![]() ® ® © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. September 17, 2007 Business Update Exhibit 99.3 |
![]() 2 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. © E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains certain projections or other forward-looking statements regarding future events or the future performance of the company. Various factors, including risks and uncertainties referred to in the 10Ks, 10Qs, and other reports E*TRADE FINANCIAL Corporation periodically files with the SEC, could cause our actual results to differ materially from those indicated by our projections or other forward-looking statements. No statement is a guarantee of our future performance and we disclaim any duty to update any data contained herein or any forward- looking statements. This presentation contains data as of September 17, 2007 and the company disclaims any duty to update any forward-looking statements made in this presentation. Data contained herein are unaudited. This presentation also contains disclosure of non-GAAP financial measures. A reconciliation of these financial measures to the most directly comparable GAAP financial measure can be found on the investor relations site at www.etrade.com. |
![]() 3 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Agenda Guidance Update Enhanced Focus on Retail Opportunity Loan and Investment Portfolio Update Strength of the Core Franchise |
![]() 4 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Strength of the Core Franchise Sound capital and liquidity position Consistent and growing base of retail customer cash Thrift charter provides access to FHLB - $13B of additional borrowing capacity Bank continues to maintain “Well-Capitalized” levels Q406 Q107 Q207 868,770 912,057 978,084 Target Segment Accounts Recognized by SmartMoney magazine as the #1 Premium Broker (August 2007) E*TRADE Bank named “Best of Breed” by Money magazine (August 2007) |
![]() 5 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Accelerate shift to a retail-driven balance sheet structure Shift, over time, portfolio composition to 80-85% of assets in whole loans (prime first lien mortgage) and margin debt, and 80-85% of liabilities in customer deposits Synchronize growth rate of balance sheet to continued growth in retail customer cash and deposits, margin debt and first lien mortgage Simplify and streamline business to increase focus on retail franchise Exit wholesale mortgage and restructure institutional brokerage operations Deploy internally generated cash flow against higher return on equity opportunities Stock and debt repurchase Enhanced Focus on Retail Opportunity |
![]() 6 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. August 31, 2007 Ending Period Interest Earning Assets $61.1B Loans $40.2B Securities $18.2B Avg. Rating: AA (92% AA-AAA) Consumer: $2.7B (Includes marine, RV) Avg. FICO: 733 Mortgage: $29.6B Avg. FICO: 735 DTI: 36% CLTV: 73% Margin: $7.9B MBS: $12.9B Agency Avg. Rating: AAA ABS: $3.3B 82% A or better 97% BBB or better Avg. Rating A 1st Lien (1- 4 family): $17.0B Avg. FICO: 738 DTI: 36% LTV: 69% 2nd Lien (HEIL & HELOC): $12.6B Avg. FICO: 731 DTI: 36% CLTV: 79% Corp/Muni/Pfd: $2.0B Avg. Rating: AA Interest-Earning Assets Composition NOTE: Loan balances are shown based on UPB, and securities are shown at amortized cost basis. Numbers may not add due to rounding. |
![]() 7 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Consumer Non-performing Loans 0.00% 0.30% 0.60% 0.90% 1.20% 1.50% E*TRADE All Savings Institutions Nonperforming loans declined during the first half of the year, but are expected to increase during the third and fourth quarter consistent with historical seasonal performance of the portfolio No significant change in performance is anticipated Non-performing loans are loans 90 or more days past due Source: OTS Data |
![]() 8 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. First Lien Non-performing Loans 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% E*TRADE All Savings Institutions $17B portfolio is well supported by high FICOs, low LTVs and private mortgage insurance $69MM of exposure greater than 80% of property value is protected by PMI Source: OTS Data Non-performing loans are loans 90 or more days past due |
![]() 9 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Second Lien Non-performing Loans (Home Equity Installment Loans and Lines of Credit) 0.00% 0.20% 0.40% 0.60% 0.80% E*TRADE All Savings Institutions $9.4B, or 75%, of portfolio to borrowers with FICO of 700 and higher $6.1B, or 48%, of portfolio with CLTV of 80% or lower Source: OTS Data Non-performing loans are loans 90 or more days past due |
![]() 10 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Second Lien Credit Performance Borrower’s credit score has become a less accurate indicator of future defaults Following factors indicative of increased defaults: loan-to-value, loan documentation type, occupancy type, and borrower credit score Loans with higher loan-to-values have higher default rates and the greatest impact on estimated future losses Impact of Factors on Estimated Loan Losses 26% 5% 32% 37% CLTV Doc Type Occupancy Type Collateral Value Adjusting the expected collateral value at the time of default accounts for 32% of the increase in expected losses |
![]() 11 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Provision Level Assumptions and Adjustments 450-500% 626% Consumer Loans 100-105% 51% Second Lien 5-10% 5% First Lien Pro-forma Coverage Under New Guidance at Year End June 30, 2007 Allowance for Loan Losses as a % of Non-Performing Loans |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 12 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Investment Securities Composition (as of August 31, 2007) 3,275 18.0% 65 0.4% 74 0.4% 464 2.6% 887 4.9% 1,785 9.8% ABS 74 0.4% - - Below Inv. Grade 2,046 11.2% - - 16 0.1% 2,030 11.2% Corporate, Municipal and Preferred Stock 18,181 100.0% 65 0.4% 464 2.6% 904 5.0% 16,674 91.7% Grand Total 12,860 70.7% Grand Total - Non- Rated 12,859 70.7% AA or Higher - BBB A MBS 1 0.0% ($ in MM, based on book value) $16.7B, or 92%, of the Investment Securities portfolio is rated AAA or AA Over 99% of the Investment Securities portfolio is rated investment grade |
![]() 13 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Asset-Backed Securities Breakdown (as of August 31, 2007) 48 0.3% 12 0.1% 5 0.0% 11 0.1% 14 0.1% 6 0.0% Other 99 0.5% - 9 0.1% 55 0.3% 33 0.2% 2 0.0% Sub-prime Residential First Lien Mortgage 3,275 18.0% 178 1.0% 257 1.4% 450 2.5% 2,243 12.3% Total 65 0.4% - 24 0.1% 29 0.2% - Non- Rated 74 0.4% 59 0.3% - 1 0.0% - Below Inv. Grade 1,785 9.8% 59 0.3% 125 0.7% 224 1.2% 1,369 7.5% AA or Higher 18 0.1% 42 0.2% Second Liens 464 2.6% 41 0.2% 47 0.3% 292 1.6% BBB A Prime Residential First Lien Mortgage 582 3.2% ABS CDO 149 0.8% Commercial Real Estate & Trust Pfd CDO 67 0.4% Total 887 4.9% ($ in MM, based on book value) $2.7B, or 82%, of ABS portfolio is rated A or higher Non-rated and below investment grade securities are $139MM, or 0.8% of Investment Securities portfolio Note: Includes $79MM of securities classified as Trading Securities |
![]() ![]() ![]() 14 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. 15 Mortgage Restructuring Up to 325 Total 17 Institutional Brokerage Restructuring 18 Smaller Balance Sheet Up to 100 Potential Impairments 175 Provision Pre-tax Impact/Charge ($ in MM) Item Summary of Items Affecting 2007 Outlook |
![]() 15 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Revised 2007 GAAP Guidance Range (0.03) Institutional Brokerage Restructuring (0.03) Smaller Balance Sheet (0.15) Potential Impairments (0.27) Provision $1.67 $1.60 $1.53 Previous FY07 Revised FY07 Mortgage Restructuring $1.10 Mid $1.15 High $1.05 (0.02) Low $0.75 YTD 2007 Actual |
![]() 16 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. 2007 Revised Guidance 475 146 329 Net Income $1.10 $0.35 $0.75 GAAP EPS 1,309 1H2007 Actual Total Net Revenues Income Statement ($ in MM, except EPS) 2,335 FY2007 Midpoint 1,026 2H2007 Midpoint Guidance 381 430 629 475 0 200 400 600 800 2004 2005 2006 2007Midpoint Net Income 1,483 1,703 2,335 2,420 0 1,500 3,000 2004 2005 2006 2007Midpoint Net Revenue |
![]() 17 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Balance Sheet Funding Sources Consistent and growing base of retail customer cash Thrift charter provides access to FHLB - $13B of additional borrowing capacity $250MM of undrawn committed senior secured revolving credit facility $432MM of Free Cash as of June 30, 2007 No material changes to date with respect to wholesale funding availability, pricing or margin, including repurchase agreements Funding and Capital Summary $350 $200 Excess Capital vs. 10% Minimum 11.00% 10.58% Total Capital to Risk-Weighted Assets $3,840 $3,625 Risk-Based Capital $650 $660 Excess Capital vs. 5% 6.00% 6.15% Tier 1 Capital to Adjusted Total Assets $3,600 $3,550 Tier 1 Capital, Ending Projected Year-End Q207 Actual ($ in MM) Capital Position |
![]() 18 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. Focus resources of the company on driving continued growth in target segment accounts Hold balance sheet relatively flat at Q307 levels Provision $150MM to $200MM along with orderly transition of balance sheet toward retail assets and liabilities Potential securities impairments of $50MM to $100M Redeploy over $500MM of expected free cash flow toward incremental stock and debt repurchase Improve ROE and higher earnings quality driven by growth in retail franchise General Expectations for 2008 |
![]() ![]() ![]() ![]() 19 © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. 2007 Exit Run Rate $432 $32 $100 $300 Embedded in FY2007 Guidance $32 $0 Restructuring Charges $132-$232 $300 Total $0-$50 $50-$100 Securities Impairment $100-$150 $150-$200 Provision Expense Reduced Headwind in 2008(E) Expectation for 2008 ($ in MM) |
![]() ® ® © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. September 17, 2007 Q&A |
![]() © 2007 E*TRADE FINANCIAL Corp. All rights reserved. This presentation contains confidential information and may not be disclosed without E*TRADE FINANCIAL Corporation’s written permission. This presentation presents information as of September 17th, 2007 or as of another date specified herein and may include “forward looking statements” as defined under the Securities Act and the Securities Exchange Act. No statement is a guarantee of our future performance and we disclaim any duty to update any forward-looking statements. ® |