 | 11.8% | ||||||
Loan Originations | ||||||||||||||||
Direct mortgage originations ($MM) | $ | 285 | $ | 364 | (21.7)% | $ | 649 | $ | 2,429 | N.M. | ||||||
Consumer loan originations, incl HELOCs ($MM) | $ | 228 | $ | 235 | (3.0)% | $ | 463 | $ | 701 | N.M. |
*Q403 quarter-to-date (QTD) includes results for the two months ended November 30, 2003
E*TRADE FINANCIAL 2004 Earnings Guidance & Monthly Activity Report for November 2003
Page 4
Effective November 2003, E*TRADE FINANCIAL Corporation is calculating abbreviated equity market trading sessions as half days in computing DART volumes. Historical monthly metric data, including adjustments for the new trading day computation, from January 2003 to November 2003 can be found on the E*TRADE FINANCIAL investor relations site atwww.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.
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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.
© 2003 E*TRADE FINANCIAL Corp. All rights reserved.