E-Trade Restructures Balance Sheet

E-Trade Financial Corp. said Tuesday that it is eliminating all of its $4.4 billion of wholesale funding obligations by quarter-end in an effort to boost its bank balance sheet by removing high-cost funding.

"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," said Chief Executive Paul Idzik.

The online brokerage said the restructuring of its bank balance sheet liabilities would create capacity for low-cost deposits over the next several quarters.

In connection with the restructuring, the company said it would record a pretax charge of about $410 million in the current quarter. E-Trade said it would offset the hit by decreasing its balance sheet size in line with the reduction in liabilities, using excess bank capital and contributing $110 million of parent capital to the bank.

In relation to the bank's expected loss in the current quarter, E-Trade doesn't intend to issue a dividend from bank to parent during the final quarter this year, though it intends to resume quarterly bank dividends in the following quarter.

Shares rose 3.4% to $26.23 in premarket trading and are up 4.6% this year through Friday's close.

Write to Ezequiel Minaya at [e-mail]

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(END) Dow Jones Newswires

September 08, 2015 09:25 ET (13:25 GMT)

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